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Panama ITMBS - Sales Tax

The sales tax in Panama is 7 % on all sales and services. Some products such as cigarettes and alcohole and taxed at a higher rate and are also subject to other "embedded" or "non-transparent" taxes. Products purchased can also be subject to various hidden import duties that are unknown to the final end user.

The sales tax or ITBMS as it is called locally is reimburseable, in other words a merchant gets to deduct the sales tax paid to outside vendors before remitting the current month to the government.

The sales tax is based on invoicing and not payments. It is possible for the employer to take a credit for any unpaid invoice in a future month.

A new law in Panama requires all local businesses to have an approved fiscal printer with a memory chip available for random government information collection. For the years 2011 and 2012 a tax credit is available to assist in this many times costly purchase.

Businesses that invoice less than 35,000 dollars per year do not have to collect sales tax in Panama. Food is not subject to tax regardless of size. This also applies to eateries (fondas) that exclusively sell food for tax away and not have table service.

The ITMBS report is submitted and paid monthly.

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