Panama

Panama enacted Law No. 526 dated May 28, 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 passive income earned in order to maintain the zero tax rate (0%), 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.