Americas · Tax guide
Panama
Panama taxes only Panama-source income, at 25% for companies, with an alternative minimum tax for larger ones. VAT (ITBMS) is 7%, and dividends carry a separate dividend tax. Taxes are administered by the General Directorate of Revenue (DGI).
At a glance
- Corporate income tax
- 25%
- Alternative minimum tax (CAIR)
- 4.67%
- ITBMS (VAT)
- 7%
- Dividend tax
- 10%
- Withholding on payments abroad
- 12.5%
Panama-source income only
Of gross income, for larger companies
Registration above B/.36,000
On Panama-source profits
Effective rate
Territorial income tax
Panama taxes only income from Panama. Companies pay 25%; larger companies pay the higher of that and the alternative minimum tax (CAIR) of 4.67% of gross income. Distributed profits carry a dividend tax of 10%.
ITBMS and e-invoicing
ITBMS is 7%, with higher rates on alcohol, hotels and tobacco. Registration is required once income exceeds B/.36,000 a year; returns are monthly. Electronic invoicing is being made mandatory in phases.
Payments abroad
Payments abroad for services, royalties and interest that benefit Panama-source income carry an effective 12.5% withholding. Substance rules apply to multinational service structures.
Key dates
- Monthly, by the 15thITBMS return
- Three months after the year-endIncome tax return
Figures and sources
6 figures- Corporate income tax rate (on Panama-source income)25%Under professional review
- ITBMS (VAT) rate7%Under professional review
- Alternative minimum tax on gross income for companies with income above B/.1.5 million (CAIR)4.67%Under professional review
- Annual income above which ITBMS registration is requiredB/.36,000Under professional review
- Dividend tax on Panama-source profits (5% on foreign-source or export profits)10%Under professional review
- Effective withholding on payments to non-residents12.5%Under professional review
Indicative only. This assessment is a high-level overview of tax obligations in Panama based on the information you provided and rules in force for 2026. It is not tax or legal advice. Consult a qualified tax adviser in Panama (a Panamanian tax adviser) before making compliance decisions.