Tax Residency in Panama: Updated Criteria and Regulatory Changes
Tax residency in Panama is a crucial status for individuals and companies seeking to establish their economic interests in the country. Regulated by the General Directorate of Revenue (DGI), this status determines tax obligations and benefits under international agreements. Below are the key aspects and recent regulatory updates.
Tax Residency Certification
Purpose:
The Tax Residency Certificate (CRF) can be requested for general use (with foreign authorities) or specific purposes (applying double taxation treaties).
Issued via a DGI resolution after validating residency criteria.
Criteria for Individuals
Physical Presence:
Residing in Panama for more than 183 consecutive or non-consecutive days within a fiscal year.
Permanent Home:
Establishing a center of vital interests (economic, professional, familial) in Panama, with a continuously used property (owned or leased).
Criteria for Legal Entities
Local Incorporation:
Entities formed under Panamanian laws, with effective management and control within the country.
Foreign Entities:
Companies incorporated abroad may qualify as tax residents if operating from Panama and registered in the Public Registry.
Tax-Exempt Activities
Offshore operations (services provided outside Panama) do not generate taxable income locally, even if managed from within the country.
Recent Regulatory Updates
Resolution 201-9673 (2021): Introduced electronic CRF applications via the Etax 2.0 platform, streamlining procedures.
Resolution 201-8394 (2024): Repealed prior rules but upheld Resolution 201-0354 (2016), governing CRF requirements and processes.
Applicant Recommendations
Accurate Documentation: Submit proof of address, lease agreements, and physical presence records.
Expert Guidance: Consult professionals to align corporate structures with current regulations and avoid double taxation.