Panama’s tax system is simple, territorial, and designed to focus on local income. With corporate and personal income tax rates capped at 25% and no taxes on inheritance, gifts, or wealth, it appeals to both businesses and individuals. Income earned outside Panama is exempt, making it a strategic choice for international investors. Supported by numerous Double Tax Treaties (DTTs) and robust agreements for information exchange, Panama also complies with global transparency standards, ensuring trust and clarity in financial dealings.
Panama’s Tax System overview
| Corporate Income Tax: | 25% |
| Personal Income Tax: | 25%, progr. |
| Inheritance Tax: | None |
| Gift Tax: | None |
| Wealth Tax: | None |
Territorial Tax Regime
Corporate Income Tax
Corporations are subject to tax on Panama source income at a rate of 25%. Capital gains on securities are taxed at 10%.
Personal Income Taxation
Residents of Panama are subject to income tax on local source income at progressive rates, up to 25%. Panama does not impose gift tax, inheritance tax, or wealth tax. Capital gains on securities are taxed at 10%.
Anti-Avoidance Rules
Panama has no General Anti-Avoidance Rules (GAARs). Panama has Transfer Pricing rules, which follow OECD guidelines. Panama has no Thin Capitalization rules, or Controlled Foreign Corporation (CFC) rules.
Double Tax Treaties (DTTs)
Foreign Investment Protection
Tax Info. Exchange Agreements (TIEAs)
OECD Multilateral Convention
Common Reporting Standard (CRS)
FATCA
Panama’s territorial tax system offers a competitive environment with low rates and exemptions on foreign income, making it attractive for local and global stakeholders. While the country embraces international standards like CRS and FATCA, its simplicity and focus on local taxation provide significant benefits for businesses and residents alike. Overall, it’s a tax-friendly destination with the infrastructure to support international investment.
