New Tax Benefits in Panama 2025

Panama's Law 401, enacted in October 2023, aims to provide a viable route to alleviate tax debt while promoting tax compliance. Among its most notable provisions are:

• Tax debt prescription: Tax debts accumulated up to the year 2015 are forgiven, provided they meet specific legal requirements.
• Significant discounts on fines and penalties: Taxpayers can access reductions ranging from 50% to 85% on interest and fines.
• Incentives for early tax payments: Those who make advance payments are eligible for benefits such as discounts on income tax or the flat tax rate.

This legislation aims not only to provide financial relief but also to stimulate a culture of tax compliance in Panama.

Not all taxpayers automatically qualify for the benefits of Law 401. It is crucial to understand who meets the established criteria. According to the General Directorate of Revenue (DGI), the criteria include:

• Having a history of tax compliance with no serious previous infractions on record.
• Not being involved in legal cases of tax fraud or other tax investigations.
• Submitting all required tax documentation in good standing and within the established deadlines.

These benefits apply to both individuals and legal entities, provided they maintain a clear and transparent relationship with the DGI.

If you meet the eligibility criteria, the next step is to ensure that your application meets the required conditions. Here are some essential steps to follow:

1. Updated income declarations:

Ensure you have filed your annual tax declarations without omissions. This includes income tax or any other applicable tax.

2. Payment of administrative fees:

At the start of the process, you must cover the corresponding administrative fees via the DGI platform.

3. Validation through a professional:

It is highly recommended to seek the support of legal experts like Limitless Legal to minimize the risk of errors in your application.

In addition to the basic benefits outlined, Law 401 includes additional incentives designed to promote tax regularization:

• Partial tax exemptions: Availability of discounts for fully paying outstanding taxes.
• Long-term discounts: Taxpayers can benefit from additional reductions by committing to structured payments through the 2025 fiscal year.
• Facilitations for small businesses: Specific incentives for entrepreneurs and SMEs in their initial years of operations.

These incentives represent an unprecedented opportunity to regularize your obligations in an accessible manner.

Applying for tax benefits under Law 401 may seem like a challenging process, but you don't have to face it alone. At Limitless Legal, we help you:

• Review your tax history to ensure that you meet all requirements.
• Submit your request correctly to the DGI.
• Maximize available tax discounts and incentives.

Our experience in tax law in Panama ensures that each client receives a personalized and efficient service. We pride ourselves on being a reliable partner in your financial journey.