Taxes in Panama
One of the reasons why Panama is a great choice for business formation is a low tax rate which is one of the lowest in all of the world. Panama does not belong to the classic “offshore” jurisdictions, since taxes are levied on a territorial basis, that is, only income received from a source in Panama is taxed. Consequently, companies operating and receiving income outside Panama are exempt from taxation.
What are the taxes
The only tax such companies pay is the Annual Corporate Franchise Tax (or “tasa unica”), which is levied in a fixed amount:
- in the first year when the company is registered in the Public Register, it is 250 USD;
- in subsequent years - 300 USD.
The only tax such companies pay is the Annual Corporate Franchise Tax (or “tasa unica”), which is levied in a fixed amount:
- for companies registered in the period from January to June, the tax must be paid by June 30 (by June 15 - for private funds);
- companies registered from July to December pay tax until December 31st.
Tax rates
The table below provides a list of some of the most prevalent tax types along with their corresponding rates.
| Tax | Tax Rate |
|---|---|
| VAT | 7% – 15% |
| Corporate income tax | 25% |
| Personal income tax | 0% – 25% |
| Dividend tax | 5% – 10% |
| Capital Gains tax | 10% |
| Property tax | 0% – 1.0% |
| Inheritance tax | 0% |
| International tax | 0% |
| Cryptocurrency tax | 0% – 25% |
Request bookkeeping solution
If you have a company in Panamanian jurisdiction, it is mandatory to do accounting and complete all taxation rules according to Panama laws. Our experts also offer bookkeeping solutions, please read more information about accountancy below.
Accountancy
Tax system
The territorial division of taxation applies not only to personal income but also to company income. Therefore, income tax in Panama is paid only by local companies and employees who are employed by Panamanian resident companies making a profit in Panama.
The tax year in Panama is the same as the calendar year and ends on December 31st.
You will be considered a resident of Panama if you spend more than 183 days in the country in a calendar year.
Individuals also receive a basic tax deduction of $ 800. Interest paid on mortgages in Panama is also tax-deductible up to $ 15,000 per year. All medical expenses in Panama that were not covered by insurance are also deducted from taxes.
Direct tax
Direct tax is one that is assessed on an individual (legal or natural) or property (i.e. real and personal property, livestock, crops, salaries, etc.) as distinct from the transaction tax.
Indirect tax
An indirect tax is a tax imposed by an agent (such as a retail store) on a person who carries the ultimate economic tax burden (such as the consumer). Subsequently, the intermediary issues a tax return and returns the tax proceeds to the nation.
Net income
In any of the aforementioned groups, net income is calculated on all total earnings earned over the fiscal year and decreased by revenue-related expenditures for the same time. Losses from one of the seven types of basic income (except capital investment) should be entirely compensated against positive income from another category of income (exceptions which apply to other income').
Business in Panama
Our company provides services for setting up a company in Panama. The specialists of our company have the necessary knowledge, experience and qualifications. We can offer a consultation with taxes in Panama. In addition, we also provide business support, accounting and other services necessary for your business. Our specialists have vast experience in this field of activity. We will be happy to help you successfully open a business in Panama.
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Disclaimer
Tax laws and regulations are continually evolving and can differ depending on individual situations. The information presented here serves as general guidance and may not represent the latest updates. It is strongly advised to seek the expertise of a qualified tax professional for specific and current advice tailored to your circumstances.