Offshore Company Taxes Panama: Complete Guide 2025
When setting up an offshore company, understanding offshore company taxes Panama is essential. Panama’s tax regime is based on territoriality, making it one of the most attractive jurisdictions for international investors.
In this article, we break down exactly what taxes and requirements an offshore company in Panama must comply with in 2025.
1. Principle of Territoriality
Panama’s tax system is based on the principle of territoriality:
• Taxes are only paid on income from Panamanian sources.
• Income earned abroad is not subject to taxation in Panama.
This makes offshore companies especially attractive for international operations.
2. Annual Franchise Tax
All Panamanian companies, regardless of whether they operate locally or abroad, must pay an Annual Franchise Tax of USD $300 to the General Directorate of Revenue (DGI).
This payment keeps the company in good standing and active in the Public Registry of Panama.
3. Income Tax
• Not applicable if the company only generates foreign-sourced income.
• Applicable if the company earns Panamanian-sourced income (sales, services, or activities carried out within Panama).
4. ITBMS (VAT 7%)
The ITBMS (Value Added Tax at 7%) only applies if the company provides goods or services within Panama.
5. Accounting Records and Legal Obligations
Since Law 52 of 2016 and Law 254 of 2021, companies must:
• Maintain accounting records and supporting documentation of their transactions.
• Keep them at the registered agent’s office or at another declared location.
• Provide them to authorities if requested.
Failure to comply may result in penalties and fines.
✅ Conclusion
In summary, offshore company taxes Panama are limited to the $300 annual franchise tax, provided the income is foreign-sourced. Still, companies must comply with accounting and record-keeping rules to remain compliant.
Panama continues to be one of the leading global hubs for offshore structures in 2025.
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