Tax Residency Certificate

By:  Pablo González

pablog@icazalaw.com

Law 33 of July, 2010 modified by Law 52 of August 28th, 2012, Resolution No. 201-10860 of August 26th, 2013 and Executive Decree No. 958 of August 7th, 2013 regulate the subject of Tax Residency in Panama.

In our country, the tax residency certificates in principle are only applicable to residents of countries with which Panama has subscribed Double Taxation Treaties. Currently these countries are: Mexico, Barbados, Qatar, Spain, Luxemburg, Netherlands, Singapore, France, Korea, Portugal, Ireland, Czech Republic, United Arab Emirates and United Kingdom.

Pursuant to the current legislation, natural and legal persons must solely prove their tax residency based on evidence which is regulated and duly acknowledged by the Authority.

The legal person may prove its tax residency in Panama in two (2) ways, evidencing the following:

  1. That it has means of direction and administration in the Republic of Panama.
  1. That it has a Notice of Operations in force.

In the case of a natural person, the tax residency certificate may be obtaining proving any of the following assumptions:

  1. That it has economic interests in Panama, submitting an original letter of employment issued by a qualified person of the employer company of the foreigner. In case of independent investors, a copy of the income tax return in Panama must be submitted and prove that the applicant has stayed in Panamanian territory for more than 183 days, alternate or continuous, during a tax year or in the immediately preceding year.
  1. That a centre of vital interests of the person is maintained in the country, evidencing that he has established his main house in the Panamanian territory through a lease contract or property deed and submitting an utilities invoice (water, electricity, telephone) under the name of the person who requests the certificate.

Once the natural person had proved before the Competent Authority that it has its tax residency in the Panamanian territory, the International Taxation Directorate shall issue a resolution together with the certificate, where it is confirmed that the same is subject of taxation in Panama and may mitigate the double taxation in the other contracting country filing the certificate before the corresponding authorities.

You may contact us to extend the corresponding information, as well as to detail the requirements set forth by our legislation to request a Tax Residency Certificate.