# Panama VAT (ITBMS) Guide for 2026: Rates, Registration & Compliance

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Published: July 15, 2026

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.

- **SaaS (domestic):** Taxable (7%)
- **SaaS (foreign):** No collection mechanism

## 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

## 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](/sales-tax-guides/latam).

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].

## Sources

- DGI — ITBMS (rates): [https://dgi.mef.gob.pa/itbms/Itbms.php](https://dgi.mef.gob.pa/itbms/Itbms.php)

- DGI — Formulario 430 (rate history, monthly filing, legal basis): [https://dgi.mef.gob.pa/DInforme/Formulario430.php](https://dgi.mef.gob.pa/DInforme/Formulario430.php)

- DGI — Preguntas frecuentes ITBMS (filing and non-domiciled providers): [https://dgi.mef.gob.pa/Preguntas/Itbms.php](https://dgi.mef.gob.pa/Preguntas/Itbms.php)

- DGI — Multas y Sanciones: [https://dgi.mef.gob.pa/MS/MS.php](https://dgi.mef.gob.pa/MS/MS.php)

## Frequently Asked Questions

### What is the Panama ITBMS rate in 2026?

7% standard, with 10% on alcohol and hotel accommodation and 15% on tobacco; exports and most essentials are exempt.

### Do foreign digital sellers register for ITBMS in Panama?

No. Panama has no active regime for foreign digital sellers; a bill to tax foreign digital platforms has been proposed but not enacted.

### Is SaaS taxable in Panama?

Domestically supplied SaaS is taxable at 7%. Foreign-supplied digital services have no active collection mechanism.

### How often is ITBMS filed in Panama?

Monthly, on Form 430, due by the 15th of the following month.

### What is the penalty for late ITBMS in Panama?

An automatic 10% surcharge plus interest, with fines and possible suspension of the operating notice for persistent non-compliance.

### Is a foreign digital-services tax coming to Panama?

A bill to extend ITBMS to foreign digital platforms has been proposed but not enacted; watch DGI announcements for changes.

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