Panama Rates of Income Tax |
|
|
|
|
Written by Worldwide Properties
|
The rate of income tax in Panama is 30%
on chargeable income up to PAB 100,000
rising to 42% on income over PAB 500,000
for companies that are registered with
the Official Registry of National Industry
or that have government contracts.
There
is a withholding tax of 10% on dividends
paid out of taxed income. If less than
40% of taxed income is distributed, then
Undistributed Profits Tax of 10% becomes
payable on the undistributed balance;
this therefore amounts to a maximum of
4% tax. In effect this is an advance withholding
tax, and it is creditable against the
10% tax on later distributions of the
taxed profit.
The
2005 reform package introduced a 'minimum
income tax' provision, under which the
net taxable income of a legal entity will
be the higher of the amount resulting
from application of the ordinary Income
Tax rules (gross income minus deductible
expenses minus deductible allowances equals
net taxable income), or 4.67 % of gross
income. Whenever the effective income
tax rate exceeds 30% of the net taxable
income earned by a taxpayer, a waiver
may be obtained from the Tax Administration
and no presumptive taxation will apply.
The same will apply in the event of losses
for taxable purposes. The waiver may be
granted for a maximum period of 4 fiscal
years (the year for which the waiver is
granted and the 3 subsequent fiscal years).
|
|
|
Register To Add Your Property
|
Panama 
