Panama has been recognized, among many things, for its fiscal system, in which only income generated within its territory is subject to taxation, regardless of where the taxpayer resides or where foreign income is earned. This is one of the factors that attract investors and businesspeople to settle in the country and prompts many foreigners to apply for a Tax ID.
Therefore, a frequent question that arises among our international clients interested in taking advantage of the Panamanian tax system has to do with the status of the taxpayer in the country. In this article we explain whether it is necessary to be a resident of Panama to apply for a Tax Identification Number (RUC).
What is Tax Identification (RUC)?
The Fiscal Identification in Panama, known as Registro Único de Contribuyentes (RUC), is a number assigned by the Dirección General de Ingresos (DGI). This number allows an individual or legal entity to comply with its tax obligations within the country. The process of applying for a Tax ID is indispensable to carry out any commercial activity legally in Panama, such as opening bank accounts and carrying out financial transactions.
Importance of the RUC for companies and individuals in Panama
Obtaining the RUC is mandatory if you plan to operate a business or perform taxable transactions in Panama. This requirement applies to both residents and non-residents, as long as they generate income in the country. Applying for a Tax ID is the first step to comply with local tax regulations.
Is it obligatory to be a resident to apply for a RUC in Panama?
In other words, there are specific situations where the tax office (Direccion General de Ingresos) will allow you to apply for a Tax ID in Panama without being a resident. However for most scenarios we recommend having Panamanian residency to request it.
See Marcos Kraemer’s explanation in the video above.
Exceptions to the residency rule
There are exceptions where you can apply for a Tax ID without being a resident, especially for foreign investors with commercial interests in the country. This may apply to those who own property or conduct business in Panama, allowing them to participate in the tax system without residing in the country.
Requirements to apply for a Tax ID in Panama
Who can apply for a RUC in Panama?
The RUC can be applied for by individuals and legal entities that intend to generate income in the country. However, the process for obtaining a Tax ID may vary depending on the status. Residents can apply for a Tax ID more easily, while non-residents may require legal guidance.
Documents required to apply for the RUC
The documents required to apply for a Tax ID in Panama include a copy of the passport or identity card, forms provided by the DGI, and additional company documents, such as the corporate charter and certificate of existence.
Process for non-residents wishing to obtain a RUC in Panama
The process to apply for a Tax ID as a non-resident usually requires the assistance of lawyers or tax advisors, who will guide you in the presentation of documents that accredit your commercial activity in Panama. It is advisable to have specialized legal advice to comply with local regulations and facilitate the process.
Benefits of applying for a RUC without being a resident in Panama
Opening international bank accounts
One of the main benefits of applying for a Tax ID in Panama is the possibility of opening international bank accounts, since the country is a global financial center.
Tax Advantages
Territorial Taxation in Panama only applies to income generated within the country, which means that non-residents do not pay taxes on income earned abroad, which is highly beneficial for investors.
In conclusion, although it is not necessary to be a resident to obtain a RUC, residency facilitates the process and is advisable if you plan to take full advantage of the tax benefits. However, it is possible to apply for a Tax ID without being a resident, although the process may be more complex.
Need help obtaining your tax ID?
Contact our team of experts for personalized guidance and support. Kraemer & Kramer can help you sort through the complexities of the Panama tax system and you take full advantage of the benefits available.
