Employer Of Record in Panama
We make it easy and painless to expand your business into Panama. Forget about dealing with local regulations, confusing tax laws and international payroll management. We take care of all that so you don't have to.

Accelerate your growth into Panama Compliantly and hassle-free
How we can help you expand in Panama
As your EOR in Panama we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary.
Your candidate is hired by a PEO in Panama provider in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. Shortly after, your new employee will be working for you, just like any other member of your team.


Expand to Panama with Serviap Global
Through our PEO and EOR services, you can hire qualified talent in your industry without the trouble of opening your own legal entity.
In just a few days, you can easily and safely build a presence in Panama, being sure that your staff will be hired in compliance with labor and tax regulations
Quick Facts
Currency:
United States Dollar (USD)
Capital:
Panama
Payroll Cycle:
Monthly
Language:
Spanish
The Economy
Panama has a stable government with a dollar-based economy. It’s democratic and actively seeks foreign investment, offering attractive low inflation rates, and zero foreign exchange risk. Panama’s economy is primarily based on its services sector, this sector includes the Canal, banking, tourism, logistics, activities in the Colón Free Trade Zone (CFZ), insurance, container ports, and flagship registry.The Importance of Small and Medium-sized Companies
One of the significant characteristics of a flourishing economy is the success and growth of small and medium enterprises (SMEs). In Panama more than 80% of businesses are classified as micro-, small-, or medium-size.Population Characteristics
Panama is a nation with a population of about 4.4 M people. The average age is 29 years old and the literacy rate is 95%. Panamanians are quick to tell you what they love about their country, national pride runs deep and feelings towards Americans are mainly positive.Economic Opportunities
Panama has one of the fastest growing economies in Latin America and dedicates substantial funding to social programs. Expanding a business beyond the U.S. borders is warmly welcomed. Its strong economy, low taxation, entrepreneurial opportunities, low barriers to entry and stable government make Panama an exceptional choice.Key Sectors of the National Economy
- Foreign Trade
- Agriculture
- Services
Human Talent
English-language courses and higher education represent the best prospects for Panamanian students within the study abroad market. In fact, 85% of all managerial positions are filled by candidates who study abroad. The most in-demand fields of study for Panamanian students in the U.S. are business administration, management, finance, banking, marketing, and engineering.Prominent Cities for Business
- Panama City
- San Miguelito
- Juan Díaz
Technological Ecosystem
Panama has been called the region’s “Technology King” following strong wireless growth. It’s long been recognized as a telecommunications hub. Panama’s excellent infrastructure kept it at the tech forefront first in land lines then later cell phone service.Facilities for Foreign Investment
Incorporating a company and launching a new international venture is simpler in Panama than most anywhere else in the region. And income obtained outside the country is free of income tax. Panama is a unique country in the fact that you can register a business in around two weeks, and you do not need to physically be in the country during or after the incorporation process. By establishing an offshore company in Panama, you can create a holding company to protect your assets and real estate from future liability.Business Culture in Panama
Meetings Always confirm meeting times in advance because things can often change on short notice. Punctuality is expected, although preliminary small talk sometimes delays the official start time of a meeting. Gestures and Body Language Good eye contact is appreciated in Panama and interpreted as a show of interest and integrity. Being loud, using profanity or generally drawing negative attention to oneself is considered very rude. As is pointing at others with the index finger. Gifts Giving gifts to Panamanian business associates is discouraged, instead follow up with a thank-you note within a few days of the meeting or social event.Panama Gastronomy: regional and traditional cuisines
A typical meal in Panama will include meat, fruits and vegetables, coconut and some rice and beans. Because of its enviable location on two oceans, seafood is always an excellent choice. Ceviche is common, typically made from curing fresh, raw, seafood with citrus juice and served cold. Typical Panamanian foods are mild in flavor. Common ingredients are corn, wheat flour, plantains, yuca, beef, chicken, seafood and pork.General Highlights
Year | 2022 |
Country | Panama |
Capital | Panama City |
Num. States / Province | 10 provinces and 3 indigenous regions |
Principal Cities | Panama City, San Miguelito, Juan Díaz |
Language | Spanish |
Local Currency | Balboa or U.S. dollar |
Major Religion | Christianity |
Date Format | DD/MM/YYYY |
Thousands Separator Format | 999,999,999.99 |
Country Dial Code | +507 |
Time Zone | GMT-5 |
Population | 4,404,110 |
Border Countries | Costa Rica & Colombia |
Continental surface | 75.517 km² |
Fiscal Year | October 1 to September 30 |
VAT % | Taxpayer Identification Number (NIT) |
Minimum Wage | U.S. $ 971.28 per month |
Taxpayer Identification Number Name in the country | NIT |
Current President | Laurentino Cortizo |
Laws and Agencies that regulate labor relationships
A business must register with the Financial Services Regulatory Commission, the Registrar of Companies, the Ministry of Finance, the Inland Revenue Department, and the Social Security Board.Laws | Brief Description |
Constitution of Panama | With the ultimate purpose to strengthen the Nation. This includes the guarantee of freedom, ensuring democracy and institutional stability, exalting human dignity, promoting social justice, maintaining general welfare, and regional integration, and invoking the protection of God. |
Labor Code | Labor and employment in Panama is governed by the Labor Code. This code was adopted through Cabinet Decree N. 152 of March 1971, reformed by Law N. 44 of August 1995 and it specifies norms to regularize labor. |
Tax Code | Article 694 of the Panamanian Fiscal Code states the object of Income Tax is “the taxable income that is produced, from any source, within the territory of the Republic of Panama whichever may be the place where it is perceived”. |
Key Tax and Labor Authorities
Labor Code | Labor Code in Panama is governed by its Labor Code and it specifies norms to regularize labor. |
Labor Contracts in Panama | Definite term: This contract may not exceed one (1) year, except for those services that require special technical preparation, the term of the contract may be stipulated up to a maximum of three (3) years. Indefinite term: It establishes an employment relationship without defining the term, a start date is established but not an end date. |
Contracts Signed | Labor contracts must be written and signed at the beginning of the employment relationship in three (3) copies, one for the Ministry of Labor and Labor Development, one for the company and one for the employee. |
Probation | A period of 3 months. |
The International Labor Organization | Panama is a member as of 1996. |
Work Hours | 8 hours per day, 48 hours per week. Underage employees of 16 are limited to a 36-hour working week. |
Basic Requirements
The contract must contain:- Name, nationality, age, sex, marital status, domicile and identification card number of the
- Name of the persons who live with the worker and depend on him/her.
- Specific determination of the agreed work or
- Place or places where the service is to be
- Duration of the contract, if it is for a fixed, determined or indefinite period of
- Duration and regular division of the working
- The salary, form, day and place of
- Place and date of conclusion of the
- Signature of the parties, or the corresponding
Payroll
Legal Benefits in Panama:Minimum Wage | U.S. $ 971.28 per month |
Wages | Wages are paid monthly in USD |
Overtime | • There is a maximum of overtime allowed per day, 3 hours and 9 hours per week. • If 48 hours per week are exceeded, overtime must be paid at an overtime rate dependent on the hours the overtime was worked. • If the hours worked are between 6:00 a.m. and 6:00 p.m., the overtime rate is 125% of the employee’s regular salary. • From 6:00 p.m. to 6:00 a.m., or on a day off or holiday, the overtime rate is 150% of the employee’s regular salary. • Hours carried over from night work are increased to 175% of the employee’s regular salary. |
Christmas Salary | Paid in three equal parts on April 15, August 15 and December 15. |
Panama’s Workers Comp | Panama’s Workers Comp pays for all accidents and sickness at the workplace. And it is administered by Panama’s Social Security System. Employers pay between .98% – 5.6% into the workers comp system with the rate depending upon the risks associated with the job and the salary. |
Vacations or PTO | 30 days of paid annual leave following the commencement of 12 months of employment. |
Leaves of Absence Employees have the right to paid absences for the following things: | • Maternity Leave: Begins six weeks before the due date and ends eight weeks after delivery for a total of 14 weeks. It is paid by the social security (if the employee has accrued nine monthly social security contributions before the seventh month of pregnancy). Otherwise the employer pays. In the case of a difficult multiple birth or pregnancy-related illness, the leave can be extended in advance with a medical certificate. • Paternity Leave: The father is entitled to 3 days of leave after the birth and the company compensates him. • Adoptive mothers: Are entitled to 28 days of paid leave. |
Foster child leave | A foster mother who adopts a child that is under three years of age has the right to 26 weeks’ maternity leave, from the date of the family placement. The foster mother is also entitled to enjoy indemnification (paid by social security) for her living maintenance and that of her child, and is protected against dismissal for two years from the family placement Foster fathers of children under three years of age are protected from dismissal for up to two years after the family placement (Article 339, New OLL) Foster fathers of children under three years of age can take paid paternity leave for 14 continuous days from the family placement. |
Employers Contribution or Labor Cost
Payroll taxes: Social security 9.75% Education contribution 1.25% Annual Taxable Income Income of resident individuals expressed in tributary units is subjected to tax at progressive rates. As of June 2021, each TU is valued at VES 20,000.Over this amount | Not over this amount | Tax % on Excess |
Less than $11,000 | $22,000 | No income tax |
$11,000 | $50,000 | 15% |
$50,000 and over | 25% |
Disability
The “Social Security Fund” includes “Professional Risks”. The purpose of this program is to substitute, within certain limits and conditions, the employer’s responsibility stipulated in the Labor Code, to protect or compensate its employees for damages due to occupational diseases or accidents resulting from risks to which the workers are exposed.Public Holidays
The Labor Code provides for public holidays that are observed in Panama:Date | Holiday Name |
1 January | New Year’s Day |
9 January | Martyrs’ Day |
Tuesday before Ash Wednesday | Carnival Tuesday |
Friday before Easter | Good Friday |
1 May | Labor Day |
3 November | Separation Day |
5 November | Colon Day |
10 November | Primer Grito de Independencia de la Villa de Los Santos |
28 November | Independence Day |
8 December | Mother’s Day & Feast of the Immaculate Conception |
25 December | Christmas Day |
Type of Termination | Brief Description |
Justified Dismissal | It is classified into 3 categories: • Disciplinary • Of a non-attributable nature • Economic |
Unjustified Dismissal | When the unjustified dismissal is proven, the employee receives a severance payment that will correspond to their seniority time and salary. The amounts are calculated on the wages received during the last 6 months or 30 days, whichever is more convenient for the employee. |
Voluntary Resignation | Resignation without just cause in Panama is a right that workers have and must present it in writing to the employer 15 days in advance. |
- If the employee resigns he/she is not entitled to severance
- For pre-notice: In the case of a contract for an indefinite term, neither party may terminate it without giving prior notice to the other, except as provided in Articles 81 and 84 of this Code, in accordance with the following rules:
- upon completion of the probationary period up to one year of service, 30 days
- for more than one year and up to five years of service, 45 days
- for more than five and up to ten years of seniority, 60 days
- more than ten years of seniority and thereafter, 90 days
Length of Employment | Required Notice |
0 – 30+ years | 15 daily wages for each year of service or fraction of six months |
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