Tax Law · EN
Special Income Tax Regime for SMEs and Entrepreneurs in Panama.
Law 189 of 2020 created a special Income Tax regime for micro, small and medium-sized enterprises and for individuals registered as entrepreneurs with AMPYME, with reduced progressive rates compared to the general regime. Eligibility requirements and rate tables in force since fiscal period 2020.
Law 189 of 2020 created a special regime for the payment of Income Tax by Micro, Small and Medium-sized Enterprises, as well as for individuals registered as entrepreneurs with AMPYME (the Authority for Micro, Small and Medium-sized Enterprises). The law amends Article 699-A and adds Article 700-A to the Código Fiscal (Panama's Fiscal Code), and the special regime applies from fiscal period 2020 onwards.
Individual (natural person)
It applies to the individual considered a micro, small or medium-sized entrepreneur, provided that they:
- Are duly registered in AMPYME's Business Registry.
- Earn annual gross income not exceeding five hundred thousand balboas (B/. 500,000.00).
- Are subject to annual verification of compliance with these requirements.
The Executive Branch, through the Ministerio de Economía y Finanzas (MEF, the Ministry of Economy and Finance), determines the formal requirements that individuals wishing to take up this special regime must meet.
Rate table — individual (natural person)
| Total income | Rate on net taxable income | Maximum tax within the bracket |
|---|---|---|
| Up to B/. 11,000.00 | 0% | B/. 0.00 |
| B/. 11,000.01 to B/. 36,000.00 | 7.5% | B/. 1,875.00 |
| B/. 36,000.01 to B/. 90,000.00 | 10% | B/. 5,400.00 |
| B/. 90,000.01 to B/. 150,000.00 | 12.5% | B/. 7,500.00 |
| B/. 150,000.01 to B/. 350,000.00 | 17.5% | B/. 35,000.00 |
| B/. 350,000.01 to B/. 500,000.00 | 22.5% | B/. 33,750.00 |
Legal entity (juridical person)
It applies to the legal entity considered a micro, small or medium-sized enterprise, provided that it:
- Is duly registered in AMPYME's Business Registry.
- Does not result, directly or indirectly, from the splitting of a company into several legal entities, and is not an affiliate, subsidiary or controlled by other legal entities.
- Earns annual gross income not exceeding five hundred thousand balboas (B/. 500,000.00).
- Has registered (nominative) shares or participation quotas, and its shareholders or partners are individuals (natural persons).
These requirements are subject to annual verification, and the Ministry of Economy and Finance determines the applicable formal requirements.
Rate table — legal entity (juridical person)
| Total income | Rate on net taxable income | Maximum tax within the bracket |
|---|---|---|
| Up to B/. 11,000.00 | 7.5% | B/. 825.00 |
| B/. 11,000.01 to B/. 36,000.00 | 10% | B/. 2,500.00 |
| B/. 36,000.01 to B/. 90,000.00 | 12.5% | B/. 6,750.00 |
| B/. 90,000.01 to B/. 150,000.00 | 15% | B/. 9,000.00 |
| B/. 150,000.01 to B/. 350,000.00 | 20% | B/. 40,000.00 |
| B/. 350,000.01 to B/. 500,000.00 | 22.5% | B/. 33,750.00 |