Countries › Panama › Guide › 6. Taxes › ITBMS in Panama: the 7 percent tax on goods and services, 10 and 15 percent special rates, the B/.36,000 threshold and monthly filing

ITBMS in Panama: the 7 percent tax on goods and services, 10 and 15 percent special rates, the B/.36,000 threshold and monthly filing

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

The 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 annual gross income below B/.36,000 are outside the tax; registered taxpayers file and pay monthly within 15 calendar days and credit input tax against output tax. Food, medicines, exports and many services such as health, education, long residential leases, transport, insurance and electricity are exempt.

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

ITBMS standard rate	7 %Código Fiscal art. 1057-V parágrafo 6, as of 2026-10-29 · in force
ITBMS rate on alcoholic beverages and lodging	10 %Código Fiscal art. 1057-V parágrafo 6, as of 2026-10-29 · in force
ITBMS rate on tobacco products	15 %Código Fiscal art. 1057-V parágrafo 6, as of 2026-10-29 · in force
Annual gross income below which a business is not an ITBMS taxpayer	36000 PABCódigo Fiscal art. 1057-V parágrafo 9, as of 2026-10-29 · in force
ITBMS return and payment deadline	15 calendar days after month end daysCódigo Fiscal art. 1057-V parágrafo 10, as of 2026-10-29 · in force
ITBMS base on imports	CIF value plus duties and charges textCódigo Fiscal art. 1057-V parágrafo 5, as of 2026-10-29 · in force
ITBMS collected by foreign digital service platforms	Not in force; bill 30-26 announced August 2026 textMEF press release of 19 August 2026, 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. The tax rate is 7 percent from 1 July 2010. Imports and wholesale and retail sales of alcoholic beverages bear 10 percent, tobacco products 15 percent, and lodging in all forms of public establishments 10 percent.
Example: A service invoice of B/.10,000 carries B/.700 of ITBMS. / US$10,000 of services, US$700 of ITBMS.Código Fiscal art. 1057-V parágrafo 6 as worded by Ley 8 de 2010 art. 76, art. 1057-V parágrafo 6, 2010-03-15 official text · verified 2026-10-29

2. The tax is filed and paid monthly; producers, traders and service providers with annual gross income below B/.36,000 are not taxpayers (parágrafo 9). Self employed professionals file and pay quarterly (parágrafo 9-A). The monthly return is filed within 15 calendar days after the end of the month; it may be amended once per period within 12 months, at a cost of B/.100 for individuals and B/.500 for companies if amended more than three months after the deadline (parágrafo 10).
Cost to do it: No registration fee; late amendment of a return costs B/.100 (US$100) for individuals and B/.500 (US$500) for companies.Código Fiscal art. 1057-V parágrafos 9, 9-A and 10 as worded by Ley 8 de 2010 art. 84 to 86, art. 1057-V parágrafos 9 to 10, 2010-03-15 official text · verified 2026-10-29

3. For services the tax arises on the earliest of invoicing, completion or payment; for recurring annual services such as resident agent fees it arises on payment (parágrafo 2 numeral 3). The importer pays at the customs declaration, on the CIF value plus all import duties and charges (parágrafos 2 and 5). The DGI may designate withholding agents, who become solely liable for the tax withheld (parágrafo 4).Código Fiscal art. 1057-V parágrafos 2, 4 and 5 as worded by Ley 8 de 2010 art. 74 and 75, art. 1057-V, 2010-03-15 official text · verified 2026-10-29

4. Residential leases are exempt only if the contract term exceeds six months; shorter leases are taxable, and property managers of horizontal property buildings must report leases under six months to the DGI.Código Fiscal art. 1057-V parágrafo 8 literal b numeral 2 as worded by Ley 8 de 2016 art. 65, art. 1057-V parágrafo 8, 2016-04-04 official text · verified 2026-10-29

5. The DGI lists as exempt services, among others: health services, residential leases over six months, education by persons authorized by the Ministry of Education, loans to the State and deposits and loans at financial institutions, freight and cargo transport and passenger sea and land transport, electricity generation, transmission and distribution, insurance and reinsurance, port and logistics services to cargo, residential internet access and stock exchange activities. Its ITBMS page also lists medicines, basic school supplies, uniforms, textbooks, food, agricultural products and public utilities as not bearing ITBMS.Código Fiscal art. 1057-V parágrafo 8 (DGI summary), art. 1057-V parágrafo 8, 2016-04-04 official text · verified 2026-10-29

Supply	Rate	Tax on B/.1,000
General goods and services	7 percent	B/.70
Alcoholic beverages	10 percent	B/.100
Lodging	10 percent	B/.100
Tobacco products	15 percent	B/.150
Food, medicines, exports, listed services	Exempt	Nil

ITBMS rates under Código Fiscal art. 1057-V parágrafo 6 (Ley 8 de 2010 art. 76), and their effect on a B/.1,000 (US$1,000) sale.

Worked example

A Panamanian consulting firm bills B/.50,000 (US$50,000) of services in May 2026 and buys B/.20,000 of taxable inputs.
Output tax is B/.3,500 and input tax B/.1,400; it files and pays B/.2,100 (US$2,100) by 15 June 2026.
A hotel charging B/.200 a night collects B/.20 of ITBMS at 10 percent per night.

Step by step

Track gross income; once annual income reaches B/.36,000, register for ITBMS and start charging it.
Issue electronic invoices showing the tax, and keep supplier invoices to support input credits.
File and pay the monthly return within 15 calendar days after month end (quarterly for self employed professionals).
Check whether the business is designated as an ITBMS withholding agent by the DGI.
For imports, budget ITBMS on the CIF value plus duties at clearance.

Common traps

Short term residential rentals under six months are taxable, and building managers report them.
The tax on recurring services such as resident agent fees arises on payment, not on invoice.
Late amendments carry fixed charges, and only one amendment per period is allowed within 12 months.
The proposal to make foreign digital platforms collect ITBMS is not law; see Digital services.

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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