Tax rates at a glance
(As of August 8 2009)
| Corporate income tax rate |
30%(a) |
| Capital gains tax rate |
30% |
| Branch tax rate |
30% |
Withholding tax |
|
| Dividends |
10% |
| On Bearer Shares |
20% |
| To Panamanian holding companies |
0% |
| Interest |
15% (b) |
| Royalties from patents and licences |
15% |
| Branch remittance tax |
0%(c) |
Net operating losses (years) |
|
| Carryback |
N/A |
| Carryforward |
5 (d) |
(a) Dividends are not included in taxable income (either because, if Panama-sourced they will have been subject to withholding tax at 10%, or because, if they are foreign, they are exempted). Expenses associated with receipt of dividends are not deductible. Interest received from time-deposits in Panama banks or from Government securities is exempted.
(b) Certain interest is exempt from tax.
(c) Branches of foreign corporations pay the 10% 'deemed dividend tax' on their full taxed income (making their effective taxation rate equal to 37%); but they are not subject to withholding tax on eventual distributions.
(d) Commercial enterprises incurring a net operating loss in a fiscal year may deduct 20% of the loss in each of the five (5) years. However, the deduction is limited to 50% of the taxable income in each subsequent fiscal year. Any portion of a net operating loss not deducted because of this limitation may not be deducted in a later fiscal year.
Source: Professionals from Taxand Panama, the Panama member of the Taxand global network of leading independent tax firms.