Panama Employees Taxes
Panama Social Security Tax
Employers and employees pay social security taxes when the employee is paid. Currently, employers pay 12.25% and the employee pays 9.75%.
Employers are required to withhold a percentage from each employee’s pay for income tax and for social security tax. Failure to withhold and make payments to the Social Security Office will result in surcharges, fines, and even criminal prosecution. There is also a professional risk premium paid to the Social Security Office corresponding to a perceived risk the work entails which is withheld from an
employee’s salary.
Educational Tax: An additional 1.25% of an employee’s wages are withheld as an “educational tax” while the employer pays 1.5%.
Non-Residents: Employers are required to withhold income taxes from non-residents who earn Panama source income. The Panama Income Tax rate for individuals is used without deductions. However, if the non-resident earns income outside of Panama, but the Panama employer wants to deduct these wages from his income tax, the non-resident will only have 50% of the total amount paid subject to the withholding tax. The employer is required to pay the withheld amounts within 10 days following the payment to the Panama tax authorities.
Contact Us for all of your Panama Tax needs.