Panama VAT (ITBMS) Guide for 2026: Rates, Registration & Compliance
Panama's VAT (ITBMS) is 7% on most goods and services. This guide explains registration, taxable scope, and filing requirements for businesses selling in Panama.
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Key Takeaways
Panama's VAT-equivalent is the ITBMS, with a standard rate of 7% since 2010, a 10% rate on alcohol and hotel accommodation, and 15% on tobacco; exports, most unprocessed foods, medicines, and medical/education services are exempt. Panama has not enacted a regime requiring non-resident digital-service providers to register or collect ITBMS, so cross-border B2C digital services are generally not collected by the provider — domestically supplied SaaS, though, falls within ITBMS at 7%. Foreign-supplied digital services currently have no active collection mechanism.
Taxability Snapshot
SaaS (domestic)
Taxable (7%)
SaaS (foreign)
No collection mechanism
Sales Tax Rates
Panama's VAT-equivalent is the ITBMS (Impuesto sobre la Transferencia de Bienes Muebles y la Prestación de Servicios), with a standard rate of 7% since 2010 [1][2]. A 10% rate applies to alcohol and hotel accommodation, and 15% to tobacco [1]. Exports, most unprocessed foods, medicines, and medical and education services are exempt [1]. The tax authority is the Dirección General de Ingresos (DGI).
Rate | Applies to |
|---|---|
Standard 7% | Most goods, services, and domestically supplied digital services |
Elevated 10% | Alcoholic beverages, hotel accommodation |
Elevated 15% | Tobacco products |
Exempt | Exports, most foods, medicines, medical and education services |
For more detail, see our LATAM tax guides.
A bill to extend ITBMS to foreign digital platforms has been proposed but not yet enacted; watch DGI announcements.
Registration or Nexus Threshold
Panama has not enacted a regime requiring non-resident digital-service providers to register or collect ITBMS, so cross-border business-to-consumer digital services are generally not collected by the provider [3]. Domestically supplied services, including SaaS provided locally, fall within ITBMS at 7% [1].
What foreign digital sellers should know:
Confirm whether you have a local presence or Panamanian-supplied services.
Treat foreign business-to-consumer digital sales as outside the current collection net.
Monitor DGI announcements for a foreign digital-services regime.
Apply 7% ITBMS to any services supplied from within Panama.
Reassess if you establish a Panamanian taxable presence.
Filing Frequency & Deadlines
Registered taxpayers file ITBMS monthly on Form 430, within the first 15 days of the following month [2][3]. There is no separate non-resident digital-services return, because no foreign-provider collection regime is in force.
Exemptions
Exports, most unprocessed foods, medicines, medical and education services, and residential rent are exempt [1]. Domestically supplied SaaS is taxable at 7%, while foreign-supplied digital services have no active collection mechanism [3].
Penalties
Late payment triggers a surcharge plus interest, and late filing carries a fixed fine, under the Fiscal Code as administered by the DGI [3][4].
Frequently Asked Questions
Panama ITBMS Calculator
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Panama · ITBMSRates as of September 2026. Source: DGI: Form 430 ITBMS instructions (opens in a new tab).
Panama · General rate
7%
ITBMS rate
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This is an estimate. Whether a sale is taxable, and at which rate, depends on what you sell, who you sell to and where it's supplied. If you intend to rely on these rates, please use the Kintsugi platform.