Incentive Laws

1. REFORESTATION:
   Ley No. 24, 1992 provides for tax exemption incentives for those who pursue reforestation initiatives, and direct and indirect forest investment in Panama including among others, exemption on taxes derived from introduction of machinery, materials, trees, etc. for reforestation purposes, as well as the exemption on Property Taxes for land with 50% or more of its extension used for reforestation.
   


2. CONCESSIONS OF LAND (Islands):
   Ley No. 2 of 2006 regulates the administrative concessions of land for up to 90 years, depending on the amount of investment and generation of employment estimated by the plan presented by the investor,  for tourism investment purposes only, and limited to specific geographic areas in Panama, including insular territory.
   
   
3. TOURISM ACTIVITIES:
   Ley No. 8 de 1994 provides for tourism activities to be promoted in the Republic of Panama, allowing among others, for tax and financial incentives on investments of as little as $50,000.  It is regulated by Decreto No. 73 of 1995, modified by Decreto No. 197 of 1995 and Decreto No. 4 of 1998. You can access the English version of this Law on  http://www.ipat.gob.pa/ley8_en.pdf
   
   
4. INVESTMENT STABILITY:
   Ley No. 54, 1998, the Investment Stability Law, was created for those who invest more than 2 million dollars in Panama, providing that all the legal, taxation, customs and labor requirements, guarantees and obligations existing at the time of the investment will remain the same, even if new legislation is enacted afterwards in these areas, for up to 10 years after the initial investment is made.
   
5. Old Quarters Development Incentive Law # 9

    With the passage of Law 9 of August 27, 1997, special restoration incentives were delineated. Coincidentally, UNESCO chose Casco Viejo as one of its 46 historic areas in the same year. Local and international investors liked the offer, and slowly but surely new life has become evident among the narrow, balconied streets. The incentives apply to San Felipe, along with parts of neighboring Santa Ana, Sal si puedes and Terraplén. Under the law, buildings are classified as historical structures and the approval granted for restoration depends on the architectural characteristics of each individual building. (Before the law, no such distinction existed ). The law seeks to accelerate the restoration process by providing incentives such as: 

   1. A system of mortgage loans with preferred interests is established for the restoration of real estate in the area of San Felipe.
   2. The property owners in Casco Antiguo will be exempt from paying the Real Estate Tax owed at the moment of the transfer (sale) of the property.
   3. The profits derived from the transfer of real estate will be exempt from paying the Income Tax.
   4. The land and improvements of restored buildings will be exempt from paying the Real Estate Tax for a period of thirty (30) years counted as from the restoration of the property.
   5. The first sale or sales that take place after the completion of the building´s restoration will be exempt from the Real Estate Transfer Tax.
   6. The profits generated by commercial, professional or industrial activities which are carried out and have their effects in the Casco Antiguo, are exempt from the Income Tax for ten (10) years counted from the restoration of the occupied property.
   7. The equipment and materials used in the construction, restoration, and equipping, will be exempt from the Import Duties.
   8. The tenants of the properties in Casco Antiguo can deduct from their Income Tax the rates of rental for a period of five (5) years.
   9. Those buildings destined for public parking will be exempt from the Income Tax for a period of ten (10) years.
   10. An indemnity payment is established for those tenants of apartments in Casco Antiguo who must vacate the property because of a restoration project. The restoration project developer will receive a transferable fiscal credit with a value equivalent to the payment done.
   11. In order to benefit from these incentives, the investments must be made during the ten (10) years following the establishment of the Decree-Law, that is, until August 2007.