Overview

Capital
Panama City
Currency
United States Dollar (USD)

Taxes

Employer
12.25% - Social security
2.25% - Workers' severance payments
1.50% - Education contribution
Employee
9.75% - Social security
1.25% - Education contribution
0% - 0 - 11,000 US$
15% - 11,000 - 50,000 US$
25% - 50,000 and above US$

Minimum Wage

General
Minimum wage is $416 per month.

VAT

General
VAT is 7% standard rate.

Mandatory Benefits

Pension Fund
Employer contributes 4% of the first 500 balboas earned per month.
Employee contributes 9.25% of the first 500 balboas earned per month. No monthly salary ceiling.

Payroll

Additional Employee Withholding
1) Individual Social Security Account
2) Education Contribution
1) Employer contributes 4.25% of employee’s gross monthly earnings greater than 500 balboas.
2) Employer contributes 1.5%.
1) Employees contribute 8.16% of gross monthly earnings above 500 balboas.
2) Employee contributes 1.25%.

Termination

Termination Process
If the employee has been in the company for less than 2 years, they will receive a month’s notice. If over 2 years, no notice is required.
Advance Notice
Employee must provide 15 days written notice.
Severance Pay
Severance pay is counted at the rate of one week’s wages for each year the employee has worked for the company. The employee also receives vacation payment which is 30 days for each 11 consecutive months worked. In additional they also receive the 13th month payment.