This article highlights the current corporate tax regime in Panama, providing clear figures and rules based solely on publicly available 2025 data. Panama’s taxation framework for companies is structured around a flat corporate tax rate, with unique rules for higher income brackets. The information below is relevant for businesses considering operations or investment structuring in Panama.
Panama Corporate Tax Rates & Structure
The Panamanian corporate tax system in 2025 features a single flat tax rate for most companies, with additional calculations required if a company’s taxable income surpasses certain thresholds. The tax year 2025 applies the following main rates and assessment methods:
| Tax Feature | Details (2025) |
|---|---|
| Tax Rate (USD) | 25% |
| Tax Type | Flat |
| Assessment Basis | Corporate income |
| Tax Currency | US Dollars (USD $) |
For most companies, the profit generated is taxed at a straightforward rate of 25% on net corporate income (declared in USD), irrespective of sector or business category unless exemptions or special regimes apply, which have not been detailed in the provided data.
Surtax Regime for Higher Incomes
Panama’s system introduces an alternate calculation for companies with higher taxable income. This is aimed at ensuring minimum tax contributions from larger businesses. The details are as follows:
| Condition | Surtax / Alternate Calculation |
|---|---|
| Taxable income > $1,500,000 (USD) | Tax base is the greater of net taxable income (taxed at 25%) or 4.67% of gross taxable income (CAIR Method), whichever results in a higher tax amount |
This 4.67% of gross taxable income calculation is known in Panama as the alternative Minimum Income Tax (CAIR). It effectively acts as a floor for tax payments among large-scale businesses, penalizing aggressive expense accounting that may seek to reduce taxable profits on paper.
Brackets and Exemptions
Currently, there are no progressive tax brackets for company profits in Panama. Only the flat rate and the CAIR alternative minimum tax apply as described above. No holding period requirements (for shares or assets) have been specified in the 2025 data, and there is no information provided about allowances or base exemptions.
Summary Table: Panama Corporate Taxation 2025
| Tax Criteria | 2025 Standard |
|---|---|
| Standard Corporate Tax Rate | 25% |
| Alternate Calculation Threshold | $1,500,000 (USD) taxable income |
| CAIR Alternate Rate (if above threshold) | 4.67% (on gross income) |
| Assessment Currency | USD ($) |
| Progressive Brackets | None |
| Surtaxes | Applicable as minimum if CAIR method exceeds regular tax |
| Holding Period Requirements | None specified |
Pro Tips for Managing Corporate Tax in Panama
- Ensure your accounting records clearly distinguish between gross and net taxable income, as the CAIR method may apply if revenues exceed $1.5 million USD.
- Regularly simulate both the standard and CAIR (4.67% of gross) tax computations if you anticipate higher income brackets, to avoid cash flow surprises at year-end.
- Monitor changes or notifications from Panama’s tax authorities via the official government portal (https://www.mef.gob.pa/) for updates on thresholds or administrative requirements.
- Consult your Panamanian accountant before making significant deductions or expense decisions that could impact the CAIR calculation.
- Since the holding period data is not defined, double-check any specific sector-based exceptions or incentives relevant to your line of business by reviewing the latest government updates.
Further Resources
For official guidance and the latest corporate tax regulations, refer to Panama’s Ministry of Economy and Finance: https://www.mef.gob.pa/
In summary, Panama in 2025 offers companies a transparent, flat tax system complemented by an alternative minimum tax for higher corporate earners. The lack of progressive brackets and the CAIR calculation mechanism mean clear predictability for most businesses, while large corporations must stay alert to the impact of gross revenues. Staying updated with the Ministry’s official releases and ensuring sound accounting practices will be essential for compliance and efficient tax planning in the current environment.