Panamanian VAT registration

Resident companies must VAT register when they pass the annual VAT registration threshold.

The VAT registration process is integrated with the tax payer registration process. Applicants are issued a local tax number, RUC. To obtain this, the business must submit the following:

• Identification papers of the signatory
• Public register of companies’ certificate
• Business licence from the Ministry of Trade
• Business registration document, Aviso de Operación

Panama does not offer a group VAT arrangement whereby related companies may consolidate intra-company transactions and returns to simplify compliance. There is also no option to register voluntarily under the VAT threshold.

Large tax payers, with annual taxable purchases above US$5 million per annum, must withhold 50% of VAT due on their suppliers’ invoices. They must register with the tax authorities, and their names are made public by the tax authorities at the end of each year. Government bodies must also withhold VAT on their suppliers’ invoices.

Withholding Agents must appoint a legal representative.

The Panamanian VAT registration threshold is US$36,000 per annum. Non-resident businesses providing taxable supplies in Panama have no threshold, and must register immediately on providing a taxable supply of any value.

Foreign businesses providing taxable supplies in Panama must VAT register from the first sale. Their local customers are also obliged to make a withholding of the VAT due, calculated as 6.5421% of the invoice value.

This withholding tax is to be paid directly to the tax authorities within ten days of settling the invoice.