Country profile
Panama
Best : For foreign income under territorial tax and a dollarised life in Latin America.
The hinge between the Americas (about 4.5 million people), a dollarised economy built around the canal and a financial centre. Territorial taxation: foreign-source income is in principle not taxed. Many residence programmes, including the Friendly Nations visa.
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International rankings
The main public indices scoring business climate, economic freedom, corruption, peace and domestic safety. Figures copied from the official editions; a weak rank shows where to look closer.
| Index | Score | Rank |
|---|---|---|
| Doing Business 2020Banque mondiale / World BankScore 0–100, rank out of 190 economies (1 = best). | 66.6 | #86 / 190 |
| B-READY 2025Banque mondiale / World BankThree pillars scored 0–100 (regulatory framework, public services, operational efficiency). No overall rank: the World Bank publishes a quintile per pillar across 101 economies. | Not covered | |
| Index of Economic Freedom 2026Heritage FoundationScore 0–100, rank out of 184 countries (1 = freest). | 64.9 | #63 / 184 |
| Corruption Perceptions Index 2025Transparency InternationalScore 0–100 (100 = very clean), rank out of 182 countries. | 33 | #116 / 182 |
| Global Peace Index 2026Institute for Economics & PeaceScore 1–5 (lower = more peaceful), rank out of 163 countries. | 1.976 | #81 / 163 |
| GPI 2026 — Societal Safety and SecurityInstitute for Economics & PeaceScore 1–5 (lower = safer), rank out of 163 countries (1 = safest). | 2.549 | #112 / 163 |
- Doing Business 2020 : Last published edition (data as of May 2019). The World Bank discontinued the series in 2021 after data irregularities: read it as a historical benchmark.
- B-READY 2025 : Successor to Doing Business. Sample averages: 66.3 / 54.0 / 60.0. The 2026 edition (over 160 economies) is due by end-2026.
- Index of Economic Freedom 2026 : Hong Kong has not been graded separately since 2021 (folded into China).
- Corruption Perceptions Index 2025 : Published February 2026.
- Global Peace Index 2026 : Overall rank: conflict, domestic safety and militarisation. Day-to-day safety is the next row. Malta and Hong Kong are not covered.
- GPI 2026 — Societal Safety and Security : Appendix C of the 2026 GPI: homicide, violent crime, terrorism and instability. Excludes armed conflict and militarisation. Malta and Hong Kong are not covered.
Geopolitical risk
Tax by profile
Tax and contributions actually paid on a reference case, for a newcomer who is tax resident in 2026. Where a special regime is open to them, it is applied and flagged. The score out of 10 follows from the effective rate.
Rentier
10/10
Effective rate ≈ 0%
- Territorial taxation: foreign-source income not taxed
Employee
5/10
Effective rate ≈ 26%
- CSS 9.75% and education insurance 1.25%
- Tax 15% then 25% above $50,000: about 15%
Entrepreneur
3.5/10
Effective rate ≈ 32.5%
- Corporate tax 25%
- Dividends 10%
Business billed and performed outside Panama can fall under territorial 0%.
Reference cases and scoring
- Rentier: €100,000 a year from a foreign portfolio (€40,000 dividends, €20,000 interest, €40,000 gains on listed shares), no other activity.
- Employee: €60,000 gross a year paid by a local employer, single with no children. Employee contributions included, employer share excluded.
- Entrepreneur: €100,000 profit from a small local business, fully paid to the owner through the most common route (company and dividends, or sole trader).
Score = 10 minus 0.2 per point of effective rate (0% gives 10, 25% gives 5, 50% or more gives 0), rounded to the half point. Foreign withholding taxes and employer contributions are not counted.
Indicative figures as of October 2026 · Main source : dgi.mef.gob.pa. Not tax advice.
Business: incorporating
Panama remains an Americas hub: corporation or LLC, territorial principle on foreign income, 25% CIT on Panama-source profit. Offshore reputation still precedes the file: expect cautious banks and moderate paperwork.
25% (territorial)
Corporate tax
$1,200–$2,500
Setup
USD, indicative
$450–$2,000
Per year
USD, indicative
6.5/10
Ease
Ranking
5.5/10
Banking
Ranking
9.5/10
CFC
Pas de CFC notable
Formation packages often ~$1.2–2.2k in year one (registry + resident agent). Then: $300 franchise tax + agent/secretarial: roughly $450–975/year before real bookkeeping. Fine for a light shell/holding; local activity or picky banks need more budget. Not “free” despite the offshore reputation.
Who it fits
- Holding or services with non-Panama revenue and assumed territorial logic
- Founders tied to Latin America seeking moderate cost and no notable local CFC
- Structure complementing life or assets in a dollarized zone
The real drawbacks
- Activity generating Panama-source income without a 25% CIT plan
- Urgent banking without local network or KYC patience
- Expecting EU tech-startup branding. Panama is a regional hub, not e-Residency
Real estate: investing
6.5 %
Net yield
indicative
≈ 60 k€
30 m² studio
Panama City
~7%
Purchase costs
+25%
10-year prices
+10%
5-year prices
- Rental income tax : jusqu’à 25%
- Capital gains (personal holding) : 10% (pas d'exonération durée)
- Capital gains (via company) : IS / territorial sociétés (indicatif)
- Public debt / GDP : 58%
- Currency : USD
Reference listings portal : Encuentra24
Moving there: living and residence
Panama City and David show two speeds: regional hub vs a cheaper secondary city. Living in Panama attracts for tax territoriality and a tropical climate, along with cars, heat, and homeschool in a grey area in our grid.
6.3/10
Liberty score
equal weights
0–25%
Income tax
0%
Inheritance
Grey area
Homeschool
Residence routes
- Friendly Nations visa: Temporary residence → permanent after delays and proof
- Pensionado visa (retirement): Permanent residence for eligible retirees
Reference cities
- Panama City (cost mid)
Modern towers and good services in Punta Pacífica, Costa del Este or Casco Viejo. Daily traffic jams, humid heat, water cuts in some districts, and areas next to the Casco (El Chorrillo, Curundú) to avoid. - David (cost low)
An agricultural and trading town in Chiriquí, hot and plain, handy for shopping and clinics. Most foreigners live higher up in Boquete, cooler, 40 minutes away.
Tax territoriality ≠ visa. Budget banking KYC and immigration timelines separately.
All residence routes, steps and costs · Daily life: cost of living, family, FAQ
Go deeper on Panama
The 16 reference countries
Each country fits a different profile. Pick the one that matches yours.
Indicative Liberty Stack data · Methodology · Rankings : Doing Business 2020, B-READY 2025, Index of Economic Freedom 2026, Corruption Perceptions Index 2025, Global Peace Index 2026, GPI 2026 — Societal Safety and Security.