Panama’s Tax Rates
Corporation tax is levied at 27.5%, with capital gains being taxed as profits. However, it is possible to deduct from corporation taxes operating losses, payments to foreign subsidiaries and some taxes.
Consumer tax is 7%, except for tobacco (15%) and alcohol (10%). Products exempt from VAT include medication, staple foodstuffs, exports, commercial services, petrol, books and agricultural raw materials.
Personal income tax is progressive and is levied at the following rates:
|Personal income (PAB)||Tax rate|
|0 to 9,500||0%|
|9,501 to 12,000||20,5%|
|12,001 to 15,000||21%|
|15,001 to 20,000||23%|
|20,001 to 30,000||24%|
|30,000 and above||25%|
The following are tax-deductible: medical expenses, donations to charities, interest on loans, loans for studies and loans for housing improvements. An expatriate relocating to Panama will be taxed at 17% if he resides in the country for at least 180 days every year.
Accounting Principles in Panama
The Panamanian accounting rules follow the International Financial Reporting Standards and the fiscal year runs from 1 January to 31 December. The accounts of the company must contain: a balance sheet of all assets and equipment, a profit and loss account, the management accounts and appendices.
There is no obligation to publish the accounts in Panama; however, companies generally keep a journal, a book, a statement and financial analyses.
All accounts must be audited.