Executive Summary

Foreign nationals who intend to work in Panama generally require authorization from the Ministry of Labor and Workforce Development (Ministerio de Trabajo y Desarrollo Laboral – MITRADEL).

Panama distinguishes between immigration status and authorization to work. Obtaining temporary or permanent residence does not necessarily, by itself, constitute authorization to perform employment or other remunerated activities in Panama. The appropriate work permit must be determined according to the applicant's immigration status, employment relationship, and applicable legal category.

The principal regulatory framework is the Panama Labor Code and Executive Decree No. 6 of April 13, 2023, which reorganized Panama's labor migration system and established different classifications of work permits for foreign nationals.

Depending on the category, an applicant may need to provide immigration documents, an employment contract, employer corporate documentation, Social Security payroll information, professional credentials, or evidence supporting a particular immigration or family status.

Introduction

Panama attracts international companies, investors, professionals, executives, entrepreneurs, and workers seeking opportunities in one of Latin America's principal financial and logistics centers.

However, foreign nationals intending to perform remunerated activities in Panama must consider both immigration law and labor law requirements.

MITRADEL is the government authority responsible for regulating labor migration and issuing work permits to qualifying foreign workers. The Ministry currently classifies work permits according to the legal and economic circumstances of the applicant.

For employers, determining the correct work permit category before hiring a foreign employee is particularly important because some categories are subject to statutory limits on the number of foreign employees that a company may employ.

Who Needs a Work Permit in Panama?

As a general rule, a foreign national performing employment activities in Panama must have the appropriate authorization issued by MITRADEL.

Executive Decree No. 6 of April 13, 2023 defines a work permit as the authorization granted to migrant workers to perform work within Panama.

The applicable work permit will depend on factors such as:

• the applicant's immigration status;

• whether the applicant will work for a Panamanian employer or independently;

• the type of position;

• whether the employee is ordinary, technical, specialized, or trusted personnel;

• family relationships with Panamanian nationals;

• the length and type of residence in Panama;

• whether the employer operates under a special economic regime;

• whether the individual qualifies under an investment or special immigration program; and

• whether a profession is legally restricted or regulated in Panama.

Because of these distinctions, there is no single work permit applicable to every foreign national.

Panama Work Permit Legal Framework

The principal rules governing foreign employment in Panama include:

Panama Labor Code

Article 17 of the Labor Code establishes limitations applicable to certain categories of foreign employees.

Under the general employment quota, employers may hire foreign nationals as:

• ordinary personnel within 10% of the workforce; and

• specialized or technical personnel within 15% of the workforce.

The current labor migration regulation further establishes categories for trusted personnel and other specific employment situations.

Not every work permit is subject to these percentages. Certain applicants may qualify as persons considered equivalent to local labor, while special legal and economic regimes may have different rules.

Executive Decree No. 6 of April 13, 2023

Executive Decree No. 6 reorganized the work permit system and regulates labor migration procedures, requirements, classifications, employer obligations, and the authorization of foreign workers in Panama.

The decree was published in Official Gazette No. 29760-C on April 13, 2023.

Main Categories of Work Permits in Panama

MITRADEL currently organizes work permits into several classifications.

1. Foreign Workers Considered Local Labor

This classification includes certain foreign nationals whose legal circumstances provide treatment comparable to local labor for purposes of the work permit system.

Examples include qualifying applicants who:

• have ten or more years of residence in Panama;

• are married to a Panamanian citizen;

• are parents of dependent Panamanian nationals;

• qualify under certain permanent residence categories;

• qualify under the Panama–Italy Treaty; or

• fall within certain diplomatic or international-organization dependent categories.

MITRADEL expressly identifies these permits under its Classification 1 – Considered Local Labor.

2. Work Permits Subject to Labor Code Percentages

This is particularly relevant for companies directly hiring foreign employees.

The main categories include:

Type 2A – Ordinary Foreign Personnel

A foreign worker hired as ordinary personnel may qualify within the statutory 10% workforce limit.

Type 2B – Specialist or Technical Personnel

Foreign specialists and technical employees may generally qualify within the 15% workforce limit.

MITRADEL requires additional documentation demonstrating the employment relationship and the employer's workforce composition for these applications.

Other categories exist for trusted personnel, micro and small employers, and certain companies conducting transactions exclusively outside Panama.

3. Work Permits Under Special Laws

Panama maintains several economic regimes with specific immigration and labor rules.

Work permits may therefore be available to eligible employees working within regimes such as:

• Colon Free Zone;

• City of Knowledge;

• Panama Pacifico Special Economic Area;

• Free Zones;

• Multinational Manufacturing Services Companies (EMMA); and

• certain aviation activities.

The applicable requirements depend on the special legislation governing each regime.

4. Economic and Investment Policy Work Permits

Separate classifications exist for individuals whose residence derives from designated economic or investment immigration programs.

MITRADEL identifies categories including:

• qualifying nationals under specific Friendly Nations circumstances;

• Qualified Investors;

• residents under Self-Economic Solvency categories; and

• other special economic and investment policies.

The fact that a person has obtained residency through an investment program should therefore be analyzed separately from the authorization required to perform employment activities.

5. Special Conditions and Professional Workers

MITRADEL also provides work permits for certain foreign nationals under special conditions, including qualifying:

• professionals;

• Friendly Nations residents;

• beneficiaries of immigration regularization programs;

• dependents under family reunification categories;

• students; and

• self-employed workers.

Certain categories distinguish between employment for an employer (por cuenta ajena) and self-employment (por cuenta propia).

General Requirements for a Work Permit in Panama

Requirements vary depending on the specific permit. However, MITRADEL identifies several documents that are commonly required across work permit categories.

1. Registration with the National Migrant Workforce Registry

The applicant must generally complete the Registro Nacional de Mano de Obra Migrante and obtain the corresponding affiliation or registration document.

MITRADEL describes this registration process as an indispensable part of the work permit procedure under Executive Decree No. 6 of 2023.

2. Power of Attorney

A notarized power of attorney is generally required authorizing a Panamanian attorney to represent the applicant in connection with the work permit application.

3. Formal Work Permit Application

The application presented through legal counsel normally identifies:

• the applicant;

• the requested work permit category; and

• the legal, social, immigration, or employment grounds supporting the application.

MITRADEL includes the power of attorney and formal application among the common requirements for multiple work permit categories.

4. Immigration Status Certificate

The applicant generally must obtain a certificate from the National Immigration Service (Servicio Nacional de Migración – SNM) confirming his or her immigration status.

MITRADEL currently indicates that this certificate must carry B/.8.00 in fiscal stamps for several permit categories.

5. Valid Passport

A legible copy of the passport's identification or biographical information page is generally required.

The passport should remain valid during the application process.

Where permitted by the applicable procedure, MITRADEL may also validate the applicant through the immigration authorities' foreigner registration systems.

6. Immigration Card or Residence Documentation

Depending on the applicant's status, the application may require a copy of:

• immigration processing card;

• temporary residence card;

• permanent residence card; or

• Panamanian permanent resident identification issued through the Electoral Tribunal, where applicable.

The documentation must correspond to the immigration category supporting the application.

Additional Requirements When Working for a Panamanian Employer

Foreign nationals hired directly by a Panamanian company will generally require additional employer documentation.

Depending on the permit category, this may include:

Employment Contract

A copy of the employment contract registered with MITRADEL.

Employer's Public Registry Certificate

A current certificate from the Public Registry of Panama identifying the employer and its corporate information.

For certain employment-based permits, MITRADEL requires the certificate to have been issued no more than three months before submission.

Notice of Operation or Business License

The employer may need to provide its:

• Notice of Operation (Aviso de Operación);

• license;

• registration;

• operating authorization; or

• other document establishing that it is legally authorized to conduct its business activity.

Social Security Documentation

The employer may also be required to provide evidence from the Caja de Seguro Social (CSS), including:

• payroll payment evidence;

• CSS payroll documentation; or

• certification concerning the employer's payroll.

The exact documentation may depend on the number of employees within the company.

These records allow MITRADEL to evaluate whether the employer complies with the applicable foreign-worker percentage requirements.

Additional Requirements for Specialists and Technical Employees

Foreign workers applying as specialists or technical personnel may need to demonstrate the qualifications supporting the position.

MITRADEL may require:

For Specialists

Professional or employment reference letters demonstrating the applicant's experience and specialty.

Foreign-issued supporting documents may require appropriate legalization.

For Technical Personnel

A professional certification, technical diploma, or other evidence establishing the worker's technical qualifications.

MITRADEL expressly requires evidence of expertise or technical training for applicants applying under the specialist or technical worker category.

Requirements for Foreign Professionals

Foreign professionals may face additional requirements.

Depending on the permit category, the applicant may need to provide:

• university diploma or degree;

• notarized copy if issued in Panama;

• apostille or consular legalization when issued abroad; and

• where required, recognition or homologation by an official Panamanian university.

MITRADEL lists these requirements for qualifying professional applicants under the current labor migration framework.

Regulated and Restricted Professions in Panama

Obtaining a work permit does not automatically authorize a foreign national to practice every profession in Panama.

Certain professions are regulated by legislation that may impose nationality, licensing, professional board, or other statutory requirements.

MITRADEL publishes a list of regulated professions and occupations restricted for migrant workers. The list includes various activities within areas such as:

• law;

• accounting;

• medicine;

• dentistry;

• nursing;

• pharmacy;

• psychology;

• architecture;

• engineering;

• veterinary medicine; and

• other regulated professions.

Each profession must be evaluated according to the specific legislation governing its practice.

This distinction is important: immigration residence, a work permit, and professional licensing are separate legal considerations.

Can a Foreign National Be Self-Employed in Panama?

Potentially, yes, depending on the person's immigration and work permit category.

Executive Decree No. 6 introduced and reorganized categories allowing qualifying foreign nationals to apply for authorization to perform activities on a self-employed basis.

For certain applicants, MITRADEL may require:

• immigration documentation;

• evidence supporting the applicable residence category;

• a Notice of Operation; or

• certification from the Ministry of Commerce and Industries confirming that the activity does not require a Notice of Operation.

The activity must also not constitute a profession or occupation legally reserved or restricted to Panamanian nationals.

Work Permit Costs

Government fees depend on the work permit classification.

For example, MITRADEL currently lists a government charge of B/.80 for several Type 2 work permits, including ordinary workers and specialist or technical personnel. Other categories may carry different government fees.

Government charges should be confirmed when the application is prepared because they depend on the exact permit category and may be modified by the authorities.

Professional fees, document legalization, translations, notarizations, certifications, immigration documents, and other expenses are separate from government charges.

Practical Considerations Before Applying

Confirm the Immigration Category First

The applicant's immigration status should be reviewed before determining the appropriate work permit.

Determine Whether Workforce Percentages Apply

Employers should verify their workforce and payroll composition before hiring a foreign employee under a permit subject to the 10% or 15% statutory limits.

Review the Job Description

The employee's actual responsibilities should correspond to the category under which the work permit is requested.

Check Professional Restrictions

Foreign professionals should confirm whether their occupation requires a Panamanian professional license or is restricted by nationality legislation.

Review Corporate and CSS Records

For employer-sponsored applications, corporate registration, operational licensing, CSS payroll, and employment documentation should be reviewed before submission.

Incomplete or inconsistent applications may require correction before MITRADEL continues processing them. MITRADEL's current procedures specifically provide for the correction of applications that do not initially satisfy the applicable requirements.

Frequently Asked Questions

Do I need a work permit if I already have permanent residence in Panama?

Permanent residence and authorization to work are separate concepts.

Executive Decree No. 6 provides that persons holding permanent residence may apply for an applicable work permit category, but the corresponding labor authorization must still be determined under the labor migration rules.

Can a Panama company hire foreign employees?

Yes.

Panamanian companies may hire foreign workers provided that both the employee and employer satisfy the applicable immigration and labor requirements.

Certain employment categories are subject to statutory workforce percentages.

What is the 10% rule for foreign workers in Panama?

Under the general Labor Code framework, ordinary foreign employees may generally be hired within a limit of 10% of the employer's workforce, subject to the detailed calculation and exceptions established by law.

What is the 15% rule?

Specialized, technical, and certain trusted foreign employees may qualify under categories permitting foreign workers within 15% of the employer's workforce, subject to the applicable legal requirements.

Does every work permit have the same requirements?

No.

The required documents, eligibility conditions, government charges, validity periods, and renewal requirements depend on the particular work permit classification.

Can I work while my residence application is pending?

The ability to work should not be assumed solely because an immigration application has been submitted.

The applicant must determine whether the applicable work permit category allows an application based on a pending immigration status and whether MITRADEL authorization has been obtained before commencing work.

Can foreigners work independently in Panama?

Certain qualifying foreign nationals may apply for work authorization on a self-employed basis. However, the applicant's immigration category, commercial activity, licensing requirements, and restrictions applicable to regulated professions must be reviewed before commencing activities.

Conclusion

Panama offers multiple legal pathways for foreign nationals who intend to work, invest, establish businesses, or develop professional activities in the country.

However, the appropriate Panama work permit depends on the relationship between the applicant's immigration status, employment structure, professional qualifications, and the characteristics of the employer.

For employer-sponsored applications, particular attention should be given to the 10% and 15% foreign-worker limits, employment contracts, Social Security payroll records, corporate documentation, and technical or professional qualifications.

Foreign nationals should also verify whether their profession is subject to separate licensing or nationality restrictions before relying on a work permit as authorization to practice that profession.

Because each permit category carries different eligibility requirements, applications should be reviewed according to the applicant's individual immigration and employment circumstances and the regulations in force at the time of filing.

References

• Panama Labor Code, particularly Article 17 regarding employment of foreign workers.

• Executive Decree No. 6 of April 13, 2023, regulating labor migration in Panama, Official Gazette No. 29760-C.

• Ministry of Labor and Workforce Development (MITRADEL), Labor Migration Department and current Work Permit Classifications.

• MITRADEL, Type 2A Work Permit – Ordinary Foreign Personnel.

• MITRADEL, Type 2B Work Permit – Specialists and Technical Personnel.

• MITRADEL, List of Regulated or Restricted Professions for Migrant Workers.