Tax Incentives

  • The companies that obtain the SEM license will enjoy legal stability for 10 years to the investments referred to Law 54 of July 22, 1998 and Executive Decree No. 9 of February 22, 1999.
  • Income Tax: Reduced rate 5% of income tax for services rendered.
  • Dividend Tax, Complementary Tax and tax applicable to branches: Companies that hold a Multinational Company Headquarters License will be exempt from the payment of dividend and complementary taxes and taxes on branches.
  • Operation License Tax: The MCQ companies are not subject to the payment of Operation License Tax since they do not have the obligation to have a Notice of Operation.
  • Capital Gains Tax: The gain or loss in the transfer of shares issued by the company are subject to the capital gains regime, but at a fixed rate of 2%.
  • Transfer Pricing: They will not cause Transfer Tax (ITBMS), provided if they are lent to entities of the business group abroad, that does not generate taxable income within Panama.
  • Tax Printers: Companies that hold an MHQ License will not be subject to the use of fiscal equipment.

Exemptions for foreign workers

  • Income tax exemption if the salary is from a foreign source.
  • Import tax exemption for household goods and vehicle for personal use of permanent employees. However, they must pay the sales tax.
  • Exemption from the payment of tax applicable to household items, at the time of moving to Panama for the first time, for personnel with temporary and permanent visa of a SEM companies

These exemptions do not apply to Panamanian employees or other foreign employees who hold a visa other than the Permanent Employee Visa of an MHQ, who will be subject to the regulations and fiscal dispositions in force in the Republic of Panama.

Labor incentives

  • Companies with a MHQ license can hire foreign executives whom they deem necessary for administrative positions.
  • There is no limit to the number of foreign executives who can be hired for these positions.

Migratory Benefits

  • Permanent visa (5 years) for foreign executives in permanent positions in the MHQ Company and their dependents.
  • Permanent residence for permanent MHQ Company personnel.
  • Three month visa for foreign technical personnel hired for short periods for MHQ company projects.

Note: The Technical Secretariat of the Ministry of Commerce and Industries will offer the one-stop-shop service to apply for the EMMA license and visas for foreign workers and their dependents.