Wealth & Net Worth Tax in Panama: Rules for Holders

Understanding Wealth and Net Worth Tax in PanamaCopy link to section

Panama levies no wealth or net worth tax. There is no annual charge on the value of your assets, no consolidated balance-sheet assessment, and no inheritance, estate, or gift tax, a position rooted in the Panamanian Fiscal Code (Código Fiscal de la República de Panamá) and confirmed by the country's tax authority administration.

This absence applies to individuals and legal entities alike, whether national or foreign, resident or non-resident. The pages that follow explain why no such tax exists, what asset-linked charges you may still encounter, and how a foreign owner can hold property or financial assets in the country without triggering a net-worth levy.

The material is most relevant to foreign investors, multinational owners, and their advisers weighing where to place assets or incorporate a holding structure.

Does Panama Levy a Recurring Wealth or Net Worth Tax?Copy link to section

No. The country imposes no recurring net worth or wealth tax, and equally no inheritance, estate, or gift tax.

There is no annual declaration of net assets. No threshold exists above which wealth becomes assessable, and no rate schedule applies to a net-worth charge, because the underlying tax has never been created.

Foreign-sourced income falls outside the tax base, and offshore capital gains generally go untaxed under the territorial regime. The result is that the stock of wealth you hold, in Panama or abroad, attracts no periodic charge from the state.

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Legal Basis for the Absence of a Net Worth TaxCopy link to section

The Fiscal Code is the foundation of the national tax system. Its Article 694, enacted under Law No. 8 of 1956, limits the object of income tax to taxable income produced from any source within Panamanian territory, regardless of where it is received.

Executive Decree 170 of 1993 later clarified how the territoriality principle applies in specific scenarios. Together these provisions form the legal backbone of taxation in the country.

Nowhere in this framework is there a provision creating a recurring net worth or wealth tax on individuals or entities. The absence is structural rather than a temporary exemption or a sunset clause; it has stood as codified policy since 1956.

The Territorial Principle and Its Effect on Taxing WealthCopy link to section

Taxation rests on a territorial principle: only income generated inside the country is subject to income tax. Income earned beyond its borders is exempt, and this holds whether the taxpayer is an individual or a company, a national or a foreigner, domiciled locally or not.

Expenses tied to the generation of foreign-source income fall outside the base as well. Because residency carries limited weight in this model, it is not a decisive factor in liability.

This design taxes the flow of domestically sourced income, not the accumulated stock of assets. A recurring wealth charge sits at odds with that logic, which is one reason it has never been legislated.

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What the Absence of a Wealth Tax Means for Resident IndividualsCopy link to section

For a resident individual, global assets sit outside the reach of wealth, inheritance, and estate levies. Foreign-source investment income accrues free of local income tax, covering dividends from foreign stocks, interest from foreign bonds, and gains on the sale of assets located abroad.

The same exemption extends to foreign rental income, pensions, and interest, and it applies to residents and non-residents alike. Domestically sourced personal income, by contrast, follows a progressive schedule.

Fiscal residency is established under the Fiscal Code by more than 183 days of physical presence within a calendar year, or by setting a centre of vital interests in the country. That status is treated fully in a separate article.

What It Means for Companies and Foreign InvestorsCopy link to section

Corporate income tax applies at a fixed 25% on Panama-source income, whether earned by a resident or a non-resident entity. There is no further charge on a company's net asset value or equity.

Dividends from a foreign corporation are not Panama-source income and so fall outside the domestic base. Dividends of local source carry a 10% tax, while companies with mixed-source income pay 5% on dividends drawn from foreign-source income and from export earnings.

The territoriality rule draws multinational groups, entrepreneurs, and independent professionals to the jurisdiction, since income generated outside the country goes untaxed. No equity or balance-sheet levy layers onto that arrangement.

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Narrow Charges That Fall Within the Wealth Tax ScopeCopy link to section

Several asset-linked charges exist, and a foreign owner should not confuse any of them with a net worth tax. None is calculated on total assets minus liabilities or on a consolidated balance sheet.

• Immovable Property Tax (Impuesto de Inmuebles): levied between 0% and 1.0% by value and use. For a primary residence or family patrimony, property valued at USD 0–120,000 is exonerated, USD 120,001–700,000 is taxed at 0.5%, and value above USD 700,000 at 0.7% (Law 66 of 2017).
• Real Estate Transfer Tax: a 2% transfer tax plus a 3% income tax advance on the transfer of real estate, computed on the gross price or cadastral value, whichever is greater.
• Capital gains on real estate or securities: the 3% advance may stand as definitive, or tax may be assessed at 10% of the gain with the 3% credited against it.
• Stamp duty: USD 0.10 per USD 100 or fraction, applied only to certain commercial contracts.
• New-construction exoneration: buildings under the Law of Property Exoneration receive a 20-year exemption on the construction value, a feature common to new condominiums in the capital.

These are transaction or asset-specific charges. They do not aggregate your holdings, and they bear no resemblance to a periodic wealth assessment. The corporate tax summary sets out the property rate band in more detail.

Holding Assets in Panama Without a Net Worth ChargeCopy link to section

A non-resident may own local real estate indefinitely, holding title personally or through a Panamanian Sociedad Anónima. Ownership by a foreign individual is fully lawful and carries no annual wealth charge.

Because the regime is territorial, residency mainly matters for withholding. Foreign corporations can register with the tax authority to be treated as resident for withholding purposes.

A private interest foundation under Law 25 of 1995 offers another holding route; it is not held to the commercial-activity test for resident status, though it must maintain real means of management and administration in the country. Interest on local government securities, on savings accounts, and on time deposits with banks established locally is exempt for citizens, residents, and non-residents.

Holding foreign securities portfolios or equity in non-Panamanian entities through a local structure draws no annual balance-sheet charge from the tax authority.

Compliance and Reporting Considerations for Asset HoldersCopy link to section

No wealth-tax return, asset declaration, or net-worth schedule exists, because no underlying obligation does. What remains are ordinary filing duties tied to income and property.

The annual income tax return falls due by 31 March. Property tax is payable in three instalments on 30 April, 31 August, and 31 December, with a 10% discount available where the full year is settled upfront.

If you earn local income, run a business, or need a Certificado de Residencia Fiscal, you will generally engage a Contador Público Autorizado, the licensed accountant authorised to prepare and submit returns through the tax system.

On international transparency, a Tax Information Exchange Agreement between Panama and the United States, signed in 2010, has been in force since 2011 and permits exchange on request. Panama left the FATF grey list in November 2023 and was removed from the EU list of high-risk third countries on 14 March 2024, though it stays on the EU list of non-cooperative jurisdictions for tax purposes while working toward removal.

Outlook for a Future Wealth or Net Worth Tax in PanamaCopy link to section

The territorial system, the country's central fiscal feature, remains in place, taxing only income generated within its territory. That principle continues to underpin its appeal to foreign capital.

Central government tax revenue stood at 7.7% of GDP in 2023, a low ratio attributed to modest rates, wide exemptions, and weak collection. The IMF country report flags revenue mobilisation as a structural need, but stops short of recommending a wealth tax.

Since joining the BEPS project in 2016, the country has adopted measures against harmful tax practices. The OECD Pillar Two agreement sets a 15% minimum effective rate for multinational groups with consolidated revenue above EUR 750 million, a mechanism aimed at corporate profit rather than net worth.

A move toward the global minimum tax is likely to be weighed carefully, perhaps through a Qualified Domestic Minimum Top-up Tax that balances international commitments with investor appeal. No public draft, government proposal, or parliamentary bill introducing a recurring wealth or net worth tax has surfaced, and the political incentives favour keeping the no-wealth-tax stance as a competitive differentiator.

ConclusionCopy link to section

For a non-resident foreign business owner, the practical weight of everything covered here rests on a single structural fact: the absence of a recurring net worth charge is not a loophole or an oversight but a direct consequence of how Panama's territorial system is built, which means the narrow charges that do exist deserve proportionally more attention precisely because they are easy to overlook against that larger backdrop. The decision-relevant question going forward is therefore not whether Panama is worth holding as a jurisdiction, but whether the specific asset and entity mix held there has been reviewed against those narrow charges and any reporting obligations tied to them.

How Expanship Can Help Your Business in PanamaCopy link to section

Because no wealth or net worth tax exists, the practical work for a foreign owner lies in structuring asset holding correctly and meeting the income and property filing duties that do apply; Expanship handles that groundwork and the wider needs of a foreign-owned entity in the jurisdiction.

• Company incorporation, including the Sociedad Anónima and private interest foundation
• Registered agent and registered office services
• Tax registration and preparation of annual returns
• Ongoing compliance management and statutory deadlines
• Accounting and bookkeeping through a licensed public accountant
• Introductions to local banking partners

To discuss holding structures or compliance for your assets, contact Expanship Panama.

Frequently Asked QuestionsCopy link to section