Countries › Panama › Guide › 6. Taxes › Tax audits and disputes in Panama: the Código de Procedimiento Tributario since June 2024, limitation periods, late payment interest and the Tribunal Administrativo Tributario

Tax audits and disputes in Panama: the Código de Procedimiento Tributario since June 2024, limitation periods, late payment interest and the Tribunal Administrativo Tributario

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

Since 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 (twelve for indirect taxes) where no return was filed, audits must end within six months plus extensions, and late payment bears interest at two points over a market reference rate plus a 10 percent surcharge on late returns. Assessments are challenged by reconsideration before a tax administrative judge, then by appeal to the Tribunal Administrativo Tributario, or by direct appeal to the Tribunal.

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

Limitation to assess additional tax on a filed return	3 yearsCódigo de Procedimiento Tributario art. 88 numeral 2, as of 2026-10-29 · in force
Limitation for direct taxes where no return was filed	5 yearsCódigo de Procedimiento Tributario art. 88 numeral 1, as of 2026-10-29 · in force
Limitation for indirect taxes (non filers and collection)	12 yearsCódigo de Procedimiento Tributario art. 88 numeral 1, as of 2026-10-29 · in force
General maximum audit duration	6 monthsCódigo de Procedimiento Tributario art. 205, as of 2026-10-29 · in force
Late payment interest	Market reference rate plus 2 points, monthly textCódigo de Procedimiento Tributario art. 70, as of 2026-10-29 · in force
Surcharge on payments of returns filed late without request	10 %Código de Procedimiento Tributario art. 70, as of 2026-10-29 · in force
Evaded tax from which tax fraud is criminal	300000 PABCódigo de Procedimiento Tributario art. 284, as of 2026-10-29 · in force
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. The Código de Procedimiento Tributario entered into force on 1 June 2024, save articles that had already entered into force earlier.Ley 76 de 2019 art. 392 as worded by Ley 401 de 2023 art. 30, art. 392, 2023-10-05 official text · verified 2026-10-29 · changed: Ley 401 de 2023 replaced the 1 January 2024 start date set by Ley 337 de 2022 with 1 June 2024.

2. Limitation runs automatically: (1) twelve years for indirect taxes and five years for direct taxes to collect assessed or self assessed debts, to assess non filers and to impose sanctions; (2) three years to assess additional tax on filed returns, counted from the day after the return was filed; (3) five years for the taxpayer to claim refunds of undue or excess payments; and (4) eighteen months to request amendment of self assessments.Ley 76 de 2019, Código de Procedimiento Tributario, art. 88, 2019-02-13 official text · verified 2026-10-29

3. Late payment bears monthly interest at two percentage points over the market reference rate set annually by the Superintendencia de Bancos; payments of returns filed late without prior request bear a 10 percent surcharge, plus interest but without other sanctions.
Example: B/.50,000 of tax on a return filed late without a DGI request: B/.5,000 surcharge plus monthly interest. / US$50,000 of tax, US$5,000 surcharge plus interest.Ley 76 de 2019, Código de Procedimiento Tributario, art. 70, 2019-02-13 official text · verified 2026-10-29

4. Audits must be completed within six months, extendable by four months for complex cases or concealment and by up to six further months for transfer pricing or international tax matters; exceeding the term or suspending the audit for more than four weeks for reasons not attributable to the taxpayer causes expiry, and the DGI cannot reopen the same taxes and periods for two years.Ley 76 de 2019, Código de Procedimiento Tributario, art. 205, 2019-02-13 official text · verified 2026-10-29

5. Tax assessments, collection acts, sanctions and refund denials may be challenged only by reconsideration before the tax administrative judge and appeal to the Pleno of the Tribunal Administrativo Tributario, filed through a lawyer (art. 303 and 304); the taxpayer may skip reconsideration and appeal directly to the Tribunal without losing access to the Third Chamber of the Supreme Court (art. 322). The Tribunal is an autonomous, specialized second instance body with national jurisdiction (art. 323). Hearings are not held for fines up to B/.1,000 or tax up to B/.25,000 (art. 309).
Cost to do it: Recourses must be filed through a lawyer holding a certificate of suitability; legal fees are private.Ley 76 de 2019, Código de Procedimiento Tributario, art. 303, 304, 309, 322 and 323, 2019-02-13 official text · verified 2026-10-29

6. Evasion with intent below B/.300,000 of tax, excluding fines, surcharges and interest, is administrative tax evasion handled by the DGI; from B/.300,000 it is criminal tax fraud for the Ministerio Público.Ley 76 de 2019, Código de Procedimiento Tributario, art. 284, 2019-02-13 official text · verified 2026-10-29

7. Income tax returns may be amended once per period within 36 months of the original deadline, not during an audit (Código Fiscal art. 710 parágrafo 4); a company's amendment reducing taxable income costs 0.5 percent of the increase in deductions.Código Fiscal art. 710 parágrafo 4 as worded by Ley 337 de 2022 art. 28, art. 710 parágrafo 4, 2022-11-14 official text · verified 2026-10-29

Right	Term	Counted from
Assess additional tax on a filed return	3 years	Day after filing
Assess non filers, collect debts, impose sanctions (direct taxes)	5 years	End of filing or payment period, or infraction
Same, indirect taxes	12 years	Same
Taxpayer refund claims	5 years	Day after the undue payment
Request amendment of a self assessment	18 months	Day after the filing deadline

Limitation periods under Código de Procedimiento Tributario art. 88 (Ley 76 de 2019, in force since 1 June 2024).

Worked example

A company filed its 2025 income tax return on 31 March 2026. The DGI can assess additional 2025 tax until 31 March 2029.
If it had never filed, the DGI could assess 2025 income tax for five years from the end of the filing period, until 31 March 2031.
If the DGI issues an assessment, the company can file reconsideration before the tax administrative judge or go straight to the Tribunal Administrativo Tributario, and then to the Third Chamber of the Supreme Court.

Step by step

Keep returns, books and supporting documents for at least the limitation period that applies to each tax.
On an audit notice, calendar the six month limit and check any extension is motivated.
Use the closing act comment periods to answer proposed adjustments with evidence.
Decide between reconsideration and direct appeal; appoint a lawyer, since recourses require one.
Pay or arrange payment of undisputed amounts to stop interest.

Common traps

Indirect taxes such as ITBMS have a twelve year limitation for non filers and collection.
Amendments are not possible during an audit.
Recourses filed without a lawyer are not admissible.

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

← Tax incentives in Panama: multinational headquarters (SEM) and EMMA at 5 percent, free zones and the Colón Free Zone, and the MSME scheduleDigital services and Panamanian tax: withholding on cross border services today and the ITBMS proposal for foreign platforms announced in August 2026 →

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