What are the Tax Benefits in Panama?

By Easyco Updated October 7, 2026

Latin American countries have made news in the past years for providing a business friendly environment for foreign investment. Panama in particular has, for many years, been a sought-out destination for foreign companies that want to enjoy the tax benefits provided by this country. And, although Panama has also made news by events such as Panama Papers and Pandora Papers last year, the country has continued to be a top destination for multinationals, small and medium sized businesses and individuals that want to keep enjoying the benefits, complying with the law and regulations.

There are several benefits companies get for a certain period of time when their business activities help in some ways the development of the country or certain industries that promote employment, investigation, and more.

Financial Privacy

Over the years, Panama has accumulated some laws and regulations that guarantee financial privacy and secrecy. Banking information is confidential, but it can be disclosed in legal proceedings, and Panama exchanges financial account information under the OECD Common Reporting Standard (CRS). Beneficial owners of Panamanian companies are recorded through resident agents in a private registry (Ley 129 de 2020).

Territorial Tax System

Article 694 of the Panamanian Fiscal Code states that Income Tax is paid only from the revenue made within the country borders “the taxable income that is produced, from any source within the territory of the Republic of Panama whichever be the place where it is perceived”. Income from activities carried out outside Panama is generally not subject to Panamanian income tax. From fiscal year 2027, entities in multinational groups that earn certain foreign-source passive income (dividends, interest, royalties, capital gains and similar) must show economic substance in Panama, or that income is taxed at 15% (Ley 526 de 2026). Annual tasa única still applies to every company.

Tourism and Agriculture Allowances

Law N°122 was approved in 2019 with the purpose to promote the development of touristic activities, or making extensions of projects already existing in the country. Tourism and agricultural incentive laws offer tax credits and exemptions for qualifying projects; eligibility depends on the project and current regulations.

Free Trade Zones

In Panama, there are 3 types of Tax-Free Zones: Private, State and Mixed. Free zones can be established across the country under Ley 32 de 2011. Each of the FTZs specializes in different areas, some are focused more on commercial activities, manufacturing, industrial, education, or development.

These are some of the most popular Free Trade Zones in Panama:

Colon Free Trade Zone

The Colon Free Trade Zone is located in the City of Colon, near the Panama Canal, and with access to both the Pacific and the Atlantic Oceans. It is one of the largest free zones in the world, and is also responsible for importing goods distributed to most of Central and South America. These imports come from Europe, Asia, and North America.
The Panama Pacifico Special Economic Zone

The Panama Pacific Special Economic Zone is a Commercial and Residential project of the London & Regional Panama Group that started in 2004. The companies in this free trade zone are mainly in the high-tech manufacturing industry, as well as logistics and distribution, fil, maritime and aviation, and venues and services. The companies here have big benefits, such as direct and indirect tax exemptions, legal stability of 10 years (since the registration of a company), migration benefits, and customs exceptions, among others.
City of Knowledge

The City of Knowledge or ‘Ciudad del Saber’ (in Spanish), gives incentives to all organizations, companies, etc, that work to promote and develop new investigations and innovations in science, technology, and culture. City of Knowledge also has a Foundation that supports higher education and productive activities. The companies (public and private), organizations, NGOs, etc, that have activities in the City of Knowledge benefit from special tax incentives.

Setting up a company in Panama

These are the main steps to set up a company in Panama (full guide: how to start a business in Panama):

Choose the right type of company and structure
Register your company at the Panamanian Public Registry (through a resident agent)
Obtain your Tax ID or RUC in Panama
File the Aviso de Operación on Panamá Emprende
Open a Corporate Bank Account

Get Assistance from Easyco Experts!

Do you want to know more about the Tax Benefits in Panama and how to register your company? Send us a message and we will send you all the information you need to know, as well as help and assess you to successfully start your business in Panama. Easyco also provides additional services to guarantee your company’s compliance, which include: