Taxes in Panama for foreigners

Panama taxes are administered by the Dirección General de Ingresos (DGI), and the rule that shapes almost everything an expat needs to know sits in one place: Article 694 of the Código Fiscal. It establishes that income tax applies to income produced from a Panamanian source, regardless of nationality, visa, or where the money is paid — and the mirror image is what matters here: income produced outside Panama generally falls outside the tax base entirely.

Source is a different question from residency, and the Fiscal Code keeps them separate on purpose. Tax residency is a status you acquire under Article 762-N, by meeting one of two tests — more than 183 days of physical presence, or your center of vital interests in Panama — and it is not the same thing as holding an immigration visa under any of the routes covered in our residency guides. A Friendly Nations or Pensionado visa does not, by itself, make you a Panamanian tax resident; conversely, someone with no immigration status at all can still meet the 183-day test.

Those two ideas — where your income is sourced, and whether you separately meet the residency test — are the two concepts the guides below are built around. Everything else, including the Tax Residency Certificate and how it interacts with US filing obligations for American citizens specifically, follows from getting those two right first.