Article 764 of the Panamanian Tax Code indicates which properties are exempt from property tax. These properties include:
Properties registered at a value of 30,000 USD or less including improvements to the land, i.e. construction
Land used exclusively for farming and registered with the Ministry of Agriculture and Development at less than 150,000 USD.
The tax basis should be understood as being the value of the land plus the improvement. Article 766 of the Tax Code goes on to establish the property tax table to be the following:
Registered Value of Property
Yearly Tax Percentage
Under 30,000 (USD)
0%
30,000-50,000 (USD)
1.75%
50,000-75,000 (USD)
1.95%
Over 75,000 (USD)
2.10%
For example if you have a property valued at $150,000 (USD), you should pay the following amount in tax.
2.1% ($150,000 – first $30,000 which is tax exempt) = $2520 per year
Alternative Property Tax Calculation
Under the recent real estate tax amendment of 2005, the following alternative tax rate is applicable to properties whose property taxes are paid up to date and whose registered value in the public registry has been updated with a sworn declaration of the estimated value of the property, which is completed by a licensed appraiser.
Registered Value of Property
Yearly Tax Percentage
Under 30,000 (USD)
0%
30,000-50,000 (USD)
0.70%
50,000-75,000 (USD)
0.90%
Over 75,000 (USD)
1%
For example if you have a property valued at $150,000 (USD), you should pay the following amount in tax.
1% ($150,000 – first $30,000 which is tax exempt) = $1200 per year
Those properties which are not paid up to in property taxes and which have not presented their estimated value in a timely manner, may not take advantage of this alternative calculation.
If you have real estate, with no improvements built on it, and you register the property with an updated cadastral value within one year of the publication of the amendment to the Tax Code - i.e. December 2007 - you will be eligible to have the property taxed according to the alternative tax rate.
In order to apply for the alternative property tax calculation you must present the following documentation:
Application addressed to the Director of the Cadastral Department
Paz y Salvo (Certificate of good standing from the tax department)
Paz y Salvo (Certificate of good standing fro the Public Registry)
Copy of cedula of the property owner or Paz y Salvo from the Company which owns the property
Current appraisal issued by an approved appraisal official.
