Panama's tax system is based on a territorial concept of income. Citizens and residents are taxed on income earned from Panamanian sources. Non-residents are taxed only on income from Panamanian sources, and the tax on any type of income paid to a non-resident must be withheld by the payer. Citizens, residents, and non-residents are not taxed on exempt income (i.e. interest on Panamanian government securities, interest on savings accounts, and time deposits maintained with banks established in Panama).
Personal income tax rates
Income tax is due on taxable income as follows:
|Taxable income (USD*)||Tax on column 1 (USD)||Tax on excess (%)|
|Over (column 1)||Not over|
* United States dollars
Local income taxes
There are no local taxes on income.