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6. Taxes: Panama

Taxes in Panama: the territorial income tax and its 25 percent corporate rate with the CAIR alternative computation, the 10 percent dividend tax and complementary tax, withholding on payments abroad, capital gains, the 7 percent ITBMS, transfer pricing, loss carryforward, treaties, property and Aviso de Operación taxes, payroll contributions, incentive regimes, the procedure code and the economic substance rules for foreign passive income that apply from fiscal year 2027, each tied to the official text. Panama has no tax treaty with Argentina; the Argentine side of cross border payments is covered in The Argentine Thread guide.

Investor view. A territorial system, a 25 percent rate, a dollar economy and 5 percent regimes for regional headquarters keep Panama competitive for holding and hub structures, and the 2027 substance rules reward investors who put real people and decisions in the country.

• Panama's tax system: territorial income tax, 25 percent corporate rate, 10 percent dividend tax, 7 percent ITBMS and the 2027 substance rulesPanama taxes only income produced inside its territory: profits from billing or directing deals from a Panamanian office that are consummated abroad are not Panamanian source. Companies pay 25 percent
• Corporate income tax in Panama: 25 percent on Panamanian source income, the 4.67 percent alternative computation (CAIR) and the MSME scheduleCompanies pay 25 percent on Panamanian source net taxable income; a handful of regulated sectors were aligned at 25 percent in 2014 and State owned companies pay 30 percent. A company whose taxable re
• Economic substance and foreign passive income in Panama: Ley 526 de 2026, the 15 percent rate and who must report from fiscal year 2027From fiscal year 2027, a Panamanian entity that belongs to a multinational group and earns foreign source dividends, interest, royalties, capital gains or rental and other capital income must report t
• Dividend tax and complementary tax in Panama: 10, 5 and 20 percent withholding, the 40 percent payout rule and branch profitsA company operating in Panama withholds 10 percent dividend tax on distributions of Panamanian source profits and 5 percent on foreign source, exempt or export profits, and remits it within ten days;
• Withholding on payments abroad from Panama: 12.5 percent effective on services, royalties and interest, and the treaty and registration exceptionsWhen a person in Panama pays a non resident for a service, royalty, know how or similar act that is deducted against Panamanian source income, it withholds the general income tax rate on 50 percent of
• Capital gains tax in Panama: 10 percent on shares and real estate, the 5 percent and 3 percent advance payments and the 2026 new home transfer tax reliefGains on Panamanian source shares, bonds and other securities are taxed at a flat 10 percent, and the buyer must withhold 5 percent of the total price within ten days; the seller may treat that 5 perc
• ITBMS in Panama: the 7 percent tax on goods and services, 10 and 15 percent special rates, the B/.36,000 threshold and monthly filingThe ITBMS taxes transfers of movable goods, services and imports in Panama at 7 percent, 10 percent for alcoholic beverages and lodging and 15 percent for tobacco. Traders and service providers with a
• Transfer pricing in Panama: arm's length rule, Form 930 within six months, the study on 45 days' notice and the 1 percent penaltyTransactions with related parties resident abroad that affect Panamanian taxable income must be priced at arm's length, using the OECD guidelines as technical reference. Taxpayers file an annual relat
• Tax loss carryforward in Panama: five years, 20 percent of the loss per year, capped at 50 percent of taxable incomeA loss can be deducted over the five following fiscal years at 20 percent of the loss per year, and each yearly slice may not reduce that year's net taxable income by more than half. Any part of a yea
• Panama's double taxation treaties: 17 treaties, the MLI, treaty residence rules and the memorial filed before the paymentThe DGI lists 17 double taxation treaties approved by law, with Barbados, Czech Republic, France, Ireland, Israel, Italy, Korea, Luxembourg, Mexico, the Netherlands, Portugal, Qatar, Singapore, Spain,
• Other business taxes in Panama: the Aviso de Operación tax of 2 percent of capital, property tax schedules, real estate transfer tax and monthly stamp tax returnsBesides income tax and ITBMS, a business operating in Panama pays an annual tax on its Aviso de Operación equal to 2 percent of its capital, with a B/.100 minimum and a B/.60,000 cap, while free zone
• Payroll taxes in Panama: social security at 13.25 percent for employers rising to 15.25 percent by 2029, 9.75 percent for employees and salary income tax withholdingEmployers pay Caja de Seguro Social contributions of 13.25 percent of salaries, rising to 14.25 percent from 1 March 2027 and 15.25 percent from 1 March 2029 under Ley 462 de 2025, and withhold 9.75 p
• Tax incentives in Panama: multinational headquarters (SEM) and EMMA at 5 percent, free zones and the Colón Free Zone, and the MSME scheduleLicensed multinational headquarters (SEM) and multinational manufacturing services companies (EMMA) pay income tax at 5 percent on net income from their services, with a 2 percent floor where foreign
• Tax audits and disputes in Panama: the Código de Procedimiento Tributario since June 2024, limitation periods, late payment interest and the Tribunal Administrativo TributarioSince 1 June 2024 the Código de Procedimiento Tributario governs DGI audits, collection and appeals. The DGI has three years to assess additional tax on a filed return and five years for direct taxes
• Digital services and Panamanian tax: withholding on cross border services today and the ITBMS proposal for foreign platforms announced in August 2026Panama has no specific digital services tax in force. A Panamanian business paying a foreign provider for services that benefit it in Panama and are deducted there withholds 12.5 percent effective inc

Related: Panama country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide