Guide to Panama Taxability and Rates
Updated 3 months ago
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This article explains how Panama's ITBMS (VAT) applies to different types of transactions, and what tax rates you should expect to see in Kintsugi.
Standard Tax Rate
Panama's standard ITBMS rate is 7%. This rate applies uniformly across the country. There are no special regional rates or tax holidays.
How taxability works by transaction type
Transaction Type | vTax Treatment |
|---|---|
B2B Domestic (both buyer and seller in Panama) | Standard 7% charged by the seller |
B2C Domestic (both buyer and seller in Panama) | Standard 7% charged by the seller |
B2B Cross-Border Import (buyer is in Panama) | Buyer self-assesses via reverse charge |
B2C Cross-Border Import (buyer is in Panama) | N/A |
B2B Cross-Border Export (seller is in Panama) | Zero-rated (0%); destination country's VAT may apply |
B2C Cross-Border Export (seller is in Panama) | Zero-rated (0%); destination country's VAT may apply |
What about non-resident businesses selling SaaS to Panama customers?
Non-resident businesses with no physical presence in Panama are not required to register for ITBMS/VAT when supplying SaaS services remotely. For non-residents:
B2B SaaS: 0% (reverse charge applies to the buyer)
B2C SaaS: 0% (currently out of scope for ITBMS; the DGI has not yet enacted a digital services tax)
Note: The B2C exemption for non-residents is considered a temporary regulatory gap. Panama's government has signaled an intention to tax non-resident digital platforms in the future. Kintsugi will update its support when new rules take effect.
Are non-profit organizations taxable?
Yes. If the supply is taxable under ITBMS and not specifically exempt, Panama requires that VAT be charged even when the buyer is a non-profit or charitable organization.
Is there a Digital Services Tax (DST)?
No. Panama does not currently have a separate Digital Services Tax.
Does reverse charge apply if the seller is already registered?
No. If the seller is registered in Panama and selling to a B2B customer, the seller charges local VAT at 7%. Reverse charge applies only when the seller is a non-resident supplying a registered Panamanian business.
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