Panama Tax Reform

In one of the most significant fiscal shifts in recent history, Panama’s National Assembly has approved Law No. 526 of 2026, requiring localized multinationals to prove genuine economic substance (i.e. effective operational presence) or face a new 15% corporate tax on foreign-sourced passive income. 

• End of Purely Paper Entities: Multinationals receiving offshore passive revenue—such as dividends, interests, royalties, and capital gains—must now demonstrate effective operational presence in Panama, including local staff, physical offices, operational expenses, and strategic decision-making.
• 15% Tax Penalty & Anti-Abuse Controls: Non-compliant structures will lose traditional territorial tax exemptions, subjecting net taxable income from these activities to a 15% rate, backed by an updated permanent establishment definition and strict anti-abuse statutory clauses.
• 2027 Enforcement Timeline & Strategic Exemptions: Taking effect in fiscal year 2027, the law strategically excludes the merchant marine alongside sectors fully regulated by the banking, securities, and insurance superintendencies to shield core pillars of Panama’s logistics and financial hub.

Multinationals operating in Panama must utilize the 90-day executive regulatory window to audit their offshore structures and align operational footprints with these strict new substance benchmarks ahead of the 2027 enforcement deadline.

The U.S. Commercial Service in Panama City stands ready to support U.S. companies in their export and procurement pursuits in Panama. For further information, contact your local U.S. Commercial Service office in the U.S. or a local Sector Specialist at the U.S. Embassy in Panama at Jeane.Zuniga@trade.gov.