Hiring employees in Panama: the payroll guide for foreign companies

Panama is one of the most practical places in the Americas to hire: salaries in US dollars, a regional banking hub and clear labor rules. But payroll has pieces that surprise foreign companies — a mandatory 13th-month salary, a monthly social-security filing (SIPE) and an employer burden of 27% to 32% on top of gross salary. This guide covers what you need to know before your first hire.

The quick facts

Currency	US dollar (the balboa is pegged 1:1) — no FX risk
Pay cycle	Usually bi-weekly: the 15th and the last day of the month, via bank ACH
Employer burden	≈27%–32% on gross salary (CSS, education tax, risks, décimo, seniority premium)
Employee deduction	11% (9.75% CSS + 1.25% education tax) plus income tax by bracket
13th salary	Mandatory (décimo): one month per year, in three installments
Vacation	30 paid days per 11 months worked
Monthly filing	SIPE (CSS) + remitting withheld income tax to the DGI

The real cost of a salary

On each salary the employer pays 13.25% CSS (rising to 14.25% in March 2027 and 15.25% in 2029 under Ley 462), 1.50% education tax and a professional-risk premium of 1.05% to 5.67% by activity. Add the décimo accrual and the seniority premium. In total: a B/.1,000 employee costs about B/.1,270 a month. The full breakdown, with a table, is in how much an employee costs in Panama.

What you deduct from the employee

From the salary you withhold 9.75% CSS + 1.25% education tax (11% total) plus income tax (ISR), computed by annualizing income: 0% up to B/.11,000 a year, 15% on the excess up to B/.50,000 and 25% above that. Check it with the net salary calculator and the ISR calculator.

The calendar you can't miss

Every month: file and pay SIPE to the social-security agency (CSS) and remit withheld ISR to the DGI. Three fixed dates: the décimo installments on April 15, August 15 and December 15. The year's dates are in the 2026 payroll calendar, and the décimo details in the décimo guide.

Minimum wage and contracts

The minimum wage in force since January 16, 2026 (Decreto Ejecutivo 13 of 2025) varies by economic activity and region — look up your rate in the minimum wage guide. When employment ends, the seniority premium applies (one week of salary per year) and, for unjustified dismissal on an indefinite contract, indemnity.

How you pay: ACH in dollars

Payroll is paid by ACH transfer from a local bank. NominaHQ generates payment files ready for Banco General, Banistmo, BAC Credomatic, Banco Nacional de Panamá, Scotiabank, Banesco and MultiBank, among others — and the SIPE file for the CSS from the same run.

Beyond payroll

Setting up the local entity, work permits for foreigners and immigration matters are outside this guide's scope — you'll want local legal counsel for those. What is solved from day one is payroll: calculation, SIPE, décimo, ACH and pay stubs.

Frequently asked questions

How much does an employee cost in Panama for a foreign company?

Between 27% and 32% on top of gross salary, depending on the activity's professional-risk rate: 13.25% employer CSS, 1.50% education tax, professional risks from 1.05%, plus the décimo accrual and the seniority premium. A B/.1,000 salary costs about B/.1,270 a month.

Does Panama have a mandatory 13th salary?

Yes. The décimo (13th month) equals one month's salary per year, paid in three installments: April 15, August 15 and December 15. It carries a reduced 7.25% employee CSS and no education tax.

What currency are salaries paid in?

In US dollars. The Panamanian balboa is pegged 1:1 to the dollar and USD is the circulating cash, so payroll is calculated and paid in dollars — no FX risk for a foreign company.

What is SIPE and how often is it filed?

SIPE is the Caja de Seguro Social's electronic system where the employer declares and pays the monthly employer/employee contributions on salaries. Filing late or with incomplete salaries triggers surcharges and interest.

Source: Ley 51/2005 (as amended by Ley 462/2025), Decreto 19/1973, Art. 700 of the Tax Code (Ley 8/2010), Decreto Ejecutivo 13/2025 and the Panama Labor Code. A payroll reference guide — not legal or immigration advice; confirm with your advisors.