North & Central America
Panama tax rates 2026
Territorial hub, where foreign-source income is exempt, with a 25% top rate on income and corporate profit and a 7% ITBMS (VAT).
Territorial
Last verified
The taxes
| Personal income (top) | 25%Progressive 0–25% on Panama-source income only. Foreign-source income is exempt (territorial). |
|---|---|
| Corporate income | 25% |
| Capital gains | 10% fixed (5% withholding at source on securities sales, creditable) |
| VAT / ITBMS | 7% ITBMS |
| Dividends (WHT) | 10% (5% on foreign-source/export income; 20% on bearer shares) |
| Interest (WHT) | 12.5% |
| Royalties (WHT) | 12.5% |
| Social security (employee) | 9.75% (CSS) + 1.25% educational insurance |
| Social security (employer) | 12.25% (CSS) + 1.5% educational insurance |
| Wealth tax | None |
| Inheritance / estate | None |
| Property tax | 0–2.1% of value (primary-residence exemption up to USD 120k) |
| Other | Educational insurance 1.25% employee / 1.5% employer |
How the system works
- Tax system
- Territorial
- Foreign income
- Largely outside scope (territorial)
- Taxes by citizenship
- No
- Exit tax
- No
- CFC rules
- No
- CRS
- Participating
A special regime for new arrivals
Panama runs a territorial system, so foreign-source income is not taxed. Law 526 of 28 May 2026 adds economic-substance and reporting rules for Panamanian entities in multinational groups that earn foreign passive income, effective FY2027. Miss the substance test and a 15% tax applies.
Rates checked July 2026: the top marginal income tax rate, the standard VAT rate and the main corporate rate.
Ways to relocate to Panama
The residency and citizenship routes that lead here, weighed against the tax picture above.