Panama VAT (ITBMS) Guide 2026
Panama's VAT, known as ITBMS (Impuesto de Transferencia de Bienes Muebles y Servicios), is 7% standard. Alcohol and tobacco are taxed at 15%, and exports are zero-rated. Monthly returns are due by the 15th.
ITBMS Rates 2026
The ITBMS is Panama's value-added tax applied to the transfer of goods and services. The standard rate is 7%, which applies to most goods and services. A higher rate of 15% applies to alcoholic beverages and tobacco products. Exports of goods and services are zero-rated (0%), allowing exporters to claim input VAT credits.
- Standard rate: 7% — most goods and services
- Alcohol and tobacco: 15%
- Exports: 0% (zero-rated)
- Exempt: Basic food items, medicines, medical services, education, insurance, financial services, real estate rentals (residential)
Registration
Businesses with annual gross revenue exceeding PAB 36,000 (approximately USD 36,000) must register for ITBMS with the DGI. Registration is done through the DGI's online portal. Once registered, businesses must charge ITBMS on all taxable sales and can claim input VAT credits on eligible purchases.
Monthly Returns
ITBMS returns must be filed monthly by the 15th of the following month. The return reports total sales, ITBMS charged (output tax), ITBMS paid on purchases (input tax), and the net amount due. Late filing penalties apply: 10% of the tax due for the first month, plus 2% per additional month.
Input Tax Credits
Registered businesses can claim input VAT credits on purchases directly related to their taxable activities. This includes goods purchased for resale, raw materials, packaging, operating expenses, and capital equipment. Input VAT on exempt activities or personal expenses is not recoverable.