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Panamanian VAT rates and VAT compliance
VAT rates in Panama
The standard VAT rate in Panama is 7%.
The current rates are:
Panama VAT rates | ||
| Rate | Type | Which goods or services |
| 7% | Standard | All other taxable goods and services, including imports |
| 15% | Higher | Tobacco products |
| 10% | Higher | Hotel and accommodation; alcoholic beverages |
| 0% | Zero | Exports |
| 0% | Exempt | Oil-based products; basic foodstuffs; agricultural produce; medical and pharmaceuticals; education; bank and related commission on foreign currency; property leasing |
Panamanian VAT compliance
VAT invoices must be provided by tax payers for all supplies, including exports. Invoices are paper-based; there are no electronic invoice provisions. Invoices should contain at the least the following details:
- Name, address of the supplier
- Tax number of the supplier
- Name, address of the customer
- Date of supply
- Unique invoice number
- Description of the goods or services provided
- Any foreign currency amounts converted into PAB or US$
- VAT rate, amount charged and gross amount of the invoice
There are no simplified invoice rules for smaller transactions. Credit notes may be issued. Export invoices also need proof of the dispatch of goods from Panama to qualify as VAT exempt.
Tax point rules
VAT is due at the tax point, or time of supply. These are the legal terms for defining the rules for when VAT is payable. For goods, it is the earlier of the issuance of the invoice or cash payment. For services, it is the earlier of: cash settlement; invoice issuance; or provision of the services. For ongoing services, it is the date of the invoices or cash payments.
VAT on imports is due at customs, and goods will not be released until it has been paid.
