Ciudad de Panamá

Edificio Sucre Arias & Reyes Avenida Ricardo Arango y Calle 61, Obarrio Panamá, República de Panamá
Teléfono: +507 204 7900
Correo: sucre@sucre.net

Panama City

Edificio Sucre Arias & Reyes Avenida Ricardo Arango y Calle 61, Obarrio Panamá, República de Panamá
Phone: +507 204 7900
Email: sucre@sucre.net

Contáctenos +507 204 7900 / Correo sucre@sucre.net

Contact us +507 204 7900 / Email sucre@sucre.net

Territorial tax system

Panama’s income tax system is based on the “principle of territoriality”, according to which only income generated or produced within the territory of the Republic of Panama is subject to taxes. Article 694 of the Fiscal Code of Panama establishes the following:

“(…) The taxable income that it produces, from any source, within the territory of the Republic of Panama, whatever the place where it is received, is subject to this tax.”

It is not considered as an income generated within the Republic of Panama:

a. Income from invoicing sales of merchandise or products for amounts greater than billed costs from an office in Panama that for which those merchandise or products have been billed at the office in Panama, provided that those merchandise or products does not enter Panamá.

b. Those direct from an office established in Panama transactions that are perfected, consumed or have their effects abroad.

C. Distribute dividends or participation fees of legal persons that do not require Operation Notice or do not generate taxable income in Panama, when such dividends come from income from abroad, including income from activities mentioned in the literals a and b.

In addition, in accordance with Article 9 of Executive Decree No. 170 of 1993, any income generated within Panama would be subject to the payment of income tax regardless of the nationality, domicile or residence of the beneficiary. The income is considered from a Panamanian source when it is generated within the country by civil, commercial, industrial, professional and similar activities, and any type of services performed, performed or exercised within the Panamanian territory.

In SUCRE | ARIAS | REYES we provide an analysis for foreign companies that are considering doing business in Panama, to guide them in tax planning.

Our tax advisory services in Panama begin with the understanding of the company’s activities and the type of structure and legal entities involved in the sale, distribution and delivery of products and services. If a company will only sell its products and services to customers residing outside of Panama or to citizens, residents and Panamanian tourists, it will make a difference with respect to Panama’s tax obligations of the company.

Knowing these facts will make it easier for us to recommend the right types of resources to minimize your tax obligations.

 

Tax Law in Panama

Panamá Tax Types

• Commercial taxes of Panama
– Panama operation notice
– Sales tax in Panamá (Itbms)
– Product import tax
• Income tax on natural persons
• Panama corporate taxes

• Panama capital gains tax
• Panama selective consumption tax
• Property taxes in Panama

• Panama dividend tax
• Municipal taxes
•Social Security Fees

Tax planning and advice

Panama is internationally recognized for its territorial tax system and its low tax rates. Corporate income tax is levied on taxable net income at a fixed rate of 25%. The tax on the transfer of movable property and the provision of services (Itbms) is applied to the supply of goods and services provided within the country and their importation.

The following rates apply for the purposes of Itbms:

• The standard rate of 7%, which applies to all supplies of goods and services in general.
• The 10% rate, which applies to importation, wholesale and retail sale of alcoholic beverages.
• The 15% rate, which applies to the importation, wholesale and retail sale of tobacco products, such as cigarettes, cigars, cigars.
• The service of lodging or lodging in all the modalities of public establishments that causes a rate of 10%.

Panama also allows significant deductions to reduce the amount of taxes owed.  .

Our taxation law lawyers in Panama

The experience of our tax law attorneys that offer advice to a wide variety of individual and commercial clients maximizes benefits according to the law. We are always  updated on changes and keep track on every updates in tax legislation to provide customized solutions and relevant information.

Keeping our clients informed up to date with taxes is easier with the advice of our tax and tax law attorneys in Panama.