Panama has 13 special regimes established, 3 of which are being reviewed after an evaluation by the OECD, which considered them potentially pernicious, changes as of January 1, 2019.
SEM COMPANIES (HEADQUARTERS OF MULTINATIONAL COMPANIES)
- They will pay Income Tax Return at a rate of 5% on the net taxable income applicable to the services they provide.
- When tax credits are applied, the company with the SEM License must pay at least 2% of the net taxable income as income tax. These credits cannot be considered as carry-forward credits nor can they be returned.
- Retention of 5% on the sum to be remitted, for SEM services to a taxpayer in Panama.
- Retention of 5% on 50% of the amount to be remitted if a SEM company benefits from a service, copyright, loan, financing, provided by an entity outside of Panama.
- Capital Gain: the gain or loss in the transfer of shares issued by the SEM company will apply a fixed rate of 2% where the buyer will retain to the seller a sum equivalent to 1% of the total value of the sale.
- Exemption from the ITBMS (VAT), for the services provided to people established both inside and outside of Panama.
- Pay Income Tax Return at a rate of 5% on their net taxable income on shared services and / or administration of offices whether inside or outside Panamanian territory, such as: management, technical support, logistics, advertising, consultancies and consultancies; management, treasury, accounting, among others.
- The activities to provide services to individuals or entities located outside Panamanian territory are eliminated; re-invoicing of goods that do not enter the territory; and the provision of high added value services protected by intellectual or industrial property regulations.
TRANSFER PRICING (TP)
As of fiscal year 2019, they are subject to the TP regime on transactions with related parties in Panama, or related parties that are fiscal residents of other jurisdictions or that are established in the Colon Free Zone, that operate in the Petroleum Free Zone, in Panama-Pacific, City of Knowledge or SEM, or in any other free zones or special economic areas.