Panama Tax Guide
Figures on this page were last verified against the cited sources in June 2026. Always check official sources before making a relocation or incorporation decision.
Best for
- Foreign income exempt
Territorial system — overseas income generally outside the local tax net.
- Special regime available
Pensionado Visa — Retiree program with tax breaks and discounts
- Digital-nomad-friendly
Combination of foreign-income treatment and residency rules works for nomads.
Personal Income Tax
Tax Residency
Income Tax Rates
Foreign Income Treatment
Investment Income
Generally 10% on Panama real estate; foreign capital gains exempt
Wealth & Inheritance
Special Regimes
Practical Notes
Territorial system means foreign pensions, investment income, and remote work income generally not taxed. Dollarized economy (USD).
Business & Corporate Tax
Corporate Income Tax
Withholding Taxes
VAT / GST
Compliance & Substance
Notable Regimes
- Free Trade Zone incentives
- Colón Free Zone
- Pacifico Special Economic Zone
OECD Pillar Two (15% global minimum tax)
No Pillar Two legislation enacted. Panama is part of OECD/G20 Inclusive Framework but has not committed to a domestic top-up tax.
See full implementation trackerTax Treaty Network
No US tax treaty. UK treaty in force. Limited treaty network reflects Panama's historic territorial-tax position.
See full treaty matrixData Sources
Last verified: June 2026. Always check official sources before making a decision.
FAQ
What is the personal income tax rate in Panama?
Panama has a top personal income tax rate of 25%. The tax structure is: Progressive 0-25% on Panama-sourced income only. See the detailed breakdown above and verify with official sources.
Do I need to pay tax on foreign income in Panama?
Panama uses a territorial system for foreign income. Foreign-source income exempt from Panamanian tax; proposed changes under discussion for passive income
What are the residency requirements for Panama?
Tax residency in Panama generally requires 183 days of physical presence. 183 days or center of vital interests; $200k residency by investment available. Always verify current rules with official sources.
Is there a wealth tax in Panama?
No, Panama does not have a wealth tax. No wealth tax
What is the corporate tax rate in Panama?
The corporate tax rate in Panama is 25%. 25% on Panama-sourced income; foreign income exempt
US citizen moving to Panama? Read this first.
Panama uses a territorial system for foreign income. For US citizens this often combines well with FEIE.
- •Foreign-source income may be exempt or only taxed on remittance in Panama, but the US still taxes US citizens worldwide. FEIE (~$130k earned income) plus FTC on any Panama tax paid is the standard combination.
- •Self-employment tax (15.3%) is owed in full — Panama has no totalization agreement with the US.
- •Carefully document whether income is "Panama-source" or foreign-source. The classification drives both Panama and US tax outcomes; getting it wrong is the #1 audit risk in this category.
- •Residency requires 183 days. Special regimes may further reduce Panama tax — check the country page for current options.
Need someone to actually plan Panama for you?
TaxAtlas covers the rates and rules. For the personal side — exit planning, residency strategy, business structure, or filings — request a response and we'll point you to relevant research or a specialist who handles Panama cases.
Want Panama rate alerts?
Get the 2026 cheat sheet (all jurisdictions, one page) plus an email when Panama changes its tax rates or residency rules.
No spam. One email when rates materially change. Unsubscribe in one click.
Related on TaxAtlas
- Is this the right country for you?4-question quiz scores 46 countries against your situation
- 2026 Global Tax Cheat SheetSide-by-side comparison of all 46 jurisdictions
- 2026 international tax changesRecent updates affecting jurisdictions like this one
- Get help with a Panama moveRequest a response within 1–2 business days