Countries › Panama › Guide › 6. Taxes › Corporate income tax in Panama: 25 percent on Panamanian source income, the 4.67 percent alternative computation (CAIR) and the MSME schedule

Corporate income tax in Panama: 25 percent on Panamanian source income, the 4.67 percent alternative computation (CAIR) and the MSME schedule

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Last verified: 2026-10-29 · Status: Stable

Companies 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 revenue exceeds B/.1,500,000 pays on the higher of its net income and 4.67 percent of taxable revenue, the CAIR, unless the DGI allows the ordinary method. Small registered companies with revenue up to B/.500,000 use a 7.5 to 22.5 percent schedule and pay no complementary tax.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates freely as legal tender; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Corporate income tax general rate	25 %Código Fiscal art. 699 (Ley 8 de 2010 art. 9), as of 2026-10-29 · in force
Rate for companies more than 40 percent owned by the State	30 %Código Fiscal art. 699, as of 2026-10-29 · in force
Taxable revenue above which the CAIR alternative computation applies	1500000 PABCódigo Fiscal art. 699, as of 2026-10-29 · in force
Deemed net taxable income under the CAIR, as share of taxable revenue	4.67 %Código Fiscal art. 699 numeral 2, as of 2026-10-29 · in force
MSME company income tax rates (schedule)	7.5 to 22.5 %Código Fiscal art. 699-A (Ley 189 de 2020), as of 2026-10-29 · in force
Revenue ceiling for the MSME company regime	500000 PABCódigo Fiscal art. 699-A, as of 2026-10-29 · in force
Company income tax return deadline	31 March dateCódigo Fiscal art. 710 (Ley 52 de 2012 art. 5), as of 2026-10-29 · in force
Estimated tax installments	30 June, 30 September, 31 December datesCódigo Fiscal art. 727 (Ley 52 de 2012 art. 6), as of 2026-10-29 · in force
Days in any 12 months for a service or construction permanent establishment (from 2027)	183 daysCódigo Fiscal art. 762-M (Ley 526 de 2026 art. 3), as of 2026-10-29 · pending
Exchange rate used for USD conversions	1 PAB per USDBalboa at par with the US dollar (Superintendencia de Bancos), as of 2026-10-29 · in force

The rule

1. Legal persons pay 25 percent on net taxable income for 2011 and following years. Electricity generation and distribution, telecommunications, insurance and reinsurance, finance companies regulated by Ley 42 de 2001, cement, gaming, mining and banking paid 30 percent in 2010, 27.5 percent from 2012 and 25 percent from 1 January 2014, and the same rates apply to subsidiaries serving them exclusively or mainly. Companies in which the State holds more than 40 percent of the shares pay 30 percent.Código Fiscal art. 699 as worded by Ley 8 de 2010 art. 9, art. 699, 2010-03-15 official text · verified 2026-10-29

2. Legal persons with taxable revenue above B/.1,500,000 a year pay the higher of: (1) tax on net taxable income under the ordinary method, or (2) tax on net taxable income equal to 4.67 percent of total taxable revenue. Taxable revenue for this purpose excludes exempt, non taxable and foreign source income.
Example: Taxable revenue B/.10,000,000, ordinary net taxable income B/.300,000: ordinary tax B/.75,000; CAIR tax 25 percent of B/.467,000 is B/.116,750, which is payable unless the DGI approves the ordinary method. / US$10,000,000 of revenue: US$116,750 under the CAIR against US$75,000 under the ordinary method.Código Fiscal art. 699 as worded by Ley 8 de 2010 art. 9, art. 699 numerals 1 and 2, 2010-03-15 official text · verified 2026-10-29

3. A company that would incur a loss because of the alternative computation, or whose effective rate (tax caused divided by taxable income) would exceed the statutory rate, may ask the DGI not to apply numeral 2; if accepted, it may use the ordinary method for up to the three following years (art. 699 parágrafo 1). The DGI accepts returns only on an accrual basis under IFRS, save authorized exceptions; companies with annual taxable revenue up to B/.250,000 and professional civil companies may use cash basis without prior authorization (parágrafo 3).Código Fiscal art. 699 parágrafos 1 and 3 as worded by Ley 8 de 2010 art. 9, art. 699 parágrafos 1 and 3, 2010-03-15 official text · verified 2026-10-29

4. A legal person registered in the AMPYME business registry with gross annual revenue up to B/.500,000, not resulting from splitting a business and not affiliated with, subsidiary of or controlled by other legal persons, with registered shares held by individuals, pays income tax on net taxable income at 7.5 percent up to B/.11,000 of total revenue, 10 percent from B/.11,000.01 to B/.36,000, 12.5 percent to B/.90,000, 15 percent to B/.150,000, 20 percent to B/.350,000 and 22.5 percent to B/.500,000, and is exempt from the complementary tax. The conditions must be proved to the DGI every year.Código Fiscal art. 699-A as worded by Ley 189 de 2020 art. 1, art. 699-A, 2020-12-17 official text · verified 2026-10-29 · changed: Ley 189 de 2020 replaced the earlier art. 699-A schedule with effect from fiscal year 2020.

5. Every taxpayer files an annual sworn return by 31 March (companies) or 15 March (individuals), together with an estimated return for the following year that may not be lower than the income declared; tax is paid on the estimate, and any balance due on the final return is paid by 31 March or within three months after the fiscal year closes (art. 710). The estimated tax may be paid in three equal installments by 30 June, 30 September and 31 December (art. 727). The DGI may grant one month's extension of the filing deadline if the estimated tax is paid first (art. 710 parágrafo 5).
Cost to do it: No filing fee; returns are filed electronically through the DGI e-Tax system. Accounting and tax preparation fees are private.Código Fiscal art. 710 and art. 727 as worded by Ley 52 de 2012 art. 5 and art. 6, art. 710 and art. 727, 2012-08-28 official text · verified 2026-10-29

6. A return may be amended once per fiscal year within 36 months of the original deadline; a company amendment that reduces net taxable income costs a fine of 0.5 percent of the increase in deductible costs and expenses, and no amendment is allowed during an audit (art. 710 parágrafo 4). Taxpayers already in default of filing when the rule took effect face an automatic fine of 0.3 percent of declared taxable income per period for companies and 0.1 percent for individuals (parágrafo transitorio).Código Fiscal art. 710 parágrafo 4 and parágrafo transitorio as worded by Ley 337 de 2022 art. 28 and art. 29, art. 710, 2022-11-14 official text · verified 2026-10-29

7. A foreign person has a permanent establishment in Panama when it has a fixed place or center of activity there, including a management seat, branch, office, factory, workshop, warehouse or store, or construction, installation or supervision projects, services by its personnel, or use of substantial equipment for natural resources lasting more than 183 days in any twelve month period; dependent agents who habitually conclude contracts also create one. Purely preparatory or auxiliary activities do not. The permanent establishment is a taxpayer on the Panamanian source income attributable to it and files the annual return.Código Fiscal art. 762-M as worded by Ley 526 de 2026 art. 3, art. 762-M, 2026-05-28 official text · verified 2026-10-29 · changed: Ley 526 de 2026 rewrote the permanent establishment definition, adding the 183 day tests, the anti fragmentation rule and the dependent agent rule, effective from fiscal year 2027.

Total revenue (B/.)	Rate
Up to 11,000	7.5 percent
11,000.01 to 36,000	10 percent
36,000.01 to 90,000	12.5 percent
90,000.01 to 150,000	15 percent
150,000.01 to 350,000	20 percent
350,000.01 to 500,000	22.5 percent

MSME company schedule under Código Fiscal art. 699-A (Ley 189 de 2020); rate applied to net taxable income according to total revenue.

Worked example

A distributor has B/.10,000,000 (US$10,000,000) of taxable revenue and B/.300,000 of net taxable income under the ordinary method.
Ordinary tax: 25 percent of B/.300,000 is B/.75,000. CAIR: 4.67 percent of B/.10,000,000 is B/.467,000 of deemed income, taxed at 25 percent, B/.116,750.
The company pays B/.116,750 (US$116,750), an effective rate of 38.9 percent on its real profit, unless it applies to the DGI under art. 699 parágrafo 1, which allows the ordinary method for up to three years once accepted.

Step by step

Close the books on an accrual basis under IFRS; keep the audited statements consistent with the return, since the DGI may compare them with statements given to banks (art. 699 parágrafo 2).
Test the CAIR every year once taxable revenue nears B/.1,500,000 and file the non application request with supporting documents if it produces a loss or an effective rate above 25 percent.
File the return and the estimated return by 31 March; pay the estimated tax in one payment or in three installments by 30 June, 30 September and 31 December.
Use the single amendment window carefully: 36 months, once per year, and never during an audit.
Foreign companies working on Panamanian projects should count days against the 183 day tests from 2027.

Common traps

The estimated return cannot show lower income than the final return without triggering a DGI review of the reasons.
Reducing taxable income by amendment costs a 0.5 percent fine on the extra deductions claimed.
MSME regime eligibility is lost if the company is a subsidiary or affiliate of another company or has corporate shareholders.
Subsidiaries that serve a bank, insurer or utility exclusively or mainly follow the sector's rate history, not the general one.

Sources

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

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