|
PERSONAL INCOME TAX
Panama's personal income tax is based on a sliding scale, ranging from a minimum of 2% after the first $3,000 to a maximum rate of 30% over $200,000.
The income tax only applies to Panamanian-sourced income. This is irregardless of whether you are a Panamanian citizen or a temporary resident.
Taxable income includes wages, salaries, business profits, pensions & bonuses, income from copyrights, trademarks, sales of stocks, bonds, and other securities.
Deductions can be made for all medical expenses incurred in Panama, charitable donations, home mortgage interest, education expenses, and loans for home improvements.
Foreigners Temporarily Working in Panama: Foreigners who remain in Panama for 180 days or more in a calendar year are considered residents for income tax purposes, irregardless of their immigration status. They must pay income taxes. If the individual remains in Panama less than 180 days in a calendar year, they are taxed at a flat 15% rate, plus pay an education tax at a 2.75% rate.
BUSINESS INCOME TAXES
Taxation in Panama is governed by the Fiscal Code which provides that only those incomes derived from business carried on in Panama itself are subject to taxation.
Capital Gains are counted as normal income after allowed deductions.
FILING DEADLINE: The tax year is the calendar year ending December 31st. Your tax return is due within 3 months (which can be extended to six months).
ESTIMATED TAXES: There are estimated tax payments made 3 times every year. Your previous year's tax return must be accompanied with a forecast of the current year's taxes. The three installments are then made after 6, 9 and 12 months. Any underpayments or over payments will be rectified when you file that year's tax return.
CORPORATE INCOME TAX
30% Flat Rate: Corporations pay a flat net income tax rate of 30%.
Dividends are taxed at a flat 10% rate.
Small Companies: The tax rate is different for corporations considered to be "small operation companies". Here the tax will be computed according to the rate for individuals up to the first net $100,000 plus 30% on the net income exceeding $100,000 up to $200,000. In addition small companies are exempt from the Complementary Tax and the Dividends Tax.
Small Companies are those that:
1. Are not the result of a sub-division of a large company;
2. Nor an affiliate, or a subsidiary controlled by another
corporation;
3. The annual gross income does not exceed $200,000;
4. The shares are nominative; and
5. The shareholders are individuals.
TOURISM ZONE EXEMPTION
Income from the operation of a tourism project, approved by the IPAT (Panamanian Institute for Tourism) and located in a "Tourism Development Zone of National Interest" are granted a 15 year exemption from income taxes.
This does not apply to housing projects. It does apply to a hotel, golf course, tennis courts, restaurants and discotheques attached to a hotel.
(From Panama Offshore Legal Services)
|
