Panama Insurance Premium Taxes
Overview
Insurance premium taxes are an important topic for insurance companies and their clients worldwide. In Panama, these taxes are also relevant and have been a subject of discussion in recent years. Let’s see what they are, how they are calculated, who pays them, and how they affect insurance clients.
What are insurance premium taxes?
The tax on insurance premiums is a tax applied to all insurance policies issued in Panama, including health, life, auto, property, and other types of insurance.
How are insurance premium taxes calculated?
Generally, a 5% tax rate is applied to all insurance premiums issued in Panama. This tax is paid by the insurance client and is collected and remitted by insurance companies to the General Directorate of Revenues (DGI).
Additionally, insurance companies pay a 2% tax to the National Treasury on the total premium received for policies issued in Panama for local risks.
Fire insurance has an exception, where the insurance company must pay not 2%, but 7% of the total insurance premium value. This 7% breaks down into a 5% contribution to firefighters and 2% for the national treasury. In the case of fire insurance, the insurance client must also pay the 5% tax.
Who pays insurance premium taxes in Panama?
In Panama, insurance premium taxes are paid by insurance clients. This means that anyone purchasing insurance in Panama will have to pay a 5% tax on the value of the insurance premium. This tax applies to all insurance policies issued in Panama, regardless of whether the insurance company is domestic or foreign.
How do these taxes affect insurance clients in Panama?
Taxes on insurance premiums can have an impact on the total cost of insurance in Panama, as insurance clients will have to pay an additional tax on the value of their insurance premium. This means that the total cost of insurance will be higher, and it is essential to be aware of this cost when budgeting for insurance.
Additionally, insurance companies in Panama may also increase their rates to compensate for the additional cost of insurance premium taxes. This can lead to a more significant increase in insurance prices overall.
Kraemer & Kraemer: Your insurance legal advisor in Panama
If you need legal advice on insurance premium taxes and other legal aspects related to insurance in Panama, Kraemer & Kraemer can help.
Our highly experienced team of attorneys is ready to help you make informed decisions and protect your assets. Contact us today for more information about our legal services in the field of insurance.