As the capital and largest city in Panama, Panama City's Economy accounts for over half of the country's total GDP. This is mainly due to the fact that as the capital city and administrative center of the country, it is home to many large businesses, banks, and financial institutions.
This is reflective of the wider Panamanian economy, 80% of which is produced by the services sector. Industry, trade and shipping are also key elements of the economy, and are based at the Panama Canal Port in the district of Balboa.
In terms of revenue generation, tourism is one of the most important economic activities for Panama City. Tourism in Panama City has grown significantly over the last decade, and it now has the second highest hotel occupancy rate of any city outside of the USA.
Expatriates working in Panama City tend to work in finance, banking, or in the shipping industry.
Expatriates wanting to work in Panama City need a work permit. However, it can be difficult to gain a permit to work in Panama as there are a number of restrictions placed on employers that wish to hire foreigners.
In order to get the work permit, you must have already secured work in Panama City, and your prospective employer must then demonstrate that the role you are taking cannot be filled by a Panamanian.
Furthermore, a company can only hire a foreign worker if they already employ more than three native Panamanians, and the law restricts large companies to a maximum of 5% foreign workers. For foreign companies who have a base in Panama this is extended to a maximum of 12% foreigners in their workforce.
In addition, work permits will need to be reviewed each year. Work permit applications should be submitted to the Ministry of Labor.
Expatriates living and working in Panama City will be required to pay income tax. However, your residency status in Panama City decides how much income tax you will pay. If you live and work in Panama City for less than 183 days in the fiscal year then you are considered a non-resident, and will pay a flat income tax rate of 12.5% on your Panama income only.
However, should you work in Panama City for more than 183 days in the fiscal year, you will be classed as a resident and will pay income tax on your worldwide income as per the progressive sliding scale tax system. This means that the more you earn, the more income tax you will pay. The rates are as follows: