Panama tax
Special regime for new residents: Panama territorial income tax.
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Special regimes for new residents
Special regime
Panama territorial income tax (foreign-source income outside the tax base)
Tax relief
Details
- Who: Applies to every taxpayer, natural or legal, national or foreign
Panama taxes income produced inside Panama only; the taxable base of a taxpayer is gross income less foreign-source income, exempt income and deductible costs, and the DGI personal return has a separate line for foreign-source income. 1 2
Taxed on
Taxable income = gross income minus foreign-source income, exempt/non-taxable income and deductible costs and expenses (Código Fiscal art. 695 as amended by Ley 8 of 2010); art. 694 par. 2 lists activities whose income is not treated as produced in Panama (invoicing from a Panama office for goods moving only abroad, directing from Panama transactions that are completed abroad, distributing dividends out of income not produced in Panama).
Who it applies to
- Applies to every taxpayer, natural or legal, national or foreign (art. 694 definition of contribuyente); no application, visa status or registration is needed to have foreign-source income left out of the base.
- Foreign-source income is reported on line 18 of the DGI natural-person return, citing par. 2 of art. 694 of the Código Fiscal and special laws.
Exclusions
- Income from work or services performed in Panama, Panama-located assets and Panama business activity is Panama-source and taxable.
- Persons domiciled abroad who receive payments for services that benefit persons in Panama and affect Panama-source income are subject to withholding on 50% of the amount remitted under art. 694 lit. e as amended by Ley 8 of 2010, unless they register as taxpayers.
- Costs and expenses attributable to foreign-source income are not deductible against taxable income.
Tax residence
no residency test is recorded.
Visas
The territorial base applies regardless of visa or residence permit type; it is a feature of the income tax, not of an immigration route.
Other taxes
Social security (CSS) and educational insurance are charged on salary by separate tariffs set out in the DGI instructivo (educational insurance tariff 2.75% of the base for employees per the instructivo).
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Standard rules and foreign-source income
Standard rules
Panama personal income tax (ordinary context)
Territorial
Details
- On: Net taxable income produced in Panama (territorial)
- Who: Natural persons, resident or not
- Limit: PAB 11k/yr ≈ $11k
Natural persons pay income tax on Panama-source net taxable income at 0% up to B/.11,000, 15% on the excess up to B/.50,000, and B/.5,850 plus 25% above B/.50,000 (art. 700 as set by Ley 8 of 2010). 2 1
Taxed on
Net taxable income produced in Panama (territorial); foreign-source income is subtracted before the tariff is applied.
Who it applies to
- Natural persons, resident or not, with Panama-source income file a sworn return within three months after the end of the fiscal year (DGI instructivo).
Exclusions
- Foreign-source income is not part of the taxable base.
Limits
- PAB 11,000 a year (≈ $11,000) · Net taxable income up to this amount is taxed at 0% (art. 700 as amended by Ley 8 of 2010); rates are as published in 2010 and not re-verified against later amendments.
- PAB 50,000 a year (≈ $50,000) · Above this net taxable income the tax is B/.5,850 on the first B/.50,000 plus 25% of the excess; 15% applies between B/.11,000 and B/.50,000.
Visas
No visa-based variation in the ordinary income tax.
Other taxes
CSS social-security and educational-insurance contributions apply to salaries.
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VAT, social security and other taxes
- Social security (CSS) and educational insurance are charged on salary by separate tariffs set out in the DGI instructivo (educational insurance tariff 2.75% of the base for employees per the instructivo).
- CSS social-security and educational-insurance contributions apply to salaries.
Questions people ask
Who qualifies for Panama territorial income tax?
Applies to every taxpayer, natural or legal, national or foreign (art. The territorial base applies regardless of visa or residence permit type; it is a feature of the income tax, not of an immigration route.
How are Remote worker visa holders taxed in Panama?
No special regime in our records is tied to the Remote worker visa. The standard rules apply: Natural persons pay income tax on Panama-source net taxable income at 0% up to B/.11,000, 15% on the excess up to B/.50,000, and B/.5,850 plus 25% above B/.50,000 (art. 700 as set by Ley 8 of 2010).
≈ USD figures are approximate: daily reference rates from ExchangeRate-API, dated 12 Oct 2026, refreshed when the site is updated.
Sources (2)
Official sources
- Instructivo para llenar la declaración jurada de renta de persona natural · Dirección General de Ingresos (DGI), Ministerio de Economía y Finanzas · checked 2026-10-10
- Ley 8 de 15 de marzo de 2010, Gaceta Oficial Digital 26489-A · Gaceta Oficial de Panamá · checked 2026-10-10 · published 2010-03-15