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*3 Months

Panama Employee Deductions

An employee in Panama is subject to several deductions. This assumes that are the employee is on the "Planilla" and that are labor contract exist between the two parties. Employees that only work on short-term projects are normally paid for professional services as outside contractors. The three deductions from a normal salary are:

- A social security tax of 9 % (sujbect to future change).
- An educational tax deduction of 1.25 %.
- A 15 % withholding tax on estimated salary above 11000 dollars per year.

The withholding tax is higher when the salary exceeds 50000 dollars per year. It also depends on if the tax payer intends to file his/her taxes jointly or as single.

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