Taxation Advantages in Panama

Panamanian corporations are under a territorial system of taxation, which means that no income arising from activities or transactions conducted or property held outside of the territory of the Republic of Panama is subject to income tax. This “offshore” feature of Panamanian corporations has been in force and effect since 1927, as the following exemptions show:

• There is no income tax applicable to income from sources outside of the territory of the Republic of Panama.


• No capital gains tax applicable to capital gains through sources outside of the territory of the Republic of Panama.


• No taxation applicable to interests derived by savings accounts or certificates of deposit within or outside the Panamanian territory.


• No taxation applicable to income arising from sales of products or services provided outside of the territory of the Republic of Panama.


• No taxation applicable to dividends received from sources outside of the territory of the Republic of Panama.


• Exemption from any obligation to prepare or publish or submit financial statements and full freedom to carry its accounting as and where the corporation may decide when its income arises from sources outside of the territory of the Republic of Panama.


• Any Panama corporation whose income arises only from sources outside of the territory of the Republic of Panama does not have to make or submit any tax return, and may conduct its accounting as and where it pleases.