Panama · Tax regime
Panamanian Territorial Tax System
Reformed
Last verified July 2026
Still territorial as a general rule, but Law 526 of 28 May 2026 introduces economic-substance and reporting requirements for entities in multinational groups earning foreign passive income, effective from fiscal year 2027.
Panama does not tax foreign-source income at all — there is no remittance trap, no non-dom clock, and no headline flat rate to negotiate. That makes it structurally simpler than the Uruguayan, Italian or Greek regimes. The exposure is reputational and banking, not fiscal.
Qualifying routes
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Tax residency by presence
generally 183 days in a calendar year, or establishing a permanent home and centre of economic interest in Panama
The facts
- Total landed cost
- no cost beyond obtaining residency and a tax residency certificate
- Timeline
- 1–6 months — a tax residency certificate from the DGI typically takes a few months and requires evidence of real presence and ties
- Physical presence
- 183 days for a tax residency certificate, notwithstanding that immigration status requires far less
- Family
- applies to the individual; each family member establishes residency separately
- Permanent residency
- not applicable — this is a tax regime, not an immigration status
- Citizenship
- not applicable
- Language test
- not applicable
- Dual citizenship
- Permitted
- Requirements
- 183 days of presence in a calendar year, or a permanent home plus centre of economic interesta DGI tax residency certificate if you need to prove it to a treaty partnerforeign-source income must be genuinely foreign-source — income from managing assets while physically in Panama can be recharacterised
What can go wrong
- Immigration residency and tax residency are different things. Panama's residency programmes require almost no presence; a Panamanian tax residency certificate requires 183 days and real ties. Holding the card while living in a high-tax country buys you nothing and may create an aggravating factor.
- Panama remained on the EU's Annex I list of non-cooperative tax jurisdictions at the February 2026 review. Expect enhanced due diligence, refusal by some EU banks and counterparties, and possible withholding surcharges from EU payers.
- Law 526 of 2026 is the first real crack in the territorial system. It bites entities in multinational groups from FY2027 — 15% on foreign passive income where substance is not met. Individuals' foreign income appears unaffected, but the direction of travel is one-way and further narrowing should be assumed.
- Panama is a CRS participant and exchanges information. Territorial taxation is not opacity.
- The Panama Papers reputational overhang is still priced into banking relationships a decade on. Opening accounts elsewhere as a Panamanian tax resident is measurably harder than as, say, a Uruguayan one.