Panama

Rita de la Guardia and Patricia Cordero, Alemán, Cordero, Galindo & Lee

Eloy Alfaro B and Rita de la Guardia, Alemán Cordero Galindo & Lee

In June 2018, the EU issued a scoping paper detailing the economic substance requisites that the subject jurisdictions should adopt before 2019 regarding entities based in those jurisdictions

Maria Alejandra Cargiulo of Alfaro Ferrer & Ramírez writes about the registration requirements for public offerings or sales of securities made in Panama

AFRA lawyer Ana Raquel Sedda explains how the new regime will work and what companies and their lawyers need to know

As part of the Panamanian government's plan to reactivate the economy following the Covid-19 crisis, it is currently promoting a new regime known as limited liability entrepreneurship companies (LLEC).

Local law firm AFRA explains the need-to-know on Panama’s new decree, which the govenrment hopes will increase its logistics appeal to foreign companies

AFRA partner Alejandro Alemán F. explains how the government is working to support families and businesses struggling as a direct result of the pandemic

Since its inception, Panama has positioned itself as a world-leading logistic services provider. This has been in part due to its privileged geographical location and connectivity, as well as to a solid pro-market and dollarised economy. A robust banking system and a responsible territorial fiscal regime have qualified Panama as an investment-grade country since 2010 – and it has since been upgraded by Moody's, Fitch Ratings and Standard & Poor's.

Since its inception, Panama has positioned itself as a world-leading logistic services provider. This has been in part due to its privileged geographical location and connectivity, as well as to a solid pro-market and dollarised economy. A robust banking system and a responsible territorial fiscal regime have qualified Panama as an investment-grade country since 2010 – and it has since been upgraded by Moody's, Fitch Ratings and Standard & Poor's.

As the world moves to adapt to the ever-growing, rapid-changing digital and globalised times, signing through electronic means is a concept many companies are trying to implement to increase the efficiency with which they connect with consumers and suppliers.

Panama and the UK have shared diplomatic ties since 1908. The US brought the highest amount of foreign direct investment (FDI) into Panama in 2018, with the UK coming in eighth position in the FDI stakes. The 2015 FDI figures saw the UK in fourth spot after the US, Colombia and Switzerland (with a total of 6% of FDI into Panama).

Panama and the UK have shared diplomatic ties since 1908. The US brought the highest amount of foreign direct investment (FDI) into Panama in 2018, with the UK coming in eighth position in the FDI stakes. The 2015 FDI figures saw the UK in fourth spot after the US, Colombia and Switzerland (with a total of 6% of FDI into Panama).

In order to maximise the potential of more than 15 commercial treaties that have been signed by the Republic of Panama, the country's Ministry of Trade and Industry has recently created a special office within the ministry called the 'commercial intelligence unit' (INTELCOM). This unit will provide knowledge to Panamania-based companies, including on what products the main commercial partners of the country are importing, who their main suppliers are, and details of opportunities that national products have under the commercial treaties. The main objective of INTELCOM will be to gather commercial intelligence relating to foreign trade, in order to efficiently reorientate Panama's productive strategies and decision making, in actions to support export development. INTELCOM will also develop business intelligence through different tools such as market research and interviews with local exporters and Panama's embassies and consulates throughout the world. This valuable information will be processed, analysed, interpreted and disseminated, in order to take advantage of business opportunities that have been identified and may be developed in Panama. INTELCOM will also oversee the strengthening of technology transfer related to the production and commercialisation permitted under the commercial treaties, in order to increase the productivity and competition of the private sector in Panama.

New laws in key offshore jurisdictions came into force at the beginning of 2019 which require entities engaging in specific types of business to demonstrate adequate economic substance in that jurisdiction. Failure to comply with substance requirements could lead to grave consequences, such as incurring significant fines or being struck off by local registries.

In 2018 the National Assembly passed Bill 665 concerning data protection. The Bill was later sanctioned by the president and publicised through the Official Gazzette No. 28,743-A as Law 81 of March 26, 2019.

The Panamanian government recently gave the green light to the establishment and operation of BPO's Panama Free Zone. The new project constitutes not only the first digital free trade zone in the Republic of Panama, but it is also being promoted as the first of its kind in the Latin American region.

The executive branch of the Panamanian government has presented a Bill to the Legislative Assembly for the formal creation of a public-private partnership (PPP) regime in Panama. The Bill was approved in the first of three debates required within the Legislative Assembly for its final approval.

Since Panama is a country with a territorial tax regime, it makes sense to have specific criteria to determine, on a case-by-case basis, if a person can be considered a Panamanian tax resident. A territorial tax regime implies that a taxpayer is only subject to the payment of taxes in Panama if its net monetary income has been obtained from commercial activity carried out within the Panamanian territory. Financial, legal and logistics services are among Panama's most robust economic drivers and these are attractive industries for foreign investment. This incoming foreign capital brings with it foreign individuals and corporate entities, which in turn leads to discussion on whether such foreign individuals and corporate entities should be considered Panamanian tax residents.

The Republic of Panama recently enacted Law 76 of February 13 2019 (Law 76 or Tax Procedure Code), through which the new tax procedure code is approved. This new Tax Procedure Code, which will come into effect on January 1 2020, does not replace the Tax Code, but rather establishes the basic principles and the fundamental rules that constitute the legal regime of the Panamanian tax system and is applicable to all national taxes.

Eloy Alfaro B and Rita de la Guardia, Alemán Cordero Galindo & Lee

Eloy Alfaro and Rita de la Guardia, Alemán Cordero Galindo & Lee

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