Panama ITBMS Rates 2026

7% (standard rate): most goods and services.

10%: alcoholic beverages, hotel lodging, petroleum derivatives.

15%: cigarettes and tobacco derivatives.

Filing: monthly via Form 430 in the DGI e-Tax 2.0 portal, within the first 15 days of the following month.

Legal framework: ITBMS Law, Panama Tax Code.

How ITBMS works

ITBMS is Panama's VAT-equivalent tax. It applies to transfers of movable goods and the provision of services within Panamanian territory. Registered taxpayers must charge it to customers and remit it to DGI monthly via Form 430.

Forward vs Reverse

Forward: you have a price without ITBMS and need to add the tax. Subtotal x (1 + rate) = total with ITBMS. Example: B/.100 x 1.07 = B/.107 (standard).

Reverse: you have a total with ITBMS included and need to extract the tax. Total / (1 + rate) = subtotal without ITBMS. Example: B/.107 / 1.07 = B/.100 (standard).

Worked example

Professional service of B/.500 with standard ITBMS (7%)

Subtotal = B/.500.00
ITBMS 7% = B/.35.00
Total billed to client = B/.535.00

In the monthly Form 430:
Sales taxed at 7% = B/.500
Output VAT (debito) = B/.35 (what you charged)
Input VAT (credito) = depends on purchases
ITBMS payable = Output - Input - withholding received

Input VAT credit and net calculation

Registered companies can deduct ITBMS paid on their purchases (input VAT / credito fiscal) from ITBMS charged on their sales (output VAT / debito fiscal). The net is paid to DGI. Only ITBMS directly related to the taxpayer's taxable activity is deductible.

Formula: ITBMS payable = Output VAT - Input VAT - Withholding received (Form 4331).

ITBMS withholding (50% and 100%)

Certain taxpayers designated by DGI must withhold ITBMS from their suppliers:

  • 50% withholding: Large Buyers (Grandes Contribuyentes) with B/.3M+ annual purchases. Withhold half the ITBMS and issue a certificate to the supplier.
  • 100% withholding: cross-border services provided by non-domiciled suppliers. The local client withholds all the ITBMS.

The supplier deducts those withholdings from output VAT in Form 430. For details on filing withholding, see Panama Form 4331.

ITBMS-exempt products and services

Some categories are exempt or not taxed:

  • Basic food basket products
  • Medicines and medical services
  • Educational services
  • Financial services (with exceptions)
  • Re-exports from the Colon Free Zone
  • Residential rentals

The full list is in the Tax Code and is updated by DGI. Before applying an exemption, verify the specific classification of your product or service.

Related resources

Frequently asked questions

What are the ITBMS rates in Panama?

7% is the standard rate applicable to most goods and services. 10% for alcoholic beverages, hotel lodging, and petroleum derivatives. 15% for cigarettes and tobacco.

When are ITBMS filings and payments due?

Monthly, within the first 15 days of the following month, via Form 430 in the DGI e-Tax 2.0 portal. Exact date depends on the last digit of your RUC. Late filing triggers a minimum fine of B/.500 plus surcharges.

How is reverse ITBMS calculated (extract from total)?

Total / (1 + rate). Example: B/.107 / 1.07 = B/.100 (subtotal), ITBMS = B/.7. Useful when you receive an invoice with the gross total and need to extract the tax.

Who must register as an ITBMS taxpayer?

Individuals or entities with annual taxable revenue above B/.36,000 (B/.3,000 monthly) from taxable transfers of goods or provision of services. Verify with DGI.

Does ITBMS apply to re-exports from the Colon Free Zone?

No. Genuine re-exports from the Colon Free Zone to other countries do not incur ITBMS. Sales to the Panamanian internal market from the zone do incur it.

Does this calculator replace Form 430?

No. This calculator handles individual cases (one invoice price, one purchase amount). The monthly Form 430 consolidates all period transactions: taxed sales by rate, input VAT, withholding received. For Form 430 automation use an ERP like cifraHQ.