North & Central America
Panama: tax at a glance
Territorial hub, where foreign-source income is exempt, with a 25% top rate on income and corporate profit and a 7% ITBMS (VAT).
Ways to relocate to Panama
The residency and citizenship routes that lead here, weighed against the tax picture above.
The taxes
- Personal income (top)
- 25%Progressive 0–25% on Panama-source income only. Foreign-source income is exempt (territorial).
- Corporate income
- 25%
- Capital gains
- 10% fixed (5% withholding at source on securities sales, creditable)
- VAT / ITBMS
- 7% ITBMS
- Dividends (WHT)
- 10% (5% on foreign-source/export income; 20% on bearer shares)
- Interest (WHT)
- 12.5%
- Royalties (WHT)
- 12.5%
- Social security (employee)
- 9.75% (CSS) + 1.25% educational insurance
- Social security (employer)
- 12.25% (CSS) + 1.5% educational insurance
- Wealth tax
- None
- Inheritance / estate
- None
- Property tax
- 0–2.1% of value (primary-residence exemption up to USD 120k)
- Other
- Educational insurance 1.25% employee / 1.5% employer
How the system works
- Tax system
- Territorial
- Foreign income
- Largely outside scope (territorial)
- Taxes by citizenship
- No
- Exit tax
- No
- CFC rules
- No
- CRS
- Participating
A special regime for new arrivals
Panama runs a territorial system, so foreign-source income is not taxed. Law 526 of 28 May 2026 adds economic-substance and reporting rules for Panamanian entities in multinational groups that earn foreign passive income, effective FY2027. Miss the substance test and a 15% tax applies.
The rates below are indicative headline figures (top marginal, standard, and headline rates), reviewed 2026-07. Brackets, surcharges, and state, provincial or cantonal taxes vary. Treat this as a reference map, not advice.
Sources (2)
Secondary references