The Income Tax Return (ISR) is a document where individuals and legal entities report their income and expenses during a fiscal year in Panama. This declaration is mandatory annually for anyone or any entity generating income in the country.
Deadlines for Income Tax Declaration
Individuals have until March 15th each year to submit their declaration. Legal entities must do so before March 31st. Extensions of one month are possible but must be requested timely to avoid penalties.
Types of ISR Declarations
Normal Declaration: For employed individuals, independent professionals, and traders.
No Operations Declaration: For taxpayers who had no activities or transactions during the fiscal year.
Final Declaration: For businesses that dissolve or cease operations.
Original Declaration: Submitted for the first time to declare income, expenses, and deductions.
Amending Declaration: To correct errors or omissions in previously submitted declarations. Subject to conditions and can lead to penalties if not made in time.
According to Article 81 of Executive Decree 98 of September 27, 2010, all taxpayers must submit a declaration. With the enactment of Law 280 of December 30, 2021, validation from a certified public accountant is required for gross annual incomes exceeding B/. 11,000.00.
First-Year Tax Declaration
It's important to differentiate between the tax declaration and the tax payment. The declaration is a document to be filled out and submitted online — based on the declared income and expenses, a payable tax amount may or may not be generated.
Consult a competent accountant familiar with the various types of declarations. The type of declaration to submit will differ based on the status or activity of the company or individual.
