The ITBMS (Tax on the Transfer of Tangible Movable Goods and the Provision of Services) is Panama’s value-added tax (VAT) equivalent and one of the country’s primary indirect taxes. It applies to the sale of goods, the provision of services, and certain imports, making it one of the most important tax obligations for businesses and professionals operating in Panama. Understanding who must charge ITBMS, the applicable tax rates, and the filing process is essential for maintaining tax compliance.
What Is ITBMS?
ITBMS is the tax levied on the transfer of tangible movable goods, the provision of services, and imports into Panama.
Its general tax rate is 7%, making it one of the lowest VAT-equivalent rates in Latin America, although special rates apply to certain goods and services.
What Are the ITBMS Rates?
Panamanian tax legislation currently establishes the following rates:
| Rate | Applies To |
| 7% | Most taxable goods and services. |
| 10% | Alcoholic beverages and accommodation services. |
| 15% | Cigarettes, cigars, and other tobacco products. |
Who Must Charge and File ITBMS?
Individuals and legal entities that transfer taxable goods or provide taxable services in the course of their business activities are generally required to:
- Charge ITBMS to their customers.
- Issue the corresponding tax invoice.
- File and pay the tax before the Panamanian Tax Authority (DGI).
Certain small taxpayers may qualify for exemptions under the thresholds established by law.
How and When Is ITBMS Filed?
ITBMS is filed monthly through Form 430, using the e-Tax 2.0 platform.
The return must be submitted within the first fifteen (15) days of the month following the reporting period and reflects the difference between output tax collected on sales and input tax paid on purchases.
What Happens If the Return Is Filed Late?
Late filing or payment of ITBMS may result in:
- Surcharges.
- Interest charges.
- Additional administrative penalties imposed by the DGI, particularly in cases of repeated non-compliance.
Timely filing helps businesses reduce tax risks and avoid unnecessary costs.
What Changed in 2026 Regarding ITBMS-Inclusive Pricing?
Law No. 531 of 2026 postponed until July 1, 2027, the entry into force of the requirement established under Law No. 473 of 2025 to display consumer prices inclusive of taxes, including ITBMS.
This extension gives businesses additional time to update their pricing and invoicing systems.
How Can LAC Tax Help?
At LAC Tax, we advise local and international businesses on: