How vat / sales tax works in Panama
Panama ITBMS defaults to 7% on goods and services, with output tax charged, input tax credited, and monthly electronic returns.
Digital-platform collection from 2026 pulls Amazon, streaming, and marketplace flows into ITBMS through card and platform mechanics.
Basic foods, medicines, and exports follow exempt and zero logic, while free-zone and special regimes redirect qualifying flows.
Tax rates at a glance
- Standard VAT
- 7%
- Digital platforms
- 7% collected
- Exempt supplies
- Defined
- Exports
- 0%
- Filing rhythm
- Monthly
- E-invoicing
- Validated
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersSaaS foundersFreelancersExpatsCross-border traders
Watch out for
- Digital-platform mechanics are new and still being regulated, so collection duties need current-rule confirmation per flow.
- Territorial income rules interact with VAT registration where foreign sellers test local presence.
- Free-zone regimes redirect treatment for qualifying operations, with status and activity scope deciding per flow.
- Exempt supplies block input recovery without a reduced band to blame, repricing mixed health and food work.
Frequently asked questions
What is the VAT rate in Panama?
Panama applies 7% ITBMS in 2026, with digital-platform collection from 2026 and exemptions for basic foods, medicines, and exports.
Do digital platforms collect Panamanian VAT?
Yes from 2026 through card and platform mechanics on qualifying flows, with regulation still bedding in per platform type.
How often are Panamanian VAT returns filed?
Monthly through electronic returns, with input credits conditioned on valid invoice documentation.