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flag Panama Panama: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices


Accounting Rules

Tax Year
The fiscal year begins on January 1st and ends December 31st of the same year. Although, a special 12-month fiscal year may be requested in certain cases, from the General Director of Internal Revenue.
Accounting Standards
Panama converted to IFRS as from 2009 and has historically utilized 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 practice 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 , (Spanish only).
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

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) - Impuesto a la transferencia de bienes corporales muebles y la prestación de servicios (ITBMS)
Tax Rate
The VAT standard rate is 7% except on alcoholic drinks and accommodations (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. Different tax rates apply depending on the type of service or good (between 5% on soft drinks and 100% on tobacco products).

Learn more about Service Providers in Panama on, the Directory for International Trade Service Providers.

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Corporate Taxes

Company Tax
Capital Gains Taxation
Capital Gains are generally taxed as income, at a general rate of 10%.
Main Allowable Deductions and Tax Credits
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
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

  Panama Latin America & Caribbean United States Germany
Number of Payments of Taxes per Year 60.0 30.0 11.0 9.0
Time Taken For Administrative Formalities (Hours) 431.0 367.0 175.0 207.0
Total Share of Taxes (% of Profit) 42.0 47.2 46.7 46.8

Source: Doing Business - Last Available Data.

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Individual Taxes

Tax Rate

Individual income tax Progressive rate from 0% up to 25%
PAB 0 - 11,000 0%
PAB 11,001 - 50,000 15%
Over PAB 50,000 25%
Allowable Deductions and Tax Credits
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 calendar year, he is subject to a tax of 15% plus and education tax of 2.75%.

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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: 5/10/20%; Interest: 12.5%; Royalties: 12.5%.

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Sources of Fiscal Information

Tax Authorities
Tax Collection Directorate
Other Domestic Resources
Taxation in Panama

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Learn more about Taxes and Accounting in Panama on, the Directory for International Trade Service Providers.

Intellectual Property

National Organizations
The Directorate General of the Industrial Property Registry. Panama signed the General Inter-American Convention for Trade Mark and Commercial Protection of 1929.
The new intellectual Property Law, approved in April 1996 fulfils the WTO requirements.  The law strongly punishes brand name and patent piracy and provides for speedy proceedings in the case of conflict.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National Regulation and International Agreements

Type of property and law Validity International Agreements Signed
Law 35 of May 10th 1996
Validity period of 20 years (Spanish only) Patent Cooperation Treaty (PCT)
Law 35 of May 10th 1996
10 years, renewable for 10 years (Spanish only)
Law 35 of May 10th 1996
10 years, period can be extended up to 5 more years (Spanish only)  
Law 15 on copyright 1994
Lifetime right for the author and his heirs as provided by the text. Berne convention For the Protection of Literary and Artistic Works
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
Law 35 of May 10th 1996
10 years, see text  

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Legal Framework

Independence of Justice
Despite the fact that the constitution provides for an independent judiciary, it remains inefficient, politicized and prone to corruption.
Equal Treatment of Nationals and Foreigners
From the judiciary's point of view, foreign nationals can expect the same treatment as Panamanians.
The Language of Justice
Recourse to an Interpreter
It is always possible to have an interpreter (contact your Embassy).
Sources of the Law and Legal Similarities
The main source of the law is the Constitution of 1972 (amended several times, last amendment in 2004). The legal system is based on a civil law system. Panama accepts compulsory ICJ jurisdiction but with reservations.
Checking National Laws Online
Panama Judiciary (Spanish Only)

Learn more about Lawyers and Legal in Panama on, the Directory for International Trade Service Providers.

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National Standards Organizations
COPANIT, Panama Committee of Industrial and Technical Standards.
Integration in the International Standards Network
Panama is a member country of the International Organization of Legal Metrology (OIML), of the International Organization of Standardization (ISO), of the International Eletrotechnical Commission (IEC) and of the Pan American Standards Commission (COPANT).
Classification of Standards
Panama's standards are the COPANIT. The body responsible for standardization is the Panama Commission of Industrial and Technical Standards (COPANIT, in Spanish), which is under the Ministry of Commerce and Industry and whose executive body is the DGNTI (Management of Standards and Industrial Technology). 
Online Consultation of Standards
Standards can be consulted on the DGNTI (in Spanish)(Directorate of Standards and Industrial Technology, link in Spanish) website, the executive body of the COPANIT (Panama Commission of Industrial and Technical Standards).
Certification Organizations
DGNTI (in Spanish) Directorate of Standards and Industrial Technology.

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Business Practices

General Information
Doing Business in Panama
Opening Hours and Days
Banks open Monday to Friday from 9 AM to 4 PM . They close at 12 PM on every last day of work of each month. Government offices are open Monday to Friday from 8 AM to 12 PM and 2 PM to 6 PM.

Offices are open Monday to Friday and sometimes Saturday from 8 AM to 12 PM and 1 PM to 5 PM.

Businesses are open from Monday to Saturday 9 AM to 7 PM.

Shopping centers are open every day from 10 AM to 7 PM.  Some Supermarkets are open around the clock every day.


Public Holidays

New Year January 1st
Martyrs' Day January
Carnival February-March
Ash Wednesday February (Wednesday First week)
Maundy Thursday and Good Friday End of March
Labor Day May 1st
Panama City, District of Panama and Province of Panama Foundation 14th August
Independence Day (From Columbia) November 3rd
Flag Day November 4th
Independence Day (From Spain) November 28th
Christmas 25th November

Periods When Companies Usually Close

Holy Week End of March, week before Easter
Christmas Holidays From December 15th to January 12th

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Last Updates: October 2014