In this page:
Accounting Rules |
Tax Rates |
Intellectual Property |
Legal Framework |
- 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
- 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 Globaltrade.net, the Directory for International Trade Service Providers.
- 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
||Latin America & Caribbean
|Number of Payments of Taxes per Year
|Time Taken For Administrative Formalities (Hours)
|Total Share of Taxes (% of Profit)
- Last Available Data.
|Individual income tax
||Progressive rate from 0% up to 25%
|PAB 0 - 11,000
|PAB 11,001 - 50,000
|Over PAB 50,000
- 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%.
Learn more about Taxes and Accounting in Panama on Globaltrade.net, the Directory for International Trade Service Providers.
- 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
- 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 Globaltrade.net, the Directory for International Trade Service Providers.
- 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.
||February (Wednesday First week)
|Maundy Thursday and Good Friday
||End of March
|Panama City, District of Panama and Province of Panama Foundation
|Independence Day (From Columbia)
|Independence Day (From Spain)
Periods When Companies Usually Close
||End of March, week before Easter
||From December 15th to January 12th
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Last Updates: October 2014