TAX LAWYER
Tax Lawyers and Double Tax Treaty Services in Panama
Expert legal support for tax planning, compliance, and cross-border agreements.
Legal Guidance for Tax Treaties and Compliance
At Paralelaw, we help individuals and businesses navigate Panama’s double tax treaties and optimize their tax obligations with strategic planning and legal compliance.
Our Tax Legal Services
We provide comprehensive legal assistance in:
- Advisory on Panama’s double tax treaties and their applications
- Tax planning for multinational businesses and expats
- Representation in tax disputes and audits
- Compliance with Panama tax laws and international standards
- Structuring cross-border transactions for tax efficiency
Serving Individuals and International Businesses
We support both local residents and foreign companies operating in Panama with tailored tax strategies that align with their unique financial goals.
Your Legal Partner for Tax Matters in Panama
Comprehensive solutions for local and international tax planning.
Double Tax Treaty Advisory
Our attorneys help clients take full advantage of Panama’s network of double tax treaties, reducing tax burdens and avoiding double taxation on global income.
Tax Disputes and Resolution
We represent clients in disputes with tax authorities, ensuring fair treatment and defending against excessive tax assessments or penalties.
International Tax Planning and Structuring
Our team designs efficient tax structures for cross-border operations, ensuring compliance while minimizing liabilities.
FAQ
How does Panama's territorial tax system work?
Panama operates under a strictly territorial tax system, meaning only income generated within Panamanian territory is subject to income tax. Foreign-sourced income — including services rendered outside Panama, international investments, foreign dividends, and capital gains on assets located abroad — is completely exempt from Panamanian income tax. This principle applies to both individuals and legal entities, regardless of their nationality or residency status. The territorial system is one of the key pillars that make Panama a premier international business and financial center, attracting investors, entrepreneurs, and multinational companies from around the world.
What is the corporate income tax rate in Panama?
The corporate income tax rate in Panama is 25% on net taxable income from Panamanian sources. This rate applies to all commercial activities generating revenue within Panama. Small businesses with gross income under $1.5 million may benefit from reduced effective rates under the alternative calculation method (CAIR). It’s important to note that this 25% rate only applies to income from Panamanian sources — foreign-sourced income is completely exempt under the territorial tax system. Additional taxes include: dividend withholding (10% for local-source income, 5% for foreign-source income), and the complementary tax (branch profits tax) for foreign company branches operating in Panama.
How many double tax treaties does Panama have?
Panama has signed double tax treaties (DTTs) with over 17 countries, including Spain, Mexico, United Kingdom, France, Netherlands, Italy, South Korea, Singapore, Ireland, Israel, Portugal, United Arab Emirates, Vietnam, Czech Republic, Luxembourg, Barbados, and Qatar, among others. These treaties reduce or eliminate double taxation on dividends, interest, royalties, and capital gains between Panama and the treaty partner countries. Importantly, Panama does NOT have a double tax treaty with the United States. For US investors, this means there is no treaty-based tax relief for cross-border transactions between the US and Panama, making proper tax planning essential.
What is ITBMS and what is the rate?
ITBMS (Impuesto de Transferencia de Bienes Muebles y Servicios) is Panama’s equivalent of VAT or sales tax. The standard rate is 7%, applicable to the sale of movable goods, taxable services, and imports. Special rates apply: 10% for alcoholic beverages and hotel accommodations, and 15% for tobacco products. Exempt from ITBMS are: basic food items, medicines, healthcare and education services, and exports of goods and services. Companies with gross annual revenue exceeding $36,000 are required to collect and report ITBMS. The tax is filed monthly via the DGI’s online platform. Understanding ITBMS obligations is essential for any business operating commercially within Panama.
Do digital nomads working remotely from Panama pay local taxes?
Under Panama’s territorial tax system, the key question is the source of the income, not where the work is physically performed. If you are a digital nomad working remotely from Panama for foreign clients and your income is generated from sources outside of Panama, that income is generally not subject to Panamanian income tax. The territorial system looks at where the economic activity that generates the income occurs and where the client is located. However, if you become a tax resident of Panama and generate income from Panamanian sources, that income would be taxable. Digital nomads should also consider their tax obligations in their country of citizenship or tax residency. Consult with a tax advisor for your specific situation.
Get a Quote
We have a committed team, always ready to provide a quick and effective response to any problem.