Investment Oportunities in Panama
Over the course of the past two decades, the Panama government has created several incentives for investors; most of them are for the establishment of business within special economical areas and include substantial tax benefits.
Colon Free Zone (Zona Libre de Colon)
- Tariff exemption for products to be re-exported.
- Tax income exemption for the transfer of goods to ships traversing the Panama Canal, the foreign transactions or for export transaction taking place within the Colon Free Zone or other Special Economical Zones, exempted operations taking place outside of Panama as well as specific services having effects outside of the territory.
- VAT exemption regarding the transfer of products to be exported or re-exported, transfer of goods with destination to the ships traversing the Panama Canal and in the Colon Free Zone.
- Taxes on capital, permits and patents are exempted. There is a partial real estate property tax exemption, being levied only the improvement on the property, this partial exemption apply to stamp taxes, as only sales within the fiscal territory of Panama are levied.
- In regards to Municipal Taxes there is an exemption for storage, transformation and export of goods sites or industries.
Panama Pacific (Agencia Panama Pacifico)
- Panama Pacific Companies will not pay tariffs on importation except if said sales take place within the territory of Panama, companies vehicles are also exempted of any importation tariff.
- Tax income and dividend exemption for and from activities related to logistic and multimodal services, maintenance and repairs of aircrafts, manufacturing of high tech products, call centers, managing offices, back office services, offshore services, transfer of the company`s shares (only for the companies within the Panama Pacific area), goods and services transfer, data transmission, transfer of services and goods for aircraft industry and exemption on transfer of real estate property.
- There is a VAT exemption for the following services and products: activities related to logistic and multimodal services, maintenance and repairs of aircrafts, manufacturing of high tech products, call centers, managing offices, back office services, offshore services, transfer of the company`s shares (only for the companies within the Panama Pacific area), goods and services transfer, data transmission, transfer of services and goods for aircraft industry and exemption on transfer of real estate property and the most important, any goods being introduced for within Panama Pacifico are exempted.
- No tax withhold of royalties payable to foreign creditors.
- Taxes on permits are exempted, the same for any real estate property and stamp taxes and capital income tax.
Free Zones other than Colon Free Zone
- Partial Income Tax exemption, as logistic, high tech companies, scientific research centres, specialized health centres and environmental services companies will be exempted from this tax, in regards to abroad operations and between companies of these categories.
- Tariff exemption in the purchase of equipment and services required for the operation of the company.
- Any transaction involving the transfer, operation or sale of movable goods and real estate.
- Dividends will be levied with a 5% over dividends paid out to the shareholders. If no dividend is paid out in that year, a complementary 2% will be levied.
- 1% over the company’s capital, as the operation notice tax. For Free Zones this tax has a minimum of USD 100.00 (EUR 67.50) and a maximum of USD 50 000.00 (EUR 33 750.50).
- VAT exemption for the developers of the Free Zone; Companies doing business in the zone will have to withhold the VAT. A Selective consume tax will also be levied over certain high end items and services.
Multinational Companies Headquarters (Sede de Empresas Multinacionales or SEM)
- Income tax exemption for revenue arising from outside of Panama sources. Partial tax income exemption for domestic revenue as only 50% of it will be taxable.
- Partial VAT exemption as only the services rendered to local companies will be levied. All services rendered to foreign entities will not be taxed. Capital income tax exempted on the amount earned abroad.
- Dividends Tax will be exempted when it arises from income produced abroad; and it has a tax exemption for taxes on permits.
City of Knowledge Foundation (Fundación Ciudad del Saber)
- Tariff exemption for Equipment used by the Foundation and for operating and manufacturing of high tech products.
- Manufacturing of high tech products and services of information diffusion are exempted in the income tax.
- VAT exemption for Operative’s purchases related to the City of Knowledge Foundation or for any of the high tech companies located within the Foundation.
- The Foundation and the Companies located within its grounds has a dividend tax and Taxes on capital, permits and patents exemption, as well as a Stamp Tax Exemption.
- There is a partial real estate property tax exemption as the companies will not be levied for the first twenty five (25) years domiciled within the Foundation grounds.
- Partial tax withhold regarding revenue arising from interests or royalties payable to foreign creditors as long as the transfer of money were indispensable for the correct functioning of the company.