'%3e%3cpath%20fill='%23eee'%20d='M0%200h256l256%20256v256H256L0%20256z'/%3e%3cpath%20fill='%230052b4'%20d='M0%20256v256h256V256z'/%3e%3cpath%20fill='%23d80027'%20d='M256%200h256v256H256z'/%3e%3cpath%20fill='%230052b4'%20d='m152.4%2089%2016.6%2051h53.6l-43.4%2031.6%2016.6%2051-43.4-31.5-43.4%2031.5%2016.6-51L82.2%20140h53.6z'/%3e%3cpath%20fill='%23d80027'%20d='m359.6%20289.4%2016.6%2051h53.6L386.4%20372l16.6%2051-43.4-31.5-43.4%2031.6%2016.6-51-43.4-31.6H343z'/%3e%3c/g%3e%3c/svg%3e)
Panama tax guide 2026
Panama taxes only what is earned in Panama: foreign salaries, dividends, gains and pensions are generally outside the system, subject to the source-of-income rules. Local income runs a short 0-15-25% scale with the first PAB 11,000 free, bank interest is exempt, capital gains pay a flat 10%, and there is no inheritance, gift or wealth tax at all — the balboa's 1:1 dollar peg keeps everything in familiar numbers.
- Rate range
- 0% – 25% (Panamanian income only)
- Key allowance
- First PAB 11,000 tax-free; salary-only earners exempt up to PAB 10,400
- Tax year
- Calendar year
- Filing deadline
- 15 March of the following year (1-month extension on request)
Taxes covered
- Income tax25%
Three bands — 0%, 15% and 25% — with the top rate starting above PAB 50,000; only Panamanian-source income counts.
- Dividend tax10% / 5%
Dividends from licensed Panamanian companies carry a final withholding — 10% on Panama-earned profits, 5% on foreign-source or export profits.
- Capital gains tax10%
A flat 10% on gains from property, shares and movable assets — collected through small withholdings on the price that sellers can elect as final.
- Crypto tax0% / 10%
No crypto law exists — under territorial sourcing, genuinely foreign-source gains are untaxed — source follows the underlying activity, not the platform, while Panama-source crypto income follows the ordinary rules.
- Social security9.75% + 1.25%
Employees pay 9.75% social security plus a 1.25% educational tax — 11% in all, on full pay with no ceiling.
- Inheritance tax0%
Panama abolished inheritance tax decades ago and never taxed gifts — inheritances, legacies and gifts are expressly exempt income.
- Withholding tax10% / half-base scale
Dividends leave at 10% or 5% final; interest and royalties paid abroad are withheld at the progressive rates on just 50% of the payment.
Special regimes
- Foreign income: 0%
The territorial system never touches income earned abroad — foreign salaries, dividends, interest, gains and pensions all pass tax-free.
- Bank interest tax-free
Interest on savings and term deposits with banks established in Panama is exempt, as are government securities and their gains.
- No inheritance, gift or wealth taxes
Inheritances, legacies and gifts are exempt income, and nothing taxes what you own.
- Flat 10% capital gains
Property and share gains pay 10%, often settled by a small withholding on the price that you can simply leave as final.
- Small-business scale
Registered micro and small entrepreneurs with gross income up to PAB 500,000 use reduced rates of 7.5% to 22.5%.
Recent changes
- 2025-04The pension reform (Law 462) began phasing employer contributions from 12.25% to 15.25% by March 2029 — the employee share stays at 9.75%; self-employed contributions of 9.36% became mandatory from March 2025.
- 2022-01Employers moved to monthly withholding-information filings, and returns above PAB 11,000 of gross income now need certification by a public accountant.
- 2020-01Reduced income tax rates for registered micro, small and medium-sized enterprises took effect (7.5-22.5% by gross-income tier).