Panama: Living There - Tax Issues

Country Rating  »

Home ›  Latin America ›  Panama ›  Living There

Living There

Income Taxes

All individuals, with the exception of employees earning a single salary, are required to file an income tax return. Resident individuals are taxed on their total income received from Panama sources, including income from employment, from rendering personal services, from business activities, and investment income. Income tax is levied at progressive rates, depending on the taxable income.

Rental Income

Rental income is taxed at the standard income tax rates. The taxable income is the gross rent less allowable deductions.

Allowances

Taxpayers are entitled to the following personal deductions from taxable income:

• Each single person, US$800 annually;
• Each married couple filing jointly, US$1,600 annually;
• US$250 for each of the taxpayers’ dependents as legally defined;
• All medical expenses incurred in Panama if duly substantiated and not covered by insurance;
• All interest paid on mortgage loans for acquiring or improving the taxpayer’s principal private residence in Panama, subject to a maximum deduction of US$15,000 annually;
• All interest paid on loans used to cover educational expenses in Panama if properly documented. Interest paid on state sponsored loans to cover educational expenses in or outside Panama;
• Educational taxes paid or withheld;
• Political contributions up to a maximum of US$10,000 annually;
• Dues paid to non-profit organizations or societies;
• Specified charitable donations and health insurance premiums;
• 25% of representation expenses not reimbursed by the employer, up to US$6,000 annually;
• A deduction of 1% of the total sum received by a worker as a result of the termination of the labor relationship, for each complete period of 12 months worked with the same employer; in addition to a basic deduction of the first US$5,000 of the balance that results after applying the deduction of 1% on the total sum received by the employer

Income tax is generally payable in advance. Taxpayers must file with their income tax return for the previous year, a declaration showing an estimate of the current year’s income. Individuals are required to deduct and withhold every month their amount of tax liability.

Panama - more data and information

• Lawyers (attorneys) with property law practices in Panama

Your Comments

Post a comment