OverviewLast reviewed - 17 January 2023
Panama, a country in Central America, is bordered by Costa Rica to the west, Colombia to the southeast, the Pacific Ocean to the south, and the Caribbean Sea to the north. Panama became independent in 1903 and is a constitutional democracy. The country is divided into ten administrative provinces, with Panama City as the capital. The official language of Panama is Spanish (although English is also widely spoken). The official currency in Panama is the balboa (PAB). Since the balboa exists in the form of coins only, Panama uses United States dollars (USD) for all its paper currency. The US dollar and the balboa have the same value in Panama and can be used interchangeably, with no exchange restrictions.
Panama's economy is mainly based on a well-developed service sector heavily weighted towards banking, commerce, tourism, trading, and private industries because of its key geographic location.
In addition, revenue from the Panama Canal tolls represents a significant portion of Panama's gross domestic product (GDP). The Canal was built by the US Army Corps of Engineers between 1904 and 1914. The entire Panama Canal, the area supporting the Canal, and remaining US military bases were transferred to Panama by the end of 1999. In October 2006, Panamanians approved a plan to expand the Canal. The expansion project, which was completed in 2016, doubles the Canal's capacity, enabling it to accommodate ships that are now too large to transverse the transoceanic crossway.
The expansion of the Panama Canal, combined with other huge infrastructure, is expected to boost and extend economic expansion in Panama for some time.
Panama's real GDP totaled B/. 40,736.4 million, during 2021, which meant an increase of B/. 5,416.6 million or 15.3%, compared to what was registered in 2020. The main contributions to GDP growth in 2021 were provided by the following activities: Mining and Quarrying with B/. 1,556.5 million (27.6% of the annual increase), Wholesale and Retail Trade with B/. 1,212.9 million (21.5% of the increase), Construction with B/. 1,067.5 million (18.9% of the increase) and Transportation, Storage and Communications with B/. 596.4 million (10.6% of the increase).
PwC InterAmericas is a regional entity comprised of seven firms: PwC Guatemala, PwC El Salvador, PwC Honduras, PwC Nicaragua, PwC Costa Rica, PwC Panama, and PwC Dominican Republic; together, we have over 1,000 professionals ready to provide our clients with audit, tax, legal, and consulting services. PwC InterAmericas firms are backed by over 40 years experience rendering a high standard of professional services to the private sector, public sector, and non-profits. PwC Panama supports clients with the local knowledge and skills of more than 200 professionals and with access to a broad range of other professionals across the PwC global network of firms.
Quick rates and dates
|Corporate income tax (CIT) rates|
|Headline CIT rate (%)||
|Corporate income tax (CIT) due dates|
|CIT return due date||
Three months after the end of the fiscal year.
|CIT final payment due date||
Tax must be paid no later than three months after closing of the corresponding accounting period.
|CIT estimated payment due dates||
Six, nine, and 12 months after the end of the taxable year.
|Personal income tax (PIT) rates|
|Headline PIT rate (%)||
|Personal income tax (PIT) due dates|
|PIT return due date||
|PIT final payment due date||
|PIT estimated payment due dates||
Three equal instalments on 30 June, 30 September, and 31 December.
|Value-added tax (VAT) rates|
|Standard VAT rate (%)||
Movable goods and services transfer tax: 7
|Withholding tax (WHT) rates|
|WHT rates (%) (Dividends/Interest/Royalties)||
Resident: 5, 10, or 20 / NA / NA;
Non-resident: 5, 10, or 20 / 12.5 / 12.5
|Capital gains tax (CGT) rates|
|Headline corporate capital gains tax rate (%)||
See Panama's corporate tax summary for capital gain rates.
|Headline individual capital gains tax rate (%)||
See Panama's individual tax summary for capital gain rates.
|Net wealth/worth tax rates|
|Headline net wealth/worth tax rate (%)||
|Inheritance and gift tax rates|
|Headline inheritance tax rate (%)||
|Headline gift tax rate (%)||