ITBMS calculator for Panama: 7%, 10% and 15%

In short: ITBMS is Panama’s consumption tax, the local equivalent of VAT. The general rate is 7%, rising to 10% for alcoholic beverages and lodging and to 15% for tobacco. This calculator works out the tax from a net price or breaks down a price that already includes it.

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

Key fact: ITBMS is filed and paid monthly to the Dirección General de Ingresos, within 15 days after the end of the month, using form 430.

What is exempt from ITBMS

Not everything you buy carries ITBMS. According to the Dirección General de Ingresos, the main exempt items are:

Basic food items from the basic basket.
Medicines.
Education services, when provided by a person authorised by the Ministry of Education.
Services linked to human health.
Rent of property used exclusively as the tenant’s home, if the contract exceeds six months.
Stock exchange activities and the financial activities of cooperatives.

Summary list. Article 1057 of the Tax Code and the DGI detail more cases; it is worth confirming the classification of each good or service with the DGI.

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.

Worked examples

Case	Rate	Net	ITBMS	Total
100 USD service before tax	7%	100.00 USD	7.00 USD	107.00 USD
200 USD hotel night before tax	10%	200.00 USD	20.00 USD	220.00 USD
50 USD tobacco purchase before tax	15%	50.00 USD	7.50 USD	57.50 USD
321 USD invoice with ITBMS included	7%	300.00 USD	21.00 USD	321.00 USD

Frequently asked questions

How much is ITBMS in Panama?

The general rate is 7%. It rises to 10% on alcoholic beverages and lodging, and to 15% on tobacco and derivatives.

How do you take ITBMS out of a price that already includes it?

Divide the price by 1.07 to get the net amount; the difference is the ITBMS. With 321 USD, the net amount is 300 USD and the tax is 21 USD.

Do medicines and food pay ITBMS?

Basic food items from the basic basket and medicines are exempt, according to the Dirección General de Ingresos.

Does residential rent pay ITBMS?

It is exempt when the property is the tenant’s exclusive home and the contract exceeds six months.

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.

Sources

Dirección General de Ingresos (DGI), services exempt from ITBMS (article 1057 of the Tax Code).
Tax Code of Panama, article 1057-V (ITBMS).