🇵🇦 Tax Overview — Panama
Corporate tax, VAT/GST, and key tax information for businesses operating in Panama.
Tax Treatment by Structure
Anonymous Society (Corporation) (SA)
Panama operates a territorial tax system — only income sourced from within Panama is subject to Panamanian income tax at 25%. Foreign-source income (income earned from activities conducted entirely outside Panama) is completely exempt, regardless of whether the funds are remitted to Panama. There is no capital gains tax on foreign-source gains. Dividends paid from foreign-source income are subject to a reduced 5% withholding tax (10% if from domestic-source income). VAT (ITBMS) applies at 7% on domestic goods and services. There is an annual franchise tax (Tasa Única) of $300 for all corporations.
International Business Company (IBC)
A Panama SA used exclusively for foreign operations pays no Panamanian income tax under the territorial system. It must still pay the annual franchise tax of $300. No tax returns are required if there is no Panama-source income, though the company should maintain records demonstrating that all income is foreign-sourced. If the company inadvertently earns Panama-source income, it becomes subject to the standard 25% corporate tax on that income.
This content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.