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VAT rates in Panama

Quick overview

Standard Rate Reduced Rate Other Rates
7% N/A 10%, 15%, exempt

The local name for VAT in Panama is Impuesto a la transferencia de bienes corporales muebles y la prestación de servicios (ITBMS).

There are basically 3 VAT rates in Panama:

  • Standard VAT rate is 7%
  • Other VAT rates are 10% & 15%

Recent developments

For more information about (recent) rate change developments in Panama, please click HERE.

Standard rate: 7%

This rate applies for all transactions that take place in Panama, unless an exception applies (such as a reduced rate, the zero rate or an exemption, or a reason to treat the transaction as outside scope of VAT).

Other rates: 10% & 15%

Examples of goods and services taxable at 10%

  • Alcoholic beverages, such as liquors and beers
  • Hotels and other lodging services

Examples of goods and services taxable at 15%

  • Cigarettes, cigars and other tobacco products

 

Examples of exempt supplies of goods, without the right to deduct VAT

  • Supplies made by agricultural producers
  • Unprocessed fish, meat and game supplied by nonindustrial fishermen and hunters
  • Exported goods
  • Medical and pharmaceutical products
  • School materials
  • Supplies of goods made in a free zone in Panama
  • Supplies of movable goods within an authorized customs warehouse
  • Oil and related products (motor oil is subject to VAT)
  • Groceries
  • Hand tools, fertilizers, insecticides, fungicides and similar products used in agriculture

A global VAT/GST rate overview can be found here (note this is a work in progress).

This post was last updated on October 2, 2021.

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