Living in Panama: 183-day residency requirement, tax on local business activity, and a tax bracket from 0 to 25 (%).

In Panama, an individual is considered a tax resident if they remain in the country for more than 183 days during the tax year or the preceding year, or if they have established their permanent residence there, according to Law No. 52 of 2012. Income tax applies to earnings from activities carried out in Panama, regardless of the recipient's residency. The tax brackets for individuals range from 0 to 25. This page does not cover social security, visas, or capital gains.

Two texts to define tax residence

Law No. 52 of August 28, 2012, published in the Official Gazette No. 27108, replaces Article 762-N of the Tax Code, entitled "Tax Residency." The 2012 law stipulates that the following are tax residents of Panama:

• natural persons who remain on the national territory for more than 183 days, continuously or not, in a tax year or in the immediately preceding year; ;
• natural persons who have established their permanent residence in Panama; ;
• companies incorporated under Panamanian law which have their material means of management and administration in the territory, and foreign companies which have these same means and are registered in the Public Register.

The text adds that the executive branch regulates this matter. Any changes made after 2012 should be verified with the DGI (General Directorate of Taxes).

The General Directorate of Revenue (DGI) offers a tax residency application form for individuals. Section 3 invites applicants to select option 3.1, 3.2, or 3.3:

• 3.1: presence on the national territory for more than 183 days, in a continuous or alternating period; ;
• 3.2: familiarity with the accommodation; ;
• 3.3: economic interests on the national territory, and, under the same numbering, family interests.

The form requests supporting documentation for the selected options. It does not clearly state whether these options are alternative or cumulative. The text of Article 762-N of 2012 makes no mention of either economic or family interests. We will not determine the relationship between these two texts: for a real-life situation, this should be verified with the tax authorities.

A tax on activity carried out in Panama

The DGI's FAQ states that anyone receiving income from activities carried out in Panama is subject to income tax, "regardless of the beneficiary's nationality, domicile, or residence." In other words, tax residence alone does not determine what is taxed.

The DGI's instructions for filing personal income tax returns include a line item for foreign-source income, as referenced in paragraph 2 of Article 694 of the Tax Code. This amount is deducted from total income, and related costs are treated separately. These instructions are undated; their most recent reference is a decree dated December 26, 2018. They do not describe, income by income, the treatment of rent, interest, or pensions received from abroad; this page does not claim to do so.

Scale for individuals and calendar

The DGI (General Directorate of Taxes) publishes the personal income tax scale. On its page concerning withholding taxes on remittances abroad, it links this to Article 700 of the Tax Code. It applies to net taxable income, in balboas (B/.).

The tax schedule pages do not bear a publication date, only the mention "© DGI 2025". The DGI pages on the tax schedule, on withholdings on remittances abroad, and on the employer's declaration give the same figures.

Calendar: Article 710 of the Tax Code sets March 15th as the deadline for filing tax returns for individuals. An extension of up to one month may be requested before the deadline, after payment of the estimated tax. The balance due to the State must be paid no later than March 31st of the same year, or within three months of the close of the tax period, according to the same page.

A net income of 60,000 B/: numerical example (fictitious profile)

Situation. Daniel, a fictitious profile, is a Panamanian tax resident. His annual net taxable income is 60,000 B/ (assumed amount).

Issue. He wants to estimate the annual tax according to the scale published by the DGI.

Strategy. It applies 0 % up to 11,000, then 15 % from 11,000 to 50,000, then 25 % beyond 50,000.

Result. The 15% tax bracket (%) covers 39,000 B/. and yields 5,850 B/., which is the amount indicated by the DGI for the first 50,000. The 25% tax bracket (%) covers 10,000 B/. and yields 2,500 B/. The total is 8,350 B/., representing an average rate of 13.9% (%). This calculation does not take into account deductions, social security contributions, and estimated tax, which are not addressed here.

Dividends from Panamanian sources

The French General Directorate of Taxes (DGI) indicates in the dividend withholding tax declaration form that companies are required to withhold 10% of the distributed profits. A rate of 5% applies to profits derived from exempt income, such as interest on government securities. For bearer shares, the form specifies 20% and a final withholding tax. The declaration must be filed within 10 days of the distribution, and the withheld amounts must be paid within 10 days of the withholding. The form clarifies that tax treaties take precedence over these rules.

These rates relate to the withholding tax levied by the Panamanian company. The page does not explain how this withholding tax interacts with the beneficiary's personal income tax.

Obtaining a tax residency certificate

The DGI processes applications for tax residency certificates on its e-Tax 2.0 platform. The stated response time is approximately three months, and applications are processed in the order they are received. For individuals, the page requests, among other things:

• a letter to the Director General of Revenue (identity, address, activity in Panama, convention referred to, years, reasons); ;
• a notarized copy of the passport; ;
• a certificate of migratory movements, mandatory, issued by the National Migration Service; ;
• a certificate from the Public Register or the deed of the property, or a notarized lease; ;
• receipts for basic services in the applicant's name, and any document proving a connection with Panama.

The French tax authorities (DGI) rank France fifth among its 17 double taxation avoidance agreements. The text of the agreement is described on our dedicated page.

Panama is on France's list of non-cooperative states

The appendix to the 2027 draft budget, submitted to the National Assembly, indicates that 11 states and territories are on the French list of non-cooperative states and territories, according to the decree of April 15, 2026. Panama is among them. The consequences for a French resident receiving Panamanian income are addressed on our page about the Franco-Panamanian treaty; the list is valid as of the date of your decision.

What this page does not cover

This section does not cover social security (Caja de Seguro Social), visas and residency permits, capital gains tax, interest and royalties, property tax, inheritance tax, or local savings: these matters are not addressed here and should be verified with the Panamanian tax authorities. Local tax matters should be confirmed with a professional based in Panama. Information pertaining to France, including the departure declaration, exit tax, and declared accounts, is covered in our section on tax residency.

What changes depending on your situation

• The number of days spent in Panama during the fiscal year and the previous year.
• The existence of permanent accommodation, and your economic and family ties in the area.
• The nature of your income: activity carried out in Panama or elsewhere, dividends, rents.
• The location of your accounts and investments.
• Your situation with regard to France, as long as you are domiciled there.

The rule depends on your situation. No results are guaranteed.