Panama has a population of more than 4 million people, wth agriculture, imports and exports crucial to the economy. There are many types of company formations allowed in Panama, and varying tax rates are applied based on the industry and company.

Labor and Payroll Considerations in Panama:

  • Employers must register the business with the social security fund, Caja de Seguro Social (CSS), complete income tax registration, obtain business licenses, and register with municipal tax agencies before hiring workers
  • Employers must ensure new employees register with the CSS
  • Employment contracts should be written, but if not, the employee is supported when claiming details of an unwritten contract
  • Minimum wage ranges from 1.22 – 2.36 Panamanian balboas per hour depending on region, business activity, and size of the company
  • Income tax and social security contributions are withheld from employee pay
  • Employers are required to contribute to social security
  • Before obtaining a work permit, foreign workers must obtain a residence permit
  • Certain jobs can only be filed by Panamanian nationals
  • For each foreign worker hired, companies in Panama must hire 10 Panamanian nationals

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