Panama Accounting Questions Answered

How is income tax calculated for a Panamanian company?

Panamanian companies pay a flat 25% income tax (ISR) on net taxable Panama-source income. Companies with gross taxable income over US$1,500,000 also run the CAIR test and pay the higher result.

Is foreign income taxed in Panama?

No. Panama taxes only Panama-source income. Foreign-source income, meaning activities, contracts or transactions completed or having effect outside Panama, is exempt from Panamanian tax even when a Panamanian company receives it.

What dividend tax rate applies in Panama?

Dividends paid out of Panama-source income bear 10% withholding. Dividends paid out of foreign-source or export income bear 5%. The rate follows the source of the profit being distributed.

When must I register for ITBMS in Panama?

Register as an ITBMS taxpayer with the DGI once monthly turnover exceeds US$3,000 or annual turnover exceeds US$36,000. The standard rate is 7%.

When is the ITBMS return due in Panama?

ITBMS returns are monthly, filed on Formulario 430 through e-Tax 2.0 and due on the 15th of the month following the reporting period. A B/.10.00 fine applies immediately to a late return.

What is the tasa única in Panama?

The tasa única is a flat US$300 a year franchise tax owed by every Panamanian corporation and private interest foundation. It is paid to the Registro Público, not the DGI, and is not an income tax.

Do I need to file an income tax return if my company had no income in Panama?

Yes. A company with an active Aviso de Operación must still file a zero-income Declaración Jurada de Renta, by 31 March for a calendar-year company. Not filing triggers automatic fines.

What are CSS contributions for employers in Panama?

Employees contribute 9.75% of gross salary with no cap. Employers pay a CSS rate that is rising in stages under Law 462 of March 2025, plus 1.50% Educational Insurance and a Professional Risk premium of roughly 1.05% to 5.67%.

What is the décimo tercer mes in Panama?

The décimo tercer mes is a mandatory 13th-month payment equal to one month's salary, paid in three equal instalments on 15 April, 15 August and 15 December.

What is the difference between an S. de R.L. and an S.A. in Panama?

The S. de R.L. is an LLC-equivalent with no minimum capital, run by gerentes and common for SMEs. The S.A. is the classic corporation run by a board of directors. Both pay 25% ISR and the US$300 tasa única.