Article ID: 10e75cb53afb5d5e01fd721bf8eddb9ce56abdd91690ce1c2198e12e74ec793a
Source ID: primary:insurancejournal.com
Published At: -
Extraction Method: trafilatura
URL: https://www.insurancejournal.com/news/international/2026/05/28/871595.htm
Body Text
Panama’s National Assembly approved a law that requires multinational entities domiciled in the country to demonstrate real local operations or face a 15% tax on passive foreign income, the Ministry of Economy and Finance said on Wednesday. - The law is intended to help satisfy European Union tax transparency requirements and support the country’s removal from EU monitoring lists. - “At the fiscal level, it requires multinationals to demonstrate that they have physical operations and real activity in a country, beyond just seeking tax advantage,” the National Assembly said in a separate statement on Wednesday. - Entities that fail to prove economic substance — qualified personnel, adequate facilities, strategic decision-making and real operating expenses in Panama — face a flat 15% rate on net taxable passive foreign income. - Passive income covered by the law includes dividends, interest, royalties, capital gains and real estate income earned abroad by members of multinational groups. - The legislation, which President Jose Raul Mulino must sign into law, takes effect from fiscal year 2027 and gives the executive branch 90 days to issue implementing regulations. - The law grants special treatment for income from intangible assets developed in Panama, such as patents, trademarks and copyrights, to encourage innovation. - The merchant marine sector and financial entities supervised by the banking, securities and insurance regulators are expressly excluded from the regime. (Reporting by Elida Moreno; writing by Brendan O’Boyle; editing by Daina Beth Solomon and Edwina Gibbs) Copyright 2026 Reuters. Click for restrictions. Was this article valuable? Here are more articles you may enjoy.
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