Taxes - Accounting

Panama

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Tax Rates | Accounting Rules

Tax Rates

Consumption taxes

Nature of the tax: IVA: Value Added Tax
Tax rate: The VAT standard rate is 7% except on alcoholic drinks (10%) and tobacco products (15%).
Reduced tax rate: Certain goods and services are exempt from VAT: foodstuffs, medical and commercial services, fuel, books and basic agricultural products.
Other consumption taxes: Excise Duties are chargeable on several products such as all products derived from tobacco and alcoholic drinks, and services such as cable television and mobile service.

Corporate taxes

Tax rate

Corporate income tax

25%

Capital gains taxation: Capital Gains are generally taxed as income.
Main allowable deductions and tax credit: Expenses are deductible for depreciation and depletion, net operating losses, payments to foreign affiliates, certain taxes.
Other corporate taxes: Real property tax, stamp duty, social security contributions, payroll tax, transfer tax

Individual taxes

Tax rate

Individual income tax	Progressive rate from 0% up to 25%
PAB 0 - 9,500	0%
PAB 9,501 - 12,000	20.5%
PAB 12,001 - 15,000	21.5%
PAB 15,001 - 20,000	23%
PAB 20,001 - 30,000	24%
Over PAB 30,001	25%

Allowable deductions and tax credit: All medical expenses incurred in Panama, donations, interest on residential mortgage loans, student loans and home improvement loans can be deducted.
Special expatriate tax regime: If someone has been in Panama for less than 180 days within a calender year, he is subject to a tax of 15% plus and education tax of 2.75%.

Double taxation treaties

Countries with whom a double taxation treaty have been signed: Panama has recently signed double tax agreements with several countries.
Withholding taxes: Dividends:10%; Interest: 15%; Royalties: 15%.
Bilateral agreement: Panama and Tunisia are bound by a double taxation treaty: no

Signed	Ratified	Enforced

Pour aller plus loin dans vos recherches nous vous proposons de connaître les taxes locales connaître les taxes locales qui s'appliquent à votre produit.

Sources of fiscal information

Tax Authorities: Tax Collection Directorate; Customs
Other domestic resources: Taxation in Panama

Accounting Rules

Tax year: The fiscal year begins on January 1st and ends December 31st of the same year.
Accounting standards: Panama converted to IFRS as from 2009 and has historically utilised accounting principles that complied with the IAS Committee. The National Accounting Management created an integrated system of financial administration (in Spanish only).
Accounting regulation bodies: National Accounting Management
Accounting reports: The accounting structure should include:
- The balance sheet: Assets (current assets, liquid assets, bad debt allowance, salaries, other, income tax, inventories, expenses incurred, Total current assets), equipment (machinery property, Depreciation), and other assets ;
- The income statement: Revenues, Gross profit, Operating costs, Operating earnings, Total operating costs, Earnings before income taxes, Net income ;
- The management balance; and
- The appendices.
Publication requirements: The Panamanian commercial law does not itemize the contents that have to be included in the accounting or the certification of the accounts. It is generally established practise that companies maintain a journal, a big ledger, the inventory and also annually prepare the necessary documents for financial analysis.
Professional accountancy bodies: Panama College of Public Certified Accountants
Certification and auditing: In Panama, all companies as well as subsidiaries of foreign companies are required to seek the services of an external auditor to carry out an annual financial audit of their organization. The auditors have to be certified public accountants and have to satisfy the government of the accuracy of the published accounting information.
You can contact an external auditor: Deloitte, KPMG, Ernst & Young, PricewaterhouseCoopers.
Accounting news: Panama Association of Certified Public Accountants