Tax In Panama
One of the most consistently challenging aspects of contracting in Panama is complying with the country’s tax system. Whether you’re a contractor or a permanent employee, you have to pay tax on all of your earnings whilst you’re in the country. As well as paying tax in Panama, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge. Do you get double taxation in Panama? It will depend on your nationality and the nature of your assignment in Panama. Getting to grips with the basics of income tax in Panama and understanding your options helps you work out the best way to organise your affairs.
Paying Income Tax in Panama through Your Employer
If you’re working in Panama under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Panama for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Panama, but contractors may not be offered this service because of their short stay with each employer.
Working Out Income Tax in Panama Yourself
Anybody who can’t pay their tax in Panama through PAYE is left with the prospect of filing a tax return and doing everything themselves. Do you know much about Panamanian Tax Law? Does Panama have a tax treaty with your home country? You will need to find out or find someone who can help! Not only does this eat into your free time, it’s also exceptionally difficult to get the most out of the system. The rules change frequently, so if you’re new to it you may be working on out-dated research and end up paying too much. Income tax in Panama can be anything from 0 to 27 percent, and you need to be sure you are placed in the correct tax brackets.
Using an Umbrella Company for Income Tax in Panama
Contractors in Panama are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Panamanian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records). The companies are experts in Panama taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Panamanian tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Panama
We work with numerous umbrella companies in Panama, many of whom are experts in tax and immigration laws. If you have any questions about tax in Panama, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We also have a comprehensive knowledge of the different services they provide, and we can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Panama work permit. Our advice is 100 percent free, and it comes with no obligations. You will be paying taxes in Panama but without the overhead of directly dealing with the Panamanian tax authorities. Get in touch with us today for some reliable advice on tax in Panama!