Panama and Taxes     

Panama commercial tax for business,  Aviso de Operación It is mandatory for a Panama Commercial Operation Permit to be secured by persons or enterprises involved in commercial activities within the Republic of Panama. This permit is issued only by the Ministry of Commerce and Industry. This permit attracts an annual tax calculated as 2% of the company’s value.The highest tax falls at $60,000 USD.

Sales Tax, ITBMS is the tax levied to importers of goods and services to be sold and consumed within Panama. The average ITBMS is pegged at 7%. Special imports like alcohol and tobacco are taxed at a higher rate of 10% and 15% respectively. Real estate businesses are taxed at 10%. These taxes are paid on a monthly basis.

An exception is made if the business is conducted in the free trade zones, or if they are related to the energy sector (generation and distribution of power) and air, land or sea transportation services.

There are special considerations for companies located within reserved areas especially for economic and developmental purposes. This also includes trade free zones, the annual tax is charged at 1% and the highest tax is $50,000 USD.

0% Taxes on Offshore Income

The Tax System (For Corporations and Individuals) In The Republic of Panama, the tax system is structured to apply only on earned revenue within the country.

This means that only businesses licensed and operating within Panama will be taxed annually.

Business activities operated outside the Borders of Panama will not be taxed. Panama plays host to a large number of foreign operated corporations which operate their businesses outside the countries, and this unique taxation system is favorable to these businesses.

The importation of goods into Panama is regulated by the authorities who levy import tariffs and the ITBMS tax with the exception of goods exempted by the existing international trade laws and agreements. A special tariff line system is used to determine the import tariff for the specific goods.

The following tax rates apply for the Panama Income Tax- People earning below $11,000 annually are exempted from paying tax.
Income earners above $50,000 are required to pay a tax of 25%

Income earners between $11,000 and $50,000 are required to pay a tax of 15% at the Panama official tax rate. Married couples benefit from tax deductions that sum up to $800 with respect to their joint tax returns.

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