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Patton, Moreno & Asvat

Capital Plaza, Floor 8
Costa del Este, Panama
P.O. Box 0819-05911
Panama, Republic of Panama

Main Contact: Maria de Lourdes Marengo
T: +507 306-9600
F: +507 263-7887
E: mmarengo@pmalawyers.com
W: www.pmalawyers.com

Do tax authorities assess taxes, duties, or other impositions in connection with any of the following events and, if so, at what rates and under what circumstances?

Sales Tax

The hallmark of Panamanian taxation is strict adherence to the principle of tax territoriality. Thus Article 694 of the Fiscal Code specifies that only “taxable income generated from any source within the territory of the Republic of Panama regardless of where it is received” is subject to income tax.

Panamanian tax laws provide for a specific tax for transfer of mobile assets and services (ITBMS), which is applied to those assets transferred or provision of services effected in the territory of Panama. This is regardless of the place where the contract has been celebrated or the place where payment is made. ITBMS tax would apply for the sale of aircraft within the Republic of Panama, at the applicable rate, currently, 7%.


Generally, the mere use of an aircraft would not be taxed.

Finance (mortgage tax, promissory note tax, conditional sale tax, tax on loan payments, tax on interest)

Mortgage tax – No, save for mortgage registration fees.

Promissory note – No promissory note tax. Stamp taxes must be paid on all contracts executed in Panama unless otherwise exempted in the Fiscal Code.

Conditional Sales tax – Not defined as such in our legislation, only ITBMS tax would apply.

Taxes of loan payments and taxes on interest – If the aircraft is being used in the Republic of Panama, generates taxable income in the Republic of Panama, payments are being deducted as an expense in Panama, and the activity has an incidence on the generation or preservation of income of a Panamanian source, payments would be subject to income tax or withholding tax, unless a treaty or diplomatic agreement for the exemption of taxes has been agreed between Panama and the jurisdiction of the counterparty

Lease (Tax on payments other than income)

Lease payments may be subject to ITBMS tax and to income tax or withholding tax.

Withholding taxes

Pursuant to paragraph 1-B of article 694 of our Tax Code, remittances to non-residents are subject to a 12.5% withholding tax by the Panamanian payor, considering such remittance as income of Panamanian source provided the following conditions are met:

  • The remittance has been deducted as an expense by the payor for income tax purposes; and
  • The service rendered by the payee has an incidence on the generation or preservation of the income of Panamanian source.

Import taxes

Import tax would be applicable for aircraft being introduced within the fiscal territory of Panama.

Export taxes

Generally, no.

Registration taxes

There are registration fees, charged by the Public Registry and the Civil Aeronautics Authority, but not a specific registration tax charged by the Government of Panama.

Luxury taxes

Generally, no.

FOR FURTHER INFORMATION: Please contact us and we would be pleased to assist.

DISCLAIMER: The above information should not be relied upon by the reader for legal advice as it is intended merely to serve as preliminary guide to the laws and regulations governing the taxation of aviation and aircraft in the Panama. The information intends to provide summary-level information about certain tax issues affecting general aviation and aircraft finance. Since these materials are general in nature, readers are encouraged to obtain legal and tax advice from their own professional legal and tax counsel based on specific facts and circumstances regarding their acquisition and/or use of aviation and aircraft.


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