Panama

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TAXES - ACCOUNTING

 

 

Corporate tax

Tax rate for resident companies

A single rate of 30%.
For companies operating in the Colon Free Zone, the regular income tax rate of 30% applies only to income derived from sales to companies located in Panama.

   
Tax rate on long-term capital gains The tax rate on long-term capital gains is 30%.
   
System governing groups of companies and dividends paid by subsidiaries to their parent companies The rate is 10% for the tax on dividends.
If a corporation does not declare any dividends during the year, it must pay a deemed dividend tax, amounting to 4% of its taxable income less tax. Branches of foreign corporations must pay 10% of their taxable income less income tax as deemed dividend tax.
   
Tax rate on branches Branches are taxed at the rate of 30%.




Income tax

Fiscal year The fiscal year begins on January 1st and ends on December 31st of the same year.
   
Income tax rate A progressive tax rate to 27% applies to incomes:
- from 0 to 9,000 PAB: 0%,
- from 9,0001 to 10,000: 73%,
- from 10,001 to 15,000: 16.5%,
- from 15,001 to 20,000: 19%,
- from 20,001 to 30,000: 22%,
- from 30,000: 27%.
   



VAT rates

Standard rates 5%
An excise tax at a rate of 5% applies also to cars, motorcycles, cable television, pre-paid cellular phones, insurance premiums and airfares.
   
Reduced rates Basic foodstuffs, medicine, medical services, agricultural raw materials, fuel and books are VTA exempt, as well as trade and exports.



Other important taxes


Name of tax
Rate
Annual tax on insurance companies, annual tax on banks, business and industrial licensing tax, customs duties, immovable property tax, payroll tax, unimproved land tax, property transfer tax, stamp duty, annual fee on corporations  
 


 

Accounting

Introduction
The Panamanian accounting principles and audit rules refer closely to those accepted in the United States.


Obligations and publications
According to the law, all the companies have to update regularly a stock account, a balance sheet.

Certification and auditing
The financials statements of public companies must be controlled by independent accountants.



Useful links
The Ministry of Economy and Finance
the General Direction of the Incomes
the General Direction of Customs

Last modified in January 2007
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