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ARTICLE · 30 JUNE 2026

Panama’s New Economic Substance Law

Icaza Gonzalez-Ruiz & Aleman
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The Republic of Panama enacted Law No. 526 of May 28, 2026, which introduces economic substance rules and requirements in Panama, applicable exclusively to entities that are members of Multinational Groups and that earn foreign-source passive income (the “Law”). This legislation will enter into force in the fiscal year 2027.

PanamaTax
Icaza, González-Ruiz & Alemán
Icaza, González-Ruiz & Alemán
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Law No. 526 of May 28, 2026

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The Republic of Panama enacted Law No. 526 of May 28, 2026, which introduces economic substance rules and requirements in Panama, applicable exclusively to entities that are members of Multinational Groups and that earn foreign-source passive income (the “Law”). This legislation will enter into force in the fiscal year 2027.

Below, we address the most relevant questions for individuals and organizations that own Panamanian companies or private interest foundations regarding the scope and application of this new law.

1. Scope of the Law

Who does this law apply to?

The Law applies to entities (companies or foundations) that: (i) are members of multinational groups, (ii) have been incorporated or are domiciled in Panama, and (iii) earn foreign-source passive income.

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