The legal system of Panama
A civil-law system distinguished by a dollarised economy, a constitutionally autonomous Panama Canal Authority, and a large offshore corporate and shipping registry. The Supreme Court exercises a wide-ranging guarantee jurisdiction: it hears amparo, habeas corpus and the objection of unconstitutionality directly, and any citizen may ask it to void a statute.
Legal tradition
Panama belongs to the civil law tradition. A civil-law system distinguished by a dollarised economy, a constitutionally autonomous Panama Canal Authority, and a large offshore corporate and shipping registry. The Supreme Court exercises a wide-ranging guarantee jurisdiction: it hears amparo, habeas corpus and the objection of unconstitutionality directly, and any citizen may ask it to void a statute.
How power is divided
Unitary, with ten provinces and five indigenous comarcas. The comarcas — Guna Yala, Emberá-Wounaan, Ngäbe-Buglé, Guna de Madugandà and Guna de Wargandà — hold recognised collective land title and internal authority.
Where law comes from
- Constitution
- Supreme, with Title XIV governing the canal.
- Statutes of the National Assembly
- Single chamber of 71 deputies.
- Codes
- Civil Code 1917, Labour Code 1971, Judicial Code 1987, Tax Code 1956.
- Supreme Court doctrine
- Three concordant plenary rulings on the same point become binding doctrina probable.
The legal profession
Practice requires a Panamanian law degree and a licence from the Supreme Court; the Colegio Nacional de Abogados is influential but membership is voluntary. Only Panamanian lawyers may appear in court, which is why offshore work is routinely structured through local counsel.
Law by topic in Panama
- Property & LandForeign ownership permitted, with a coastal and border limitForeigners may own titled property on the same terms as nationals, and Panama has a reliable public registry. The constitutional restriction is narrow: land within 10 km of a national border cannot be foreign-owned, and islands and coastal areas are subject to concession regimes and to rights of possession that are not the same as title.
- Family LawFamily Code procedure in specialised courtsThe 1994 Family Code created dedicated family courts and consolidated marriage, divorce, filiation and child protection. Panama does not recognise same-sex marriage; the Supreme Court rejected challenges in 2023, leaving it one of the few Latin American states without recognition following OC-24/17.
- Criminal LawAccusatorial system completed nationwide in 2016Panama moved from an inquisitorial to an accusatorial oral process under the 2008 Criminal Procedure Code, rolled out by judicial district and completed in 2016. The Ministerio Público investigates and prosecutes; garantÃas judges supervise the investigation.
- Civil ProcedureJudicial Code procedure, with a new code phased inCivil litigation follows Book II of the Judicial Code. A new Civil Procedure Code (Ley 402 of 2023) introduces oral hearings and electronic filing, with entry into force staged, so practitioners must confirm which regime applies to a given case.
- Immigration & NationalityFriendly Nations, Qualified Investor and work-permit quotasImmigration is governed by Decree-Law 3 of 2008 and administered by the Servicio Nacional de Migración. The Friendly Nations visa was reformed in 2021 to require a job offer or property investment, and the Qualified Investor route grants permanent residence on a substantial investment.
- Constitutional LawOpen standing to challenge any statutePanama's guarantee jurisdiction is concentrated in the Supreme Court sitting in plenary. Any person may file a demanda de inconstitucionalidad against any law, decree or act without showing personal injury — one of the widest standing rules in the hemisphere — and a ruling voids the norm for everyone, but only prospectively.
- Business & CorporateCorporations, foundations and a transparency overhaulThe 1927 Corporation Law made Panama a major incorporation centre, and the private-interest foundation added an estate-planning vehicle in 1995. Since 2016 the regime has been rebuilt around transparency: resident agents must hold beneficial-ownership data, accounting records are mandatory, and a central register now exists.
- Employment & LabourLabour Code with strong reinstatement rightsThe 1971 Labour Code is protective and difficult to contract out of. After two years of service a worker generally cannot be dismissed without justified cause, and an unjustified dismissal can lead to reinstatement with back pay rather than merely damages.
- Tax LawTerritorial taxation with 7% ITBMSPanama taxes only Panamanian-source income, which is the foundation of its offshore sector. Corporate income tax is 25%, ITBMS (VAT) is 7%, and there is an alternative minimum calculation (CAIR) for larger companies. Dividends from foreign-source income are not taxed.
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