What is the corporate tax rate in Panama?

Panama applies a territorial tax system, meaning only income earned within Panama is subject to corporate income tax. Income generated from activities conducted outside of Panama is exempt from corporate taxation.

Standard Corporate Tax Rate

• The general corporate income tax rate in Panama is 25% on net income derived from Panamanian sources.

Key Features of Panama’s Tax System

• Offshore income is tax-exempt. Income earned from foreign operations, such as international trading or offshore services, is not taxed in Panama.
• No capital gains tax on foreign-source gains. Capital gains from offshore assets or transactions are not subject to taxation.
• No withholding tax on dividends paid from foreign-source income. This makes Panama ideal for holding companies and international structuring.
• Annual tax filing required. Even offshore companies must maintain basic financial records and submit tax filings, especially if any local income exists.

In summary, Panama’s 25% corporate tax rate applies only to domestic income. This territorial tax principle makes Panama an attractive jurisdiction for offshore companies that operate globally but earn little or no income within Panama itself.