Panama

Panama enacted Law No. 526 dated 28 May 2026, which establishes a new economic substance regime applicable to certain foreign-source passive income.

This Law introduces specific economic substance requirements for entities incorporated or domiciled in the Republic of Panama that are part of multinational groups and that earn foreign-source passive income.

These entities must demonstrate, annually, substance requirements for each foreign-source passive income earned in order to maintain the 0% tax rate in accordance with the territoriality principle that governs the Panamanian tax system. If the substance requirements are not met, foreign-source passive income obtained by a non-qualified entity will be subject, exceptionally, to a single and definitive tax rate of 15% on net taxable income.

Law No. 526 will apply from fiscal year 2027 onwards.