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Taxes
Taxes – Panama is a haven!
Panama has one of the most favorable tax systems in the world. Not only does it have a light tax burden, but personal income tax is only levied on income derived in Panama regardless of residency status. It is a tax haven and any profits created offshore are tax free. Unlike the U.S. and many other industrialized countries, interest derived from your banking accounts are not taxed either even if these funds are in Panamanian banks.
As if that was not enough, when you purchase or build a new property you will be exonerated of property taxes for a typical period of 5, 10, 15 or even 20 years in the tourist areas (see details below). Panama’s friendly laws allow visitors from other countries to buy and own property with the same rights and protections as citizens.
All of these incentives is what renders retiring in Panama so easy and advantageous. None of your foreign-sourced income is taxed and you can easily live based on your social security and/or pension. Your savings can be transfered to a bank in Panama and you can reap the rewards and use your interest tax free. You have a multitude of discounts and it also provides you other tax benefits including free importation of household and personal goods and the right to import a new car every two years tax free.
Regardless of your need, we can assist you in your personal and corporate goals. Visit our Investment & Legal Services section to learn how Panama Corporations and Foundations can benefit you and contact us so we can assist you in getting started!
Real Estate Tax Incentives
As indicated in Invest in Panama, the country is experiencing an exciting economic growth at multiple levels. This has also propelled a development boom to meet for the continued demand in housing, tourism, business and services. The pro-business country has integrated a series of incentives including tax breaks and preferential interest rates that further stimulate the construction industry.
Over the next five years, it is estimated that construction will generate more than $10 billion according to the Institute of Architecture and Urbanism.
Tourist zones defined by the Panamanian Institute for Tourism are provided a 20-year exemption on real estate taxes, import duties and value-added tax over imports of furniture, materials, equipment used for construction and large capacity vehicles.
Investing in Panama may provide you the opportunity to be eligible for residency and immigrant visas. Feel free to contact us to discuss the opportunities of these programs.
Real Estate Tax Exemptions
Government appraisals for tax purposes are performed by Panama's Ministry of Economy and Finances. Real estate valued above $30,000 is subject to taxes. In 2006, new legislation offered tax exemptions of up to 15 years on new residential homes and which are transferable when the property is sold.
Commercial Buildings: 10 year tax exemption
Other Construction Use: 10 year tax exemption
Single family homes:
Up to US$100,000 --- 15 year tax exemption
US$100,000 - US$250,000 --- 10 year tax exemption
More than US$250,000 --- 5 year exemption
Preferential Interest Rates
From now till May 2009, your mortgage interest rates may be reduced by up to 6.5% below market rates. To qualify for this program, the property must be below $62,500 and be the primary residence.
Income Tax Exemption
Profits from a real-estate sale may be exempted of tax if reinvested in new construction of a housing valued at $62,500 or less.
Special Tourism Zones
Several zones within the country of special interest for tourism have been designated and have additional incentives you can take advantage of:
20-year exemption on real estate tax
15-year exemption on income tax derived from tourism activities
20-year exemption from import duties and value added tax on furniture, materials, equipment, parts and accessories for construction, as long as they are not manufactured in enough quantity in Panama. (This includes eight-passenger vehicles, as well as aircraft, boats, etc. to be used exclusively for tourist activities).
Old Panama City, or Casco Viejo
Casco Viejo is located within Panama City and mark the beginnings of the city since the 17th century. It is a colonial historical area that has deteriorated over the decades.
The sector is slowly changing as restorations have begun and are taking place. To further promote this area, the government is offering incentives for the restoration of these historical monuments within Casco Viejo.
10-year income tax exemption on the sale or rental income of properties
30-year real estate tax exemption
total exemption on the 2% transfer tax of real estate on the first sale of properties valued above $50,000
preferential interest rates on loans
total import tax exemption for equipment and materials related to construction and restoration that are not available in Panama
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