Does the holding pay Panama tax on dividends received from abroad?

No. Under the Fiscal Code's territorial system, foreign-source dividends are not taxed in Panama. However, this does not eliminate source-country taxes (withholding) or the shareholders' tax obligations in their countries of residence.

Can I apply the double taxation treaties automatically?

No. To benefit from a treaty, the holding generally must obtain a tax residency certificate from the DGI and demonstrate real economic substance in Panama (effective management, expenses, staff as applicable). Treaties include anti-abuse clauses. Consult a tax advisor before structuring.

What withholding applies when the holding distributes dividends to its shareholders?

If the company requires an operations notice and distributes Panama-source profits, the withholding is 10%; distributions of foreign-source or exempt income are subject to 5%. Purely offshore companies with no Panama operations or operations notice are generally not subject to this withholding. Verify your case with a Panamanian tax advisor.

Must the holding keep accounting records even if it does not operate in Panama?

Yes. Law 52 of 2016 (as amended) requires Panamanian legal entities not operating in Panama to keep accounting records and supporting documentation, available through their resident agent. Non-compliance triggers fines and can lead to suspension of the company.

Panama Holding Company | 0% Tax on Foreign Dividends

Visa Types

A Panama holding company is a corporation (S.A.) incorporated under Law 32 of 1927 whose purpose is to hold equity interests, shares, real estate or other assets, generally located outside Panama. Thanks to the territorial tax system, foreign-source dividends received by the holding pay no income tax in Panama (0% when received; note that when the company distributes dividends out of that foreign-source income, a 5% dividend withholding applies if it holds an operations notice (aviso de operación) or operates in Panama — purely offshore holdings with no Panama operations avoid it), and capital gains from the sale of foreign assets are likewise not taxed in Panama. Panama also has a network of 17 double taxation treaties in force (Spain, Mexico, Singapore, United Arab Emirates, Netherlands, Luxembourg, South Korea, Qatar, among others, per the Ministry of Economy and Finance and PwC tax summaries), which can reduce withholding in the source country when tax residency and substance requirements are met. No minimum capital is required and formation takes 3-5 business days. It is a common structure for regional Latin American holdings, intellectual property holding, real estate portfolios and family wealth planning.

Legal Disclaimer

This information is general guidance and does not constitute legal, tax or financial advice. Panama's laws and tax rates change; always verify current rules with the DGI and MEF. Consult a licensed Panama attorney and tax advisor (and advisors in your country of residence) before forming a holding company. Last verified: July 2026.

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