Taxes in Panama
Panama is a country that encourages foreign investment and has long been known for being a safe and reliable tax haven. In 1998 they passed the Investment Stability Law, which protects foreign investors from changes in tax, customs, municipal and labor rules for 10 years from the date an investment is registered. Other advantages include no taxes for foreign-earned income, a 20 year exemption on property taxes for newcomers who buy or build a new house and retirees get a one time exemption of duties for importing up to 10,000 worth of household goods.
Summaries of the main types of taxes in Panama:
Income tax in Panama is applied to Panamanian-sourced income only.
It is based on a sliding scale system, ranging from 7% to 27% after the first $9,000 earned. This taxable income also includes salaries and wages, business profits, income from copyrights, bonuses, royalties, trademarks, stock sales, bonds, and securities.
Capital gains tax:
Capital gains are taxed at the level the person is being assessed for income tax and should be included in the annual tax return. There is also a possible option to pay a flat rate of 10%.
There is no property tax required for properties with a value of $30,000 or less. Properties with a higher value pay a percentage of the value, 1.75% for $30,000 to $50,000; 1.95% for $50,000 to $75,000; and 2.1% for any property valued above $75,000.
Rental income tax:
Those who receive rental return on their property will be liable for income tax up to 27% max. You may be exempt for 15 yeas if you invest in one of the special tourism zones.
Real estate 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.
There is no longer an inheritance tax in Panama. However there is a tax on property given as a gift, the amount of the tax depends on the relationship between the two people.