Panama: Regulations Applicable to Tax Deductions from School Expenses 

July, 2019 -

Law 37 of June 5, 2018, adds line 9 to article 709 of the Fiscal Code, which is related to the annual income tax deductions to which natural persons are entitled, regarding school expenses incurred by the taxpayer with respect to their dependents. Additionally, Executive Decree 368 of December 26, 2018 and Resolution No. 201-1635 of May 13, 2019, establish the regulations applicable to the deduction of said expenses.

From the regulations indicated above, we highlight the following aspects:

  1. School expenses, including tuition and school fees, supplies, uniforms and school transportation, incurred by taxpayers with respect to their minor dependents, will be deductible from the taxable income.
  2. School expenses related to the payment of tuition and credit hours incurred by taxpayers with respect to their dependents of legal age who are still under their tutelage, attending third-level or higher education.
  3. The deduction may be up to a maximum annual amount of B/.3,600.00, for each dependent; and may also be applied to taxpayers who pay for their own studies, as long as they submit their tax return declaration.
  4. Employees who pay Income Tax, in order to make the deduction, must: i) submit an affidavit of the fiscal period in which they incurred those expenses and ii) submit a petition requesting the deduction, duly accompanied by the detail of school expenses and supporting documentation (invoices).
  5. Invoices or equivalent documents supporting the school expenses to be deductible must be issued in the name of the father, mother or the person who has legal tutelage of the student. They may also be issued in the name of the dependent.
  6. The deduction of school expenses will be recognized only for payments made in the Panamanian territory.
  7. The financial obligation of parents with their children of legal age will be until they reach 25 years-old.
  8. Taxpayers whose dependants have a level of disability but that does not prevent them from attending an educational or university center will be entitled to the deduction of all school expenses.
  9. School expenses will be deductible in the tax return declaration of the year 2019, and be settled in the year 2020.


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