Panama Investment Income Tax Guide 2026
Panama taxes investment income from Panama sources at favorable rates: dividends 10% WHT, interest 5%, CGT 10% on real estate, 3% on stock exchange. Foreign investment income is exempt under the territorial system.
Dividend Taxation
Dividends paid by Panamanian companies are subject to a 10% withholding tax. A reduced rate of 5% applies to dividends paid from legal reserves. Dividends received from foreign companies are not taxable in Panama due to the territorial system. Panama does not have CFC (controlled foreign corporation) rules, so retained earnings of foreign companies are not attributed to Panamanian shareholders.
Interest Income
Interest paid by Panamanian sources (banks, companies) to non-residents is subject to 5% withholding tax. Interest paid to residents may be exempt or subject to reduced rates depending on the source. Interest from foreign sources is not taxable in Panama.
Capital Gains on Investments
- Panama Stock Exchange: 3% withholding on sale value
- Real estate: 10% on gain (primary residence exempt)
- Other assets: 5% withholding
No CFC Rules or Thin Cap
Panama does not have Controlled Foreign Corporation (CFC) rules or thin capitalization rules. This makes it an attractive jurisdiction for holding companies and investment vehicles. The absence of CFC rules means Panamanian residents can accumulate foreign investment income without current Panamanian tax.