Corporate Tax

Companies in Panama pay a flat 25% tax rate on taxable corporate profits.

Value Added Tax

Generally, there is a 7% VAT applicable in Panama. However, other VAT tax rates shall be applicable for other goods and services such as alcoholic drinks (10%), tobacco (15%), and Hotel Accommodation (10%).

Dividends

Depending on the income source, a 5% or 10% dividend tax operates in Panama.

Expats l Individuals

No income tax applies if you earn between $0 to $11,000 annually.

If you earn between $11,001 and $50,000, you’re taxed at 15% on all income above $11,000.

If you earn over $50,000, you’ll be subject to USD 5,850 for income tax, plus 25% on all income over $50,000. 

Social Security

Employees contribute 9.75% of their wages to Social Security in Panama. Employers contribute 12.25% to this fund.

Tax Residency

Non-resident individuals who spend 183 days in Panamanian territory would be considered residents for tax purposes. Of course, other components such as family, economics, and other interests must also be associated with the Republic of Panama to opt for tax residency.