Panama Taxes

Income Tax:

Personal income tax in Panama is based on a sliding scale, ranging from a minimum of 10%, to a maximum rate of 27%.

For temporary residents, the tax is only applied to Panamanian-sourced income.

Transfer Tax:

Transfer taxes in Panama are paid by the seller, and are 2% of either the updated registered value of the property or the sale price – whichever is higher. The updated value is the registered value, plus 5% per annum of ownership. If the property is bought by a corporation, it is customary for the shares of the company to be sold (instead of the property), thus eliminating the need to pay transfer tax.

Inheritance Tax:

Inheritance taxes in Panama have been completely abolished. However, the probate process will take about a year and legal fees will have to be paid.

Rental Income Tax:

If you receive rental return on your property, you will be liable for income tax up to a maximum of 30% (on returns greater than $200,000). However, if you invest in one of the special “tourism zones”, you may be exempt from income tax for 15 years.

Property Tax:

Properties with a registered value of $30,000 or lower do not pay property tax. For properties of a higher value they pay as follows: 1.75% from $30,000 to $50,000; 1.95% from $50,000 to $75,000; and 2.10% over any property value above $75,000.

Houses or apartments where construction permit is issued after 1st September 2006, will have the following exemption on property tax:

Value up to $100,000 15 years exemption
Value from $100,000 to $250,000 10 years exemption
Value over $250,000 5 years exemption

The land itself is not exempted and would continue to pay property tax if its value is above $30,000.

Please note that pensioners are not exempted from paying property tax, except as detailed above for new constructions.

Capital Gains Tax:

Real estate gains should be included in the annual tax return, and are taxed at whatever level the individual is being assessed for income tax. Or, if you have held the property for more than two years, then you may choose to pay a flat 10% tax on the gross profit.

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