Panama's core rules are stable. The one scheduled change in Finn's rules is the phased rise in employer CSS contributions under Law 462 of March 2025, with the other entries recording structural rules that remain in force. Figures are taken from the DGI, the Registro Público and the CSS.
Confirmed — upcoming1 March 2027
payroll
CSS employer contributions rise in stages under Law 462
Law 462 of March 2025 raises the employer CSS rate in stages, with further steps from March 2027 and March 2029.
What changed and what to do
What changed
Law 462 of March 2025 legislates a phased increase in the employer CSS contribution rate. The employer rate rose from 12.25% to 13.25% from the April 2025 contribution month. Finn's Panama rules record further steps from March 2027 and March 2029, reaching 15.25% from March 2029 onward. The employee rate of 9.75% is not part of the step-ups. The rate in force depends on the payroll period.
Who it affects
Employers with staff on the payroll
Businesses planning hires in the next few years
Companies modelling employer cost
What to do
Check the current employer rate with the CSS before running each payroll, and update cost forecasts when a new step starts.
Territorial system: foreign-source income is exempt
Panama taxes only Panama-source income. Foreign-source income is exempt, even when it passes through a Panamanian company.
What changed and what to do
What changed
This is a long-standing structural feature and not a recent change. The date shown is when Finn's Panama rules were last reviewed. Income from activities, contracts or transactions completed or having effect outside Panama is exempt from Panamanian tax. The principle also sets the dividend rate, at 5% for foreign-source and export income and 10% for Panama-source income.
Who it affects
Companies that invoice clients abroad
Consultancies and online businesses
Shareholders receiving dividends
What to do
Record the source of each income stream from the start, and confirm borderline contracts with a Panamanian contador público autorizado.
Every Panamanian corporation and private interest foundation owes US$300 a year to the Registro Público.
What changed and what to do
What changed
This is an existing obligation and the date shown is when Finn's Panama rules were last reviewed. The tax is due 15 July for entities incorporated January to June and 15 January for those incorporated July to December. Late payment carries a US$50 a year penalty, rising to US$300 a year after a second missed deadline period.
Who it affects
All S. de R.L. and S.A. companies
Private interest foundations
Dormant companies that stay registered
What to do
Confirm the incorporation month, correct the seeded deadline date and pay the Registro Público, not the DGI.
A business must register for ITBMS once monthly turnover exceeds US$3,000 or annual turnover exceeds US$36,000.
What changed and what to do
What changed
This is an existing rule and the date shown is when Finn's Panama rules were last reviewed. The standard ITBMS rate is 7%, returns are monthly on Formulario 430 and there is no grace period for late filing.
Who it affects
Small businesses approaching the threshold
Founders starting to sell in Panama
Freelancers and consultancies with Panama customers
What to do
Track turnover monthly against both tests and register with the DGI as soon as either is passed.
Companies with gross taxable income over US$1,500,000 pay the higher of 25% of net income or 4.67% of gross income.
What changed and what to do
What changed
This is an existing rule and the date shown is when Finn's Panama rules were last reviewed. If the CAIR calculation gives an unreasonable result, such as in a loss year, the taxpayer can ask the DGI for authorisation to be excluded for that year.
Who it affects
High-turnover, low-margin companies
Growing businesses approaching US$1,500,000 of gross income
Groups with thin profit margins
What to do
Run both calculations before filing and apply to the DGI for exclusion where the CAIR result would be unreasonable.
Dividends from Panama-source income bear 10% withholding. Dividends from foreign-source and export income bear 5%.
What changed and what to do
What changed
This is an existing rule and the date shown is when Finn's Panama rules were last reviewed. The rate depends on the source of the profit being distributed, which follows from the territorial system.
Who it affects
Shareholders of Panamanian companies
Companies planning distributions
Founders paying themselves by dividend
What to do
Establish the source of the profit before declaring a dividend, and keep the split by source in the books.