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Panama Tax Guide
South AmericaLast verified June 2026Territorial system
- Top income tax
- 25%
- Capital gains
- 10%
- Corporate
- 25%
- VAT / GST
- 7%
- Residency test
- 183 days
Progressive 0-25% on Panama-sourced income only
In short
- Panama combines territorial taxation, a dollarised economy and some of the easiest residency routes in the Americas with a modern capital and a regional air hub.
- No newcomer tax regime: the standard rates above apply to new residents.
- Watch out: Panama City is hot, humid and congested, and petty crime plus slow bureaucracy are common complaints.
Verified June 2026 · 3 sources
Recent changes
No changes logged since the last full verification.
Full change logBest 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
Residency, rates, foreign income, capital gains, wealth and inheritance, special regimes+
Personal Income Tax
Residency, rates, foreign income, capital gains, wealth and inheritance, special regimesTax 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 rate, withholding, VAT, substance, Pillar Two and treaties+
Business & Corporate Tax
Corporate rate, withholding, VAT, substance, Pillar Two and treatiesCorporate 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 matrixBeyond tax
Living in Panama
Panama combines territorial taxation, a dollarised economy and some of the easiest residency routes in the Americas with a modern capital and a regional air hub.
- Expat hub
- Panama City
- Monthly budget
- ~$2,600
- Climate
- Tropical, 27°C
- Time zone
- UTC-5
- Tax88
- Cost of living$$$
- Safety58
- Healthcare72
- English50
- Internet200 Mbps
- Warm climate100
- Residency access80
- Scores 0-100, higher is better. Editorial composite ratings; see method.
Ways to get residency
- Pensionado visaLifetime pension of at least US$1,000/month
- Friendly Nations visaCitizens of listed countries: local employment, US$200,000 in real estate, or a US$200,000 3-year bank deposit
- Short Stay Visa for Remote WorkersUS$36,000/year foreign income, health insurance
Watch out: Panama City is hot, humid and congested, and petty crime plus slow bureaucracy are common complaints.
See how Panama ranks for remote workers, retirees and familiesData 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?
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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?
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No, Panama does not have a wealth tax. No wealth tax
What is the corporate tax rate in Panama?
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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.
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