Panama VAT Rates 2026
Panama (Panamá) levies Value Added Tax as ITBMS (Impuesto a la Transferencia de Bienes Corporales Muebles y la Prestación de Servicios). The standard rate is 7%, applied to most goods and services. Panama applies a single flat rate with no reduced rates.
Current rates — 2026
| Type | Rate | Applies to |
|---|---|---|
| Standard | 7% | Most goods and services |
| Zero-rated | 0% | Exports, food, medicines, school supplies (exempt) |
Registration and filing
| Registration threshold | USD 36,000Annual gross income below USD 36,000 exempts a business from charging ITBMS |
| Tax authority | Dirección General de Ingresos (DGI) |
| Filing frequency | Monthly returns, due by the 15th of the following month |
Access rates via API
The TaxID API returns current VAT and GST rates for 200+ countries and territories. Use the /api/v1/rates/PA endpoint to get Panama data programmatically. Responses are cached for 24 hours.
curl http://localhost:3000/api/v1/rates/PA
# No authentication required for rate lookups
# Response:
# { "country_code": "PA", "tax_type": "vat",
# "standard_rate": 7, "reduced_rates": [],
# "currency": "USD", "last_updated": "2026-06-12" }Fetching the rate in code
// Fetch current Panama VAT rates (no auth required)
const rates = await fetch('http://localhost:3000/api/v1/rates/PA').then(r => r.json());
// → { standard_rate: 7, reduced_rates: [],
// currency: 'USD' }
applyRate(rates.standard_rate);About Panama VAT
Panama's 7% ITBMS is among the lowest VAT-type rates in the Americas, fitting its dollarised, services-and-logistics economy built around the Canal and the Colón Free Zone — where re-exports move untaxed. Higher rates of 10% apply to alcohol and hotel accommodation and 15% to tobacco. Food, medicines and school supplies are exempt outright, and businesses earning under USD 36,000 a year stay outside the system entirely.
VAT in Panama is administered by the Dirección General de Ingresos (DGI).
Sources: PwC Worldwide Tax Summaries · DGI Panamá (accessed Jun 2026)
Rate history
- 2010ITBMS raised from 5% to 7% in the Martinelli fiscal reform
Frequently asked questions
What is the VAT rate in Panama in 2026?
7% ITBMS standard, with 10% on alcohol and lodging and 15% on tobacco; food and medicines are exempt.
Is the Colón Free Zone subject to ITBMS?
Re-export operations within the free zone are outside ITBMS scope — one reason Panama sustains such a low domestic rate.
Related concepts and guides: