Panama » Taxes

Property Tax	Transfer Tax	Capital Gains Tax

Personal income tax in Panama is established on a sliding scale, running from a lower limit of 7% after the first $9,000, to an upper limit rate of 27%. Irrespective of your citizenship status, the tax is only enforced to Panamanian-sourced income. Taxable financial gain includes wages and salaries, other business benefits, pensions, bonuses, and income from copyrights, royalties, trademarks, stock sales, bonds, and securities. Implications may be made on all medical cost received in Panama, all contributions made to charities, interest paid on home mortgages, education costs, and loans for dwelling betterments.

The country is famous for its easy tax load. If you meet the criteria for Panama’s pensionado program, you are permitted to a one-time immunity of duties on the importation of household goods (up to $10,000), and a freedom of every two years of duties on the importation or local buy of a car.  

If you buy or build a novel home, you won’t pay property taxes for up to 20 years, nor will you pay taxes on foreign garnered financial gain. In 1994, Panama passed Law No. 8—the most recent and complete law for the publicity of tourism investment in Latin America and the Caribbean. Since the law was enacted, lots of the world’s most prominent hotel chains have extended in to take benefit, including Marriott, Radisson, Holiday Inn, Intercontinental and Sheraton.

But Panama’s gorgeous tourism investment laws are not merely for huge business. With a minimal investment of $50,000 wherever in Panama’s region, you can take advantage from: 

• A 20 year immunity of any import taxes payable on materials, furniture, equipment, and vehicles
• A 20 year freedom on real property taxes for all possession of the enterprise
• Immunity from any tax imposed for the use of airports and piers
• Accelerated reduction for real estate property of 10% per year.

The investment price does not comprise the price of the land. And for projects in the city area, the minimum investment obligation is $300,000.

Income Tax 

Personal income tax in Panama is supported on a sliding scale, roaming from a lower limit of 7% after the first $9,000 to a maximum rate of 27%. For short-term residents, the tax is only enforced to Panamanian- obtained income.

Property Tax

There is absolutely no property tax for properties with registered price of 30,000 dollars and lower than this value. For real estate properties of a superior value, you will pay:

• 1.75% from $30,000 to $50,000;
• 1.95% from $50,000 to $75,000; and
• 2.1% above any property price above $75,000. 

If you purchase or construct a housing property in Panama, you may be free from property tax for up to 20 years if the construction permit is supplied by Sept. 1, 2006, and the residence permit issued and sudations registered by Sept. 1, 2007. On houses or apartments where the building permit is issued after Sept. 1, 2006, the following immunities will apply:

• cost up to $100,000: 15-year immunity
• cost from $100,000 to $250,000: 10-year immunity
• cost over $250,000: 5-year immunity

The immunity is moveable throughout the exemption period to any new buyer. The land itself is not relieved and would go forward to receive property tax if its price is over $30,000.

Transfer Tax

Property transfer taxes in Panama are financed by the vendor, and are 2% of either the updated registered cost of the property or the sale price—No matter which is higher. The updated price is the registered price, plus 5% per year of ownership. If the property is purchased by a corporation, it is conventional for the shares of the company to be traded (instead of the property), therefore canceling out the need to give transfer tax.

Inheritance Tax 

Rental Income Tax

If you obtain lease return on your property, you will be responsible for income tax up to a maximum of 27% (on returns greater than $250,000). On the other hand, if you invest in one of the particular “tourism zones,” you may be free from income tax for 15 years.

Capital Gains Tax

Capital gains should be integrated in the yearly tax return, and are taxed at no matter what level the individual is being evaluated for income tax. Except you have possessed the property for at least of two years and are not in the real estate business of selling and buying property, you may select to pay a flat 10% of the overall income.