All taxpayers subject to Income Tax in the Republic of Panama who have school-age dependents are entitled to deduct educational expenses incurred with respect to such dependents in their Annual Income Tax Return, provided that such dependents are pursuing studies at the primary, secondary, or higher education level, up to twenty-five (25) years of age
Deductible expenses include enrollment fees, monthly tuition payments, school supplies, uniforms, and transportation, up to a maximum amount of $3,600.00 per dependent. In the case of university studies, credit hours and enrollment fees shall be considered deductible. All expenses must be properly supported by tax invoices or equivalent documentation issued in the name of the student or the parent or person responsible for a student.
For salaried taxpayers whose income tax has been withheld by their employer, the initial requirement to be elegible to receive this tax benefit is to register as a tax declarant with the General Revenue Directorate of Panama.
As a subsequent step, the taxpayer must file an Annual Income Tax Return, reporting both income subject to income tax withholding and the corresponding deduction of educational expenses incurred. Such deductions may include expenses incurred in up to five (5) prior fiscal years, including the current fiscal year.
Once the Annual Income Tax Return has been filed, and if a tax credit in favor of the taxpayer is generated, the said taxpayer must appear before the General Revenue Directorate of the Republic of Panama and submit a formal written request addressed to the Director General of Revenues, together with a salary certification issued by the employer, the dependents’ birth certificates, and the original documentation supporting the declared educational expenses, in compliance with applicable legal and tax regulations.
The refund of the tax credit shall be determined based on the taxpayer’s income level. Those taxpayers with annual income exceeding $11,000.00 and up to $50,000.00 shall be entitled to receive a refund equivalent to 15% of the credit, while those with annual income exceeding $50,000.00 shall be entitled to a 25% refund.
Attorney Edgardo Espinosa
The Century Tower, Ricardo J. Alfaro Avenue,
4th Floor, Suite 401, Bethania District,
Panama City, Republic of Panama
📞 Tel.: +507 6772-4739
✉️ Email: info@lawyerinpanama.com