In WILLIAMS & ASSOCIATES we understand our clients’ needs regarding the taxation law and their obligations before the General Direction of Revenues. In this sense we offer a wide scope of services to help our clientele in any manners related to taxation, such as:
- Business Tax Accounting
- Business Tax Compliance
- Reporting and Tax compliance
- Personal Tax and Accounting Services
All persons and entities engaging in business activities within the Republic of Panama must obtain a Panama Commercial Operation Permit (“Aviso de Operacion”) which is issued by the Ministry of Commerce and Industry. The
annual tax for the permit equals 2% of the company’s net worth with a maximum
payment of $60,000 USD. Companies located in special economic or development zones or within free trade zones pay a rate of 1% with a maximum payment of $50,000 USD.
The Panama Sales Tax is known as the “ITBMS”. This tax applies to imported goods, products sold or services rendered in Panama. The importer, seller, or service provider pays this tax whereby most simply add this tax to be paid by the consumer. Since July 1, 2010 the ITBMS increased from 5% to 7%. Higher rates exist for the sale of alcoholic drinks (10%), tobacco products (15%), and specific services such as housing services (10%). Exceptions to paying this tax include free trade zone transactions, power generation & distribution services, cargo and passenger transportation by sea, air, or land. Most businesses pay the tax monthly.
Products imported into Panama which are not exempt by law or by international trade agreements are subject to import tariffs and the ITBMS tax. The import tariffs differ by products and are set forth in a tariff line system.
Here are the Panama Income Tax Rates:
• Individuals who earn less than $11,000 per year pay no income tax.
• Those earning between $11,000 and $50,000 pay a 15% Panama tax rate and
• Those earning $50,000 or more pay a 25% rate.
• Married couples are $800 with their joint tax return.
• Mortgage interest paid on the primary home can be deducted up to
• Student loans interest payments for the taxpayer’s or dependents’ education
in Panama is fully deductible.
• Health insurance premiums are deductible.
• Contributions to private pension plans not exceeding 10% of the
individual’s gross yearly income to a maximum of $15,000 yearly are deductible.
Foreign Residents: Foreigners who reside in Panama for more than 183 days per year and earn income in Panama will be taxed at the same rate as nationals.
Annual Returns: Individuals must file their annual income tax return before March 15th. Individuals whose sole source of income is a single salary are exempt for having to file an income tax return as the employer withholds part of each payment for taxes.