Corporate taxes in Panama: comply with the DGI without overpaying
If your company pays corporate taxes in Panama, we help you comply with the tax authority (DGI) and pay what the law requires, not more. Our certified public accountants review, plan and defend your tax position.
- Since 2005
- Certified public accountants
- Member of Kudos International
Who it is for
Mid-sized company in Panama
You have an in-house accountant but want a second technical review before each close and each return.
Subsidiary of a multinational group
You deal with related parties, pay dividends abroad and answer to both headquarters and the DGI.
Foreign company with operations in Panama
You invoice, hire staff or run a branch here and need to know what you pay and when.
Problems we solve
Paying more tax than necessary
Unused deductions, misclassified foreign-source income, or a dividend policy that triggers avoidable complementary tax.
Unsure whether CAIR applies
The alternative minimum calculation can raise tax in a low-margin year or even a loss year.
A DGI request or audit has arrived
Every answer counts, and a procedural mistake can cost more than the original adjustment.
Transactions with related parties abroad
You must file the transfer pricing report and back it with a technical study.
What is included
Your company's tax work, with one team:
- Ongoing or one-off tax advisory
- Tax planning for related-party transactions
- Preparation or review of the corporate income tax return in e-Tax 2.0
- CAIR calculation and waiver request when it applies
- Estimated tax, dividend tax and complementary tax
- Responses to DGI information requests and audits
- Claims and appeals before the Administrative Tax Court
- Transfer pricing study and report (Form 930)
Corporate taxes in Panama: what this service covers
A company in Panama handles several obligations at once: income tax, dividends, ITBMS (VAT), operations notice tax, municipal tax and social security. Each has its own form, deadline and risk.
We organize tax work into four services. Hire one or all of them, depending on your company's size and structure. The Panama tax profile below summarizes the main rates.
Tax advisory: pay what is due, within the law
We review how your company is taxed to find legal savings: unused deductions, foreign-source income, special regimes and dividend policy. We also plan related-party transactions before they happen.
It can be a one-off consultation or ongoing support. Learn more about tax advisory.
Corporate income tax return, reviewed before filing
We prepare or review your corporate income tax return before it is filed in e-Tax 2.0. We reconcile books with taxable income and check CAIR, estimated tax, dividends and complementary tax.
The return is due three months after year end, with a possible one-month extension. Details in corporate income tax return and dates in our tax calendar (both in Spanish).
Tax audit support before the DGI
We stand by your company when the DGI reviews it: information requests, audits, claims and appeals before the Administrative Tax Court against assessments, fines and resolutions.
We organize the evidence, draft the filings and watch the deadlines. More in tax audit support.
Transfer pricing for related-party transactions
If your company transacts with related parties abroad, it must file the transfer pricing report (Form 930) within six months after year end. Failing to file costs 1% of the total related-party transactions, up to US$1 million.
We prepare the technical study behind it and support you if the DGI requests it. See transfer pricing.
Foreign companies with operations in Panama
We work with companies from the US, Central America, Colombia and Ecuador that invoice, hire staff or have subsidiaries in Panama. We cover DGI registration, withholding on payments abroad, dividends, payroll and annual returns.
Start with our guide to doing business in Panama, or see Panama payroll for foreign companies.
Panama tax profile for companies
Summary of the main taxes for a company operating in Panama. Reviewed in October 2026.
| Tax | How it works |
|---|---|
| Territorial system | Only Panama-source income is taxed. Income generated outside Panama is not subject to income tax. |
| Corporate income tax | 25% on net taxable income. |
| Alternative minimum tax (CAIR) | If taxable income exceeds US$1.5 million, tax is paid on the higher of net taxable income or 4.67% of gross taxable income. Companies may request not to apply it if it causes a loss or an effective rate above 25%. |
| Dividends | 10% on Panama-source dividends; 5% when paid from foreign-source, export or exempt income; 20% on bearer shares. |
| Complementary tax | Advance payment of dividend tax when a company distributes less than 40% of its net profit for the year. It is credited when the dividend is declared. |
| ITBMS (VAT) | 7% general rate; 10% on alcoholic beverages and hotel accommodation; 15% on tobacco. Exports are not taxed. |
| Operations notice tax | 2% per year on equity, with a minimum of US$100 and a maximum of US$60,000 (1% and a maximum of US$50,000 in free zones). |
| Municipal tax | Based on gross income by activity, with an annual return filed with the municipality. |
| Property tax | From 0% to 1% per year depending on the value and use of the property. Calculate it here. |
| Social security (CSS) | Social security: 13.25% employer (14.25% from March 1, 2027, Law 462 of 2025) and 9.75% employee. Education insurance: 1.50% and 1.25%. Occupational risk: 0.33% to 6.25%, paid by the employer. |
| Payments abroad | Services, royalties and interest paid to non-residents: effective 12.5% withholding, unless a double tax treaty applies. |
| Deadlines | Income tax return: three months after year end (March 31 for calendar years), with a one-month extension. Estimated tax: three payments, in June, September and December. |
General summary based on the rules in force as of October 2026. Rates change and every company has its own details: talk to us before making a decision.
How we work
-
Diagnosis
We review your latest returns, financial statements and related-party transactions.
-
Obligations map
You get which taxes you pay, on what dates, and where risk or savings lie.
-
Execution
We prepare or review returns, studies and DGI responses with your accounting team.
-
Follow-up
We alert you to deadlines and rule changes that affect your company.
Want to know if your company is paying more tax than it should?
Message us on WhatsAppFrequently asked questions
What corporate taxes does a company pay in Panama?
The main one is income tax: 25% on net taxable income. If taxable income exceeds US$1.5 million, the alternative calculation (CAIR) applies. Distributing profits triggers dividend tax, and complementary tax may apply. On top of that come ITBMS, operations notice tax, municipal tax and social security on payroll. The tax profile on this page summarizes each one.
Is income earned outside Panama taxed?
Panama follows the territorial principle: only Panama-source income is subject to income tax. Income generated abroad pays no income tax, although it may pay dividend tax at 5% when distributed. The classification has to hold up before the DGI, so we document it for each income stream.
What tax applies when paying dividends?
The general rate is 10% on dividends from Panama-source income. It drops to 5% for foreign-source, export or exempt income, and rises to 20% for bearer shares. If a company distributes less than 40% of its net profit for the year, it pays complementary tax. That is an advance credited when the dividend is declared.
What withholding applies to payments to foreign suppliers?
Payments to non-residents for services, royalties and commissions carry an effective 12.5% withholding, because the 25% rate applies to half the amount remitted. If the payer does not withhold, the expense is not deductible. A double tax treaty may change the rate, so we review each payment before it goes out.
How far back can the DGI review a company?
As a general rule, the DGI's power to assess, collect and sanction expires after five years. Additional assessments have a three-year limit. Keep support and reconciliations for at least five years, and review returns before filing, not after a request arrives.
Sources
- PwC Tax Summaries Panama: taxes on corporate income (25% CIT, CAIR, territoriality), reviewed Aug 4, 2026
- PwC Tax Summaries Panama: income determination (dividends 10/5/20%, complementary tax 40%)
- PwC Tax Summaries Panama: tax administration (return deadline, extension, estimated tax, statute of limitations)
- PwC Tax Summaries Panama: withholding taxes (effective 12.5% on payments abroad)
- PwC Tax Summaries Panama: group taxation and transfer pricing (Form 930, six months, 1% penalty up to US$1 million)
- PwC Tax Summaries Panama: other taxes (ITBMS, operations notice tax, occupational risk)
- PwC Tax Summaries Panama: individual other taxes (social security 13.25% employer from Apr 2025, 14.25% from Mar 2027)
