Taxes in Panama

Whether you are a full time resident of Panama, looking to move there or have lived there your entire life, like most other countries in the world, you need to pay taxes.
Sponsored Links

It does not matter if you are a citizen, if you are a resident you must pay taxes.Taxes in Panama 2015 The tax rates here are much simpler to follow than what you would find in the United States as there are fewer tax rates. However, keep in mind that if you are still an American citizen, there is a good chance you have to pay federal taxes, although you need to look into this further as it cay vary based on a few factors.

Personal Income Tax Rate
If you make anywhere from 0 to $10,000 (in U.S. dollars) you do not have any income tax rate. Keep in mind that deductions are minimal in Panama and you do not have the same kind of access to deductions as you might in the United States. A basic deduction of $800 is included in the tax return, although you can include mortgage interest, political contributions, medical expenses not reimbursed by the insurance company and charitable donations. The next tax rate is if you make $10,001 to $50,000. If you make in this range you have a 15% tax rate. Anything over $50,000 and your tax rate bumps up to 25%.

Now, this is not the only income tax you are going to pay though. There is social security in Panama and naturally you need to pay taxes. Social Security is much higher in Panama than what it is in the United States. In the U.S., an employer and worker split Social Security, so employees pay a little over 6 percent. In Panama, the employer pas 12 percent while am employee pays another nine percent. If you do not have this taken out of earnings you make inside of the country throughout the year, you need to pay the added nine percent during tax season.

The corporate tax rate in Panama is rather straight forward as well. It is generally a flat 25%. However, if the country of Panama owns at least 40% of the company, then the corporate income tax rate is bumped up to 30%.

There is a capital gains tax in Panama as well. This is 10% of any calculated gain. For any sort of real estate purchase or sale, there is a 3% withholding and made at closing. This means you’d only need to pay seven percent when filing taxes.

You do have less time to complete your taxes in Panama than what you do in the United States. Tax day comes a bit earlier on the 15th of March. If your only income comes from a local employer though you actually don’t have to file at all. All taxes are automatically withheld by the employer so they pay the faxes for you, which can make it a bit easier if this is your only income.