What ITBMS is and who pays it
The Impuesto a la Transferencia de Bienes Corporales Muebles y la Prestación de Servicios (ITBMS) is charged on the sale of goods and the provision of services in Panama. The final consumer pays it in the price, and the merchant or professional who issues the invoice collects and files it. Taxpayers with gross annual income above 36,000 USD must charge it.
Current rates
| Good or service | Rate |
|---|---|
| Goods and services in general | 7% |
| Alcoholic beverages | 10% |
| Hotel and lodging services | 10% |
| Cigarettes, tobacco and derivatives | 15% |
| Basic food, medicines, medical services, education, residential rent | Exempt |
How it is calculated
- Net price: ITBMS = price × rate. Total = price + ITBMS.
- Price with tax included: net = price ÷ (1 + rate). ITBMS = price − net.
Example: a 1,000 USD service at the general rate generates 70 USD of ITBMS and a total of 1,070 USD. If the invoice already reads 1,070 USD tax included, the net amount is 1,000 USD.
Frequently asked questions
Who is exempt from charging ITBMS?
Small taxpayers with gross annual income of 36,000 USD or less are not required to charge it, although they do pay it on their purchases.
Does ITBMS apply to professional services?
Yes. Fees of lawyers, accountants, consultants and other professionals carry the general 7% rate once the provider exceeds the income threshold.
Can ITBMS paid on purchases be recovered?
A registered taxpayer deducts the ITBMS paid to suppliers (tax credit) from the ITBMS charged to customers (tax debit) and pays the difference.
Related articles
Sources
- Dirección General de Ingresos (DGI), Ministry of Economy and Finance
- Tax Code of Panama, article 1057-V (ITBMS)