DoubleTaxationTaxes on salary: Panama preliminary data
How much income tax and social contributions are paid on a salary in Panama, what a sole proprietor and a company pay, and which special regimes exist. Preliminary data.
Preliminary data: headline rates from official sources and bulletins of international organisations, without reliefs or special rules; being refined.
Calculation for a gross salary of €60,000 per year
| Gross salary | PAB 70,326 ≈ €60,000 |
|---|---|
| Income tax | PAB 10,932 ≈ €9,326 |
| Employee contributions | PAB 6,857 ≈ €5,850 |
| Take-home pay | PAB 52,538 ≈ €44,824 |
| Employer contributions and payroll taxes | PAB 9,318 ≈ €7,950 |
| Employer's labour cost | PAB 79,644 ≈ €67,950 |
Only some of the country's direct taxes and levies are counted: income tax on wages and compulsory contributions. Not counted: property and real-estate taxes; taxes on dividends, interest and other investment income; inheritance and gift taxes; indirect taxes such as VAT, excise and customs duties.
Taxes for sole proprietors and companies
Tax and contributions on the profit for a year; expenses are 10% of revenue, the company pays its profit out to the owner. Reliefs and local taxes are not included.
| Annual revenue | €30,000 PAB 35,163 | €60,000 PAB 70,326 | €120,000 PAB 140,652 |
|---|---|---|---|
| Sole proprietor | PAB 3,097 9.8 % | PAB 9,173 14.5 % | PAB 24,997 19.7 % |
| Company | PAB 10,285 32.5 % | PAB 20,570 32.5 % | PAB 41,141 32.5 % |
Special tax regimes
Tributación territorial (renta de fuente extranjera no gravada)
Other · rate 0.0 %
Who: All individuals and companies, resident or not (general rule, no application needed).
Only Panamanian-source income is taxed; income from activities or transactions performed abroad is foreign-source and not taxable.
Legal basis: Código Fiscal art. 694 (territoriality principle), as described by MICI
Visa de Personal Permanente de Sede de Empresa Multinacional (SEM)
For employees · rate 0.0 %
Who: Foreign staff holding the SEM permanent staff visa and working for a company with a Multinational Headquarters (SEM) licence; after obtaining permanent residence (art. 27-A) the exemption ends.
Salaries and other employment pay, including in kind, are exempt from income tax and from social security and educational insurance contributions, to the extent paid and booked as staff cost by the SEM licensee.
Legal basis: Ley 41 de 2007 art. 26 (last paragraph as amended by Ley 57 de 2018 art. 13); art. 27-A
Régimen EMMA — personal extranjero (Ley 159 de 2020)
For employees · rate 0.0 %
Who: Foreign permanent/temporary staff of companies licensed under the EMMA regime (multinational companies providing manufacturing-related services).
Wages of foreign staff are exempt from income tax and from social security and educational insurance contributions (same model as SEM).
Legal basis: Ley 159 de 2020 (EMMA regime); article number not read — summary from MICI
Tax residence
The tax residence check does not cover Panama yet.
Assumptions
- Calculated with the OECD Taxing Wages methodology: income tax including local taxes plus employee social security; single person without children, tax year 2026, ECB rate of 2 January 2026.
- Exchange rate: 1 EUR = 1.1721 PAB (Balboa at par with US dollar (USD is legal tender), 2026-01-02) ↗
Sources
- DGI / MEF Panamá — Tarifas del Impuesto sobre la Renta (personas naturales y jurídicas)
- Gaceta Oficial No. 30238, 18 Mar 2025 — Ley 462 de 2025, art. 84 (new art. 101 Ley 51 de 2005): employee 9.75%; employer 13.25% to 28 Feb 2027, 14.25% to 28 Feb 2029, 15.25% after; independents 9.36% IVM
- Asamblea Nacional (Legispan) — Ley 57 de 2018 reforming Ley 41 de 2007 (SEM regime)
- MICI / PROPANAMA — Doing Business in Panama (territoriality, SEM and EMMA regimes)
Data checked: 2026-11-08. An indicative calculation for a typical case. Not tax advice.