Best Tax Lawyers in Panama

About Tax Law in Panama

Tax law in Panama is governed by a series of regulations and treaties designed to manage the country's taxation system and its interactions with international partners. Panama is well-known for its status as a tax haven, which has historically attracted foreign investors due to its favorable tax regimes. The system is characterized by its territorial tax system, which means only income derived from Panamanian sources is subject to tax. The General Directorate of Revenue (DGI) is the governing body overseeing tax collection and enforcement. Understanding these laws is essential for individuals and companies operating within and outside the country.

Why You May Need a Lawyer

There are several situations where individuals and corporations might require legal assistance regarding tax matters in Panama, including:

• Setting up a business and navigating corporate tax obligations.
• Understanding the implications of Panama's territorial tax system on foreign income.
• Handling audits or investigations by Panama's tax authorities.
• Dealing with tax compliance issues and filing requirements for domestic and international entities.
• Seeking tax optimization strategies that comply with Panamanian law.
• Addressing double taxation issues through Panama's international agreements.
• Resolving disputes with tax authorities or addressing tax evasion claims.

Local Laws Overview

Key aspects of local tax laws in Panama include:

• Territorial Tax System: Only income generated within Panama is taxable, and foreign income is generally exempt.
• Corporate Tax Rate: Panama applies a standard corporate tax rate on locally-sourced income.
• Personal Income Tax: Residents pay tax on their Panamanian-sourced income, with progressive rates applied.
• Value Added Tax (VAT): Known locally as ITBMS, this is applied to goods and services at a standard rate.
• Tax Treaties: Panama has entered into various treaties to avoid double taxation and foster international trade and investment.
• Tax Evasion and Avoidance: Panama is committed to international standards on transparency and has adopted measures to combat tax evasion.

Frequently Asked Questions

What types of taxes are there in Panama?

Panama has several types of taxes, including income tax, corporate tax, VAT, real estate tax, and capital gains tax, primarily on locally-sourced income.

Who is considered a tax resident in Panama?

A person is generally considered a tax resident if they spend more than 183 days in Panama within a fiscal year or if they have established 'center of economic interests'.

Is foreign income taxed in Panama?

No, Panama follows a territorial tax system, meaning foreign income is not subject to taxation.

What is the current corporate tax rate in Panama?

The standard corporate tax rate for Panamanian-sourced income is around 25%.

Do I need to file a tax return if I have no Panama-sourced income?

If you have no Panamanian-sourced income, you typically do not need to file a tax return. However, compliance requirements should be confirmed with a tax professional.

Are there any tax incentives for businesses in Panama?

Yes, Panama offers various incentives and exemptions for businesses in specific sectors, such as tourism, technology, and agriculture.

How can I avoid double taxation in Panama?

Panama has treaties with several countries to prevent double taxation. Consulting a tax lawyer can help leverage these agreements effectively.

What penalties exist for failing to comply with tax laws?

Penalties can include fines, interest on unpaid taxes, and in severe cases, legal action. Compliance is crucial to avoid these consequences.

Can I appeal a tax decision made by the DGI?

Yes, taxpayers have the right to appeal decisions through formal processes. Legal assistance is advisable in navigating appeals.

Is Panama on the OECD's list of tax havens?

Panama has worked on improving its transparency and is no longer classified as a tax haven by the OECD, although it remains under observation.

Additional Resources

For individuals and businesses seeking more information, the following resources can be helpful:

• General Directorate of Revenue (DGI): The government body responsible for tax regulation and enforcement.
• Panamanian Bar Association: Offers resources and a directory of qualified tax lawyers.
• Chamber of Commerce, Industry, and Agriculture of Panama: Provides informational sessions and guidance for businesses.
• OECD Reports: Provides insights into Panama's compliance with international tax standards.
• International Financial Centers Forum: Offers analysis and comparative data on tax regulations.

Next Steps

If you require legal assistance in tax matters in Panama, consider the following steps:

1. Identify Your Needs: Clearly define your tax issues or questions to find a lawyer with relevant expertise.
2. Consult a Legal Directory: Use available legal directories to find qualified tax lawyers in Panama.
3. Schedule a Consultation: Arrange meetings with potential lawyers to discuss your needs and evaluate their approach.
4. Evaluate Experience and Credentials: Choose a lawyer with a proven track record in handling similar tax issues.
5. Discuss Fees and Terms: Agree on fees and terms before proceeding with legal representation.
6. Set Clear Goals: Work with your lawyer to establish clear objectives and a strategy for resolving your tax issues.