PANAMÁ

INVESTING IN PANAMA 2016

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PROYECCIONES 2012

WHY INVEST IN PANAMA

Investing in Panamá

LOCATION in the center of the American continent

FISCAL STABILITY to attract investments

LEGAL INCENTIVES in order to promote investment and fair

trade: Multinational Enterprises Headquarters, Tourism Law,

Special Economic Areas (Free Trade Zones)

Most solid and reliable banking and FINANCIAL SYSTEM in the

region

GOVERNMENT with stable democracy since 1989

Large communications and infrastructure NETWORKS

HUB of the Americas & Panama Canal

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ECONOMIC INDICATORS

Investing in Panamá

Capital Panama City

Area 0.075 million km2

Official language Spanish (Official)/ English (Commercial)

Life expectancy 73 years

Currency USD

Economic Growth 6.2%

Wealth: GDP Per Capita (2012 or latest available) USD 16.994

Unemployment rate 4.1%

Inflation rate 4.0%

Population (2012 or latest available) 3.8 million

Investment Grade BBB

Literacy rate 94.5%

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PROYECCIONES 2012

ECONOMIC INDICATORS

Investing in Panamá

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PROYECCIONES 2012

ECONOMIC PROJECTIONS

Investing in Panamá

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PROYECCIONES 2012

PUBLIC INVESTMENT

Investing in Panamá

Estimated in 4,000M for 2017

Expanded Canal

Airport extension

Metro Lines 2 and 3

New Bridges over the Canal

Renovation City of Columbus

Health and educational projects

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PROYECCIONES 2012

ESTABLISHING A COMPANY

Investing in Panamá

1) Hire a registered agent which must be a lawyer or a law firm, who have to prepare the Articles of Association. Directors can be foreigners.

2) Register at the Public Registry and pay Annual Franchise Tax (Tasa Única). Payments can be made at the National Bank of Panama or at any cashier of the Ministry of Economy and Finance.

3) Obtain a notice of operation ("aviso de operación") through the "Panama emprende" website.

4) Register with municipality

5) Request an employers' inscription number from the Social Security Administration - The Social Security Administration manages insurance programs for pension, health, unemployment, and occupational accident and injury.

Principal business entities: These are the corporation, limited liability company, limited liability partnership, general partnership, joint venture and branch of a foreign corporation

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PROYECCIONES 2012

TAXATION

Investing in Panamá

• INCOME TAXLocal operations taxed at 25%)Offshore operations are exemptSpecial RegimesWitholding Tax 12.5%

• VATRegular rate 7%Witholding Agents (2016)

• CAPITAL GAINS (for negotiable instruments/ real property) 10% over gains

• AVISO OPERACIÓN2% over Equity (for Capital over 10K)

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PROYECCIONES 2012

TAXATION

Investing in Panamá

• DIVIDEND TAX5% for offshore income10% for local income (nominative shares)20% for local income (bearer shares)

• SOCIAL CHARGESEmployer 14.75%Employee 11%Special Regimes

• OTHER TAXESMunicipalityOther fees

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PROYECCIONES 2012

TAXATION

Investing in Panamá

DOUBLE TAXATION TREATIES

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PROYECCIONES 2012

TAXATION

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INFORMATION EXCHANGE TREATIES

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PROYECCIONES 2012

TAXATION

Investing in Panamá

• INCENTIVES

• Multinational Headquarters (MHQ): Licensed MHQs are exempt from income tax on services provided to nonresident entities that do not derive Panama-source income, from dividend tax and from Panamanian VAT on export services provided to nonresidents that do not generate taxable income in Panama. Foreign employees working in Panama for an MHQ are exempt from income tax on their wages and other remuneration that is not paid by the MHQ.

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PROYECCIONES 2012

TAXATION

Investing in Panamá

• INCENTIVES

• Tourism: A variety of tax incentives are granted to encourage investment in new projects and activities relating to tourist facilities, including an exemption from income tax, property tax, import taxes and other taxes, depending on the amount of investment and location. The incentives will expire between 2016 and 2020.

• Other Incentives: Incentives also are available in the Colon Free Trade Zone, Howard (Panama Pacífico), Petroleum Free Trade Zones, etc.

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PROYECCIONES 2012

TAXATION – ANTI-AVOIDANCE RULES

Investing in Panamá

• FATCA - Foreign Account Tax Compliance Act (USA)

• TRANSFER PRICING REGULATIONS

• SUSPICIOUS ACTIVITY REPORT (SAR)

MILESTONES• In 2015 the BEARER SHARES were forbidden• In February 2016, Panama is removed from Gray List of Financial

Action Task Force (FATF)• Panama approves the MAC (Convention on Mutual

Administrative Assistance in Tax Matters) along with more than 50 countries, effective as of 2018.

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PROYECCIONES 2012

COMMERCIAL TREATIES

Investing in Panamá

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PROYECCIONES 2012Investing in Panamá

WEBSITES OF INTERESt

Dirección General de Ingresos (DGI)

www.dgi.gob.pa

Panama Emprende

www.panamaemprende.Gob.pa

Ministerio de Comercio e Industrias (MICI)

www.mici.gob.pa

Momento Fiscal

www.momentoiscal.com/leyes

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