Panama Property For Sale

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).