Tax residence certificate

Law 33 of June 2010, amended by Law 52 of August 28, 2012, Resolution No. 201-10860 of August 26, 2013 and Executive Decree No. 958 of August 7, 2013, regulate the issue of Tax Residency in Panama.

In our country, tax residency certificates are, in principle, only applicable to residents of countries with which Panama has signed Treaties to avoid Double Taxation. Currently, these countries are: Mexico, Barbados, Qatar, Spain, Luxembourg, Holland, Singapore, France, Korea, Portugal, Ireland, Czech Republic, United Arab Emirates and the United Kingdom.

According to current legislation, natural and legal persons must limit themselves to proving their tax residency based on evidence that is regulated and duly recognized by the Authority.

The legal entity may prove its tax residence in Panama in two (2) ways, demonstrating the following:

1. Which has means of direction and administration in the Republic of Panama.
2. That has a valid Operations Notice.

In the case of a natural person, the certificate of tax residence can be obtained by proving any of the following assumptions:

1. That economic interests are maintained in Panama , providing an original work letter issued by a qualified person from the foreigner’s employer. In the case of independent investors, a copy of the sworn income tax return in Panama must be provided and proof must be provided that the applicant has remained in Panamanian territory for more than 183 alternate or consecutive days during a fiscal year or in the immediately preceding year.
2. That the person maintains a center of vital interests in the country , demonstrating that he or she has established his or her main residence in Panamanian territory with a lease agreement or a property deed, and providing a bill for basic services (water, electricity, telephone) in the name of the person requesting the certificate.

Once the natural person has proven before the Competent Authority that he or she has his or her tax residence in Panamanian territory, the International Taxation Directorate will issue a resolution along with the certificate, confirming that the person is subject to tax imposition in Panama and may mitigate double taxation in the other contracting country by presenting the certificate to the corresponding authorities.

You can contact us for more information, as well as for details of the requirements established by our legislation to request a Certificate of Tax Residence.