Panama reinstates the ITBI exemption on the first sale of new housing.
Law 546 of 31 August 2026, published in Official Gazette No. 30601-B of 31 August 2026. In force as of 1 September 2026. It amends article 4 of Law 106 of 1974.
A. Purpose
To reinstate the Real Estate Transfer Tax (ITBI) exemption on the first sale of new housing. The exemption covers the first B/.120,000.00 of the value on which the ITBI is calculated and the excess is taxed, at a reduced scale where the base does not exceed B/.200,000.00.
B. What changed
| Before (1 January to 31 August 2026) | Now (as of 1 September 2026) |
|---|---|
| The first sale of a new dwelling paid ITBI on the entire taxable base, under the general regime of article 1 of Law 106 of 1974. | The first B/.120,000.00 of the taxable base is exempt and only the excess is taxed, with a preferential scale up to B/.200,000.00. Above that amount the exemption remains and the excess is taxed under the general regime. |
C. Scope of the exemption
The first sale of new housing is exempt from ITBI, provided the sale is formalized within the two years following the date of issuance of the occupancy permit. The exemption is equal to the first B/.120,000.00 of the taxable base, determined in accordance with article 1 of Law 106 of 1974, whatever the total value of the transfer.
Any contractual stipulation imposing on the buyer the payment, reimbursement or assumption of the ITBI legally payable by the seller is null and void.
Key practical point. The benefit is not capped by the value of the dwelling. In any transaction whose taxable base exceeds B/.200,000.00, the saving is fixed and equals the tax that would have applied to the first B/.120,000.00.
D. How the tax is calculated between B/.120,000.00 and B/.200,000.00
The tax is calculated solely on the portion of the taxable base exceeding B/.120,000.00, applying exclusively the following scale:
| Taxable base of the transfer (over B/.120,000.00 and up to B/.200,000.00) | Rate applicable to the excess over B/.120,000.00 |
|---|---|
| Over B/.120,000.00 and up to B/.130,000.00 | 0.50 % |
| Over B/.130,000.00 and up to B/.150,000.00 | 1.00 % |
| Over B/.150,000.00 and up to B/.170,000.00 | 1.40 % |
| Over B/.170,000.00 and up to B/.190,000.00 | 1.60 % |
| Over B/.190,000.00 and up to B/.200,000.00 | 1.80 % |
Moving from one band to another within the scale does not result in the loss of the exemption corresponding to the first B/.120,000.00. The rate applies exclusively to the portion of the taxable base exceeding that amount.
E. Formalities to claim the benefit
- The seller must state in the public deed of sale, under oath, that the property is a new dwelling, that the transfer corresponds to the first sale and that it is formalized within the stated period. The date and identification details of the occupancy permit must also appear in the deed.
- The ITBI exclusion certificate issued by the Directorate General of Revenue (DGI) is not required. The benefit is self-applied, but it must be reported to the DGI through the mechanisms the DGI establishes, for registration and audit purposes. That report does not constitute a prior authorization.
- A false statement or the undue application of the exemption requires payment of the unpaid tax, with surcharges, interest and any applicable penalties.
F. Transitional provision
First sales formalized as of the entry into force of the Law may claim the benefit even where the occupancy permit is earlier, provided the transaction is formalized within the thirty months following its issuance. Sales formalized before the entry into force are governed by the rules in force at the time of formalization.
This publication provides a high-level summary of Law 546 of 2026 and of the amended article 4 of Law 106 of 1974. Certain operational aspects will be defined in the mechanisms to be established by the Directorate General of Revenue. It does not constitute legal or tax advice. For any additional information, please contact Víctor Carrizo at victor.carrizo@lovill.com .
