Corporate - Other taxes

Last reviewed - 23 January 2024

Movable goods and services transfer tax (ITBMS)

The movable goods and services transfer tax (Impuesto de Transferencia de Bienes Muebles y Prestación de Servicios or ITBMS) is the Panamanian value-added tax (VAT).

The general tax rate is currently 7%.

Alcoholic beverages and hotel accommodation are taxed at 10%, and tobacco and tobacco-derived products are taxed at 15%.

ITBMS is calculated on the value-added through a method of tax credits (i.e. ITBMS paid on transactions to produce taxable transactions) and tax debits (i.e. ITBMS collected on transactions).

Exports are not taxed, and the ITBMS paid to generate the exports may be refunded. The sale of goods such as medicines, foods, and certain products for babies are not taxed and may allow the supplier to recover the ITBMS as an exporter if certain criteria is met.

Medical services and transportation, among other services, are not taxed but do not produce ITBMS credit for the supplier.

The statute of limitations is five years.

Customs duties

All goods introduced into the Panamanian territory from another country are subject to customs duties. The duty rates are provided by the Panamanian Customs and Tariffs Office.

Customs duties may only be assessed by authorised customs brokers.

Excise tax (selective consumption tax)

The selective consumption tax is applied to foods (sugar tax), goods (e.g. jewellery, expensive automobiles, guns, tobacco, alcoholic beverages), and services (e.g. mobile, cable TV, satellite TV) that are considered as non-essential. The tax base is the cost, insurance, and freight (CIF) price plus import duties for imported items and sales price for all other activities. The tax is levied at only one stage: on the importation of the taxed products; on the sale of taxed goods produced in Panama; and, for services, when the service is invoiced, the service is completely rendered, or upon receipt of advance payments, whichever occurs first.

Different tax rates apply depending on the type of service or good, with a minimum of 5% on soft drinks and 100% on tobacco products.

Immovable Property Tax

In Panama, all owners of real estate should pay Immovable Property Tax annually at a rate between 0% and 1.0%, depending on the value and use the property.

Stamp duty

Stamp duty is charged at a rate of USD 0.10 per USD 100 (or fraction thereof) only on certain commercial contracts.

Capital gains tax

In case of transfer of real estate property, a 2% real estate transfer tax plus a 3% income tax advance payment must be remitted (calculated over the gross transaction amount or the cadastral value, whichever is greater). The 3% may be deemed definitive; contrariwise, the tax will be assessed at 10% of the gain and the 3% of the advance payment will be credited. Any amount in excess may be subject to rebate.

The rates as described in the table below will be applicable to the transfer of real estate if:

  • the transferor's core business is the sale of real estate with new constructions
  • it is the first transfer of the real estate after the new construction is built, and
  • the construction permit was issued after 1 January 2010.
New housing construction Rate (%)
Up to USD 35,000 0.5
From USD 35,000 up to USD 80,000 1.5
Greater than USD 80,000 2.5
New commercial construction 4.5

When transferring new housing real estate, the real estate transfer tax (2%) does not apply if the transfer occurs within the next two years after an Occupancy Permit is issued.

The transfer of securities is subject to a 5% WHT, and the tax rate on capital gain is 10%. The law establishes the application of a 5% WHT that will be applied by the buyer. The seller may accept the WHT as definitive or perform the calculation of the gain, apply the rate of 10%, and deduct the applied WHT. In case the WHT is superior, the taxpayer can choose to claim the return of payments made in excess. In certain cases, for transfers in which there is no capital gain, withholding at source does not take place, provided that certain conditions are met.


Sales price (a) 1,000
Cost (b) 900
Benefit (c) 100
WHT at 5% of (a) 50
Tax at 10% of (c) 10
Payment in excess 40

The sale of fixed assets is subject to 10% on the capital gain, and there is no WHT.

Franchise tax

Franchise tax must be paid by all corporations on an annual basis (USD 300 per year). The deadline for payment depends on the date of incorporation of the company. If the company was incorporated on any date during the first six months of the year, the due date for payment will be on 15 July of each year. If it was incorporated in the last six months, the due date will be 15 January of each year.

Non-profit organisations, cooperatives, and civil partnerships are not subject to franchise tax.

Operations Notice tax

The Operations Notice tax is an annual tax on equity at a rate of 2%, with a minimum tax amount of USD 100 and a maximum tax amount of USD 60,000. In case of free zones or special trade areas, the tax will be calculated at a rate of 1% with a minimum tax amount of USD 100 up to a maximum tax amount of USD 50,000.

The tax base is the outcome from total assets less total liabilities (excluding liabilities with related parties abroad). Special considerations apply under certain double tax treaties (DTTs).

Payroll taxes

In addition to social security tax (see below), the following payroll taxes are applicable.

Educational insurance tax

Educational insurance tax is assessed at the rate of 1.25% for employees and 1.50% for employers on salaries and wages paid. There is no maximum limit on the taxable amount.

Professional risk tax

Professional risk tax is an additional tax applicable to employers at 0.33% to 6.25% according to the type of industry.

Social security tax

Social security tax is assessed at a rate of 9.75% on wages and other compensation paid, including compensation in kind, for employees and 12.25% for employers. There is no maximum limit on the taxable amount.