Legitimate planning on Panama's territorial tax system: 25% only on Panama-source income, treaty-backed fiscal residency, transfer pricing compliance — and the new economic substance rules (Law 526 of 2026) most advisors haven't read yet.
Panama's territorial system taxes Panama-source income (corporate rate 25%) and generally leaves foreign-source income outside the net. Used with substance and proper home-country reporting, it remains one of the world's cleanest planning platforms.
The 2026 economic substance law changed the rules for multinational groups: foreign passive income now demands demonstrable substance in Panama — people, decisions and spending — or faces a flat 15% tax. Our founding attorney's DGI background means we plan with the auditor's eyes.
Deep insight into Panama's tax authority processes.
Master in Public Administration — law, economics and policy.
You always deal directly with the attorney handling your case.
Licensed attorney in the Republic of Panama.
“Panama tax planning is not a loophole strategy — it is the legitimate use of a transparent territorial system, backed by real substance.”
— Lic. José Manuel Góndola Escudero · Panama Bar No. 17,005Law 526 of 28 May 2026 added economic substance rules to the Fiscal Code for Panamanian entities of multinational groups earning foreign passive income: dividends, interest, royalties, capital gains, foreign real-estate income and other mobile income. From fiscal year 2027, those entities must report that income annually and demonstrate adequate substance in Panama — qualified people and premises, strategic decisions and risks, and operating spend. Entities that fail (or misreport) pay a flat, definitive 15% on that net income.
If your structure was designed before 2026, the question is no longer “is it territorial?” but “can it prove substance?”. We review structures against the law as written — our team read all of it — and fix what needs fixing before the first affected tax return.
Your Panama entities mapped against territoriality, substance and treaty rules.
People, premises, decisions and spend — designed and documented in Panama.
Documentation and filings for related-party transactions.
Residency certificates and treaty positions that hold up.
Audits, assessments and appeals before the tax authority and the courts.
CRS/FATCA-aware planning with your home-country advisors.
Entities, income flows and where each dollar is actually earned.
Territoriality, Law 526 substance, transfer pricing and treaties — as written.
Substance, agreements and filings put in place before the authority asks.
If the DGI questions the structure, we defend it — we built it to be defensible.
Panama taxes income produced within Panama; foreign-source income is generally outside the income tax. The corporate rate on Panama-source taxable income is 25%. That territorial principle is the foundation of legitimate Panama structures.
It changed it for multinational groups: Law 526 of 2026 (effective fiscal year 2027) requires Panamanian entities of multinational groups earning foreign passive income — dividends, interest, royalties, capital gains, real-estate and other mobile income — to demonstrate real substance in Panama, or that income is taxed at a flat 15%. Structures designed before 2026 should be reviewed now.
It is Panama's transfer pricing information return for taxpayers with related-party transactions subject to the regime. Transfer pricing documentation and the 930 filing are core compliance for groups operating through Panama — see our transfer pricing practice.
Yes, qualifying individuals and companies can obtain fiscal residency certificates from the tax authority, which matter for treaty relief. Panama maintains a network of double taxation treaties; whether you qualify depends on your real ties to Panama.
Structuring through Panama is legal when it is substance-backed and properly reported at home — CRS and FATCA mean opacity is not a strategy. We design structures that work because they are real, and we coordinate with your home-country advisors.
Confidential consultation in English. We review your structure against the current rules — territoriality, Law 526 and transfer pricing — and quote in writing.