Panamanian legislation designates a legal entity or individuals, as well as entities that by their public functions or by their activity, trade or profession, act in transactions as withholding agents that retain or receive Panamanian VAT (impuesto a las transferencias de bienes corporales muebles y la prestacion de servicios – ITBMS). The ITBMS withholding amount is 50% of the ITBMS included in the invoice or equivalent document that the supplier submits to the ITBMS withholding agent. Details about the withholding mechanism, including the required documentation, registration, payment terms, and other formalities applicable to ITBMS withholding agents have been established by Executive Decree.
Source: BDO
