Territorial Tax System Panama

Territorial Tax System Panama

Panama’s tax system is centered on the concept of territorial incomeCitizens and residents are taxed on net income earned from Panamanian sources only. Income derived from foreign sources outside the territory of Panama is 100% excluded. Non-residents are taxed solely on income from Panamanian sources, and the tax charged on any income paid to a non-resident should be retained by the payer. Tax breaks are given to citizens, residents, and non-residents on exempted sources of income for example Panama government securities interest, saving account dividends and term deposits held at banks founded in Panama. Many expats looking to save more and spend less have indeed found territorial taxes to be at the top of all interesting facts about Panama.

The proceeds obtained from the following activities are not deemed to have been created within Panama’s jurisdiction and are therefore tax exempt:

  • Operations carried out in another region from an office located in Panama
  • Transactions which are performed, finished or carried out outside Panama even if initiated by an office in Panama
  • Distribution of dividends generated from income not obtained within the jurisdiction of Panama, including income gained from operations in the points mentioned above

They say two things are certain in life, death and taxes. How about we skip the taxes?



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