Understanding corporate income tax and other business taxes in Panama is crucial for companies operating within the country. Alongside corporate income tax, businesses should be aware of other taxes, such as withholding tax, social security contributions, customs duties, property tax, and potential municipal taxes. It is advisable to consult with a tax professional or refer to the official website of the Panama Tax Authority for the most accurate and up-to-date information. By fulfilling their tax obligations, businesses can operate in compliance with Panamanian tax laws and contribute to the growth and development of the country's economy while benefiting from its business-friendly environment and strategic location.
Corporate Income Tax:
Panama imposes corporate income tax on the profits earned by companies operating within its jurisdiction. The corporate income tax rate in Panama is a flat rate of 25%. This rate applies to both resident and non-resident companies engaging in commercial, industrial, or professional activities in the country.
Types of Business Taxes in Panama:
- Value Added Tax (VAT): As of the knowledge cutoff date in September 2021, Panama has not implemented a Value Added Tax (VAT) system. However, discussions and plans for the introduction of VAT have been underway, and businesses should stay updated on any future developments regarding this tax.
- Withholding Tax: Panama imposes withholding tax on certain types of payments made to non-residents, such as dividends, interest, royalties, and fees for technical services. The withholding tax rates vary depending on the nature of the payment and may be subject to tax treaties.
- Social Security Contributions: Employers and employees in Panama are required to make social security contributions. These contributions fund various social security benefits, including healthcare, pensions, and other social programs. The rates for social security contributions vary based on the employee's salary and specific circumstances.
- Customs Duties: Customs duties are levied on imported goods into Panama. The rates vary depending on the type of goods and their classification under the Harmonized System (HS) code. Panama is a member of several free trade agreements, which may offer reduced or zero-duty rates for certain goods.
- Property Tax: Property owners in Panama are subject to an annual property tax, known as "Impuesto de Inmuebles." The tax rate varies based on the location, size, and value of the property.
- Municipal Taxes: Municipalities in Panama have the authority to levy additional taxes on businesses operating within their jurisdiction. These taxes may include local business taxes, advertising taxes, or other fees and charges determined by the respective municipality.
Panama Tax Authority Website:
For comprehensive and up-to-date information on business taxes in Panama, it is recommended to visit the official website of the Panama Tax Authority, the Dirección General de Ingresos (DGI).
Panama Tax Authority Website: Official Panama Tax Authority Website