Panama: Income Tax

The Republic of Panama approved Law No. 526 of May 28, 2026, which introduces rules and requirements of economic substance in Panama, applicable only to entities that are members of Multinational Groups that obtain passive income from foreign sources (the “Law”). This law was regulated by Executive Decree No. 32 of September 2, 2026. All these regulations will enter into force as of the 2027 fiscal period.

The enactment of Law 526 of 2026 in Panama introduces strict obligations for companies that are part of multinational groups and earn passive income from foreign sources. With entry into force set for fiscal year 2027, organizations that fall behind face a 15% tax rate on their net taxable foreign-source income if they fail to demonstrate a genuine operational presence within national territory. Given this regulatory landscape, delegating accounting and labor administration to qualified local providers is no longer merely an efficiency option, it has become a pillar of legal compliance.

Panamá aprobó la Ley 526 de 2026, que introduce requisitos de sustancia económica para entidades panameñas integrantes de grupos multinacionales que obtengan rentas pasivas de fuente extranjera. La norma, vigente a partir del período fiscal 2027, no aplica de manera general a todas las sociedades o fundaciones panameñas, sino únicamente a aquellas que cumplan los supuestos específicos previstos en la ley.

Panama is an appealing country for investment in broad range of sectors, including financial services, logistics, tourism, communications, technology and manufacturing.

Nowadays, when many countries are announcing an increase in taxes due to the coronavirus pandemic, surely a lot of individuals are or will be looking to do some tax planning...

Nowadays, when many countries are announcing an increase in taxes due to the coronavirus pandemic, surely a lot of individuals are or will be looking to do some tax planning by changing their tax residence to...

The Republic of Panama has a Tax System that is based on the Territorial Principle of Taxation. This principle that Panama has embraced means that only Panama-source income is taxed.

La República de Panamá tiene un Sistema Tributario que se basa en el Principio Territorial de Tributación. Este principio que Panamá soberanamente ha escogido, significa que sólo los...

The law on Panamanian corporations, adopted in 1927, is a version of the corporation law of the State of Delaware, United States, and since its enactment, has been widely used by the international financial community...