How corporate tax works in Panama
Panama applies corporate income tax on Panama-source income only. Foreign-source income is generally outside the tax base, which is why the jurisdiction is popular for regional holding and trading structures.
The standard corporate income tax rate is 25%. If taxable income exceeds USD 1.5 million, the tax base can be the higher of normal net taxable income or 4.67% of gross taxable income under CAIR.
The listed regulated sectors now use the 25% rate. A 30% rate applies where the State holds more than 40% of the company’s shares. Panama also has a 15% domestic minimum top-up tax for large multinational groups from fiscal years starting on or after 1 January 2025.
Tax rates at a glance
- Corporate income tax
- 25%Standard rate
- CAIR minimum
- 4.67%
- State-owned companies
- 30%
- DMTT
- 15%
- VAT / ITBMS
- 7%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
Remote foundersHolding companiesRegional operatorsInvestorsHigh earners
Watch out for
- Panama corporate tax is territorial, not zero-rate on everything. Panama-source income, local operations and permanent establishments can all create tax.
- Dividend withholding and branch-profit tax sit on top of corporate tax and should be modeled together, not in isolation.
- The 2025-2029 social security step-up and the 2026 EU blacklist status are practical compliance issues that can affect business operations even when the headline CIT looks simple.
Frequently asked questions
Does Panama have corporate income tax?
Yes. The standard rate is 25% on Panama-source income, with a 30% rate for companies more than 40% owned by the State and a CAIR minimum calculation for larger companies.
Is foreign income taxed in Panama?
Generally no. Panama’s territorial system usually excludes foreign-source income from corporate tax.
Is Panama good for holding companies?
It can be, especially if the group income is foreign-source. But banks, withholding tax, substance, dividend tax and foreign tax residence still need review.