by Astrid Chang 
Panama thanks to its strategic position in the continent, its dollarized economy and international business competitiveness, position itself as one of the most robust economies in the region, these and other factors make the isthmus one of the favorite destinations for foreign investment.
La Estrella de Panamá in its article cites the study conducted by Torino Economics – the subsidiary of Torino Capital Group Company, an investment bank and brokerage firm based in New York – which reported earlier this year that Panama is undergoing a favorable economic expansion, with an average annual growth of 6% in the last 25 years, the highest in Latin America.
Likewise, the Capital Financiero newspaper published that Foreign Direct Investment (FDI) in Panama had an inflow of $1,611.2 million dollars as of the third quarter of 2021, which represents an increase of 61%, or $610.8 millions as compared to the same period of the previous year, this data was provided by the General Treasury Account 2021 report of the Ministry of Economy and Finance (MEF).
The $1,611.2 million captured in FDI during the period represented 3.6% of the gross domestic product (GDP) according to the MEF, where it adds that, from January to September 2021, the reinvestment of profits was distributed in the following sectors: Non-financial companies with $969 million, General License banks with $289.3 million, ZLC with $230.9 million, and International License banks with $102.8 million.
What does Panama offer?
Apart from its strategic location, other reasons to invest in Panama stem from a stable political system, also from the existence of laws, for example, Law 41 of 2007, which aims to promote the Special Regime for the Establishment and Operation of Headquarters of Multinational Companies, to attract investment, job creation and technology transfer, as well as to make the Republic of Panama more competitive in the global economy, through the use of its physical infrastructure and international services.
This law in its V Chapter, of the fiscal regime, in article 21 establishes that the comp
anies holding a Multinational Company Headquarters License will be exempt from the payment of Income Tax in the Republic of Panama, for services rendered to entities of any nature located abroad, which do not generate taxable income within Panama. This exemption will only apply to the company and not to its employees.
Article 22 specifies that the Tax on the Transfer of Movable Goods and the Rendering of Services. Since these are export services, the services provided by a company with a Multinational Company Headquarters License will not cause Transfer Tax of Movable Goods and the Rendering of Services, as long as they are rendered to persons with a foreign domicile, who do not generate taxable income within Panama.
Panamanian laws provide a framework of guarantees for foreigners to have the same rights as nationals in the country related to property ownership, investments, intellectual property and trade.
More facts
Fernando Alvarán, manager of the company Investi, which accompanies Colombian investors who want to enter the Panamanian market during an interview with Semana magazine, points out that before taking this step “the most important thing is to know the conditions and ways in which an investment is made abroad” and that aspects such as “tax and legal factors, etc.” should be taken into account.
He advises to educate oneself about how investments work, to look for an advisor who knows the market and to have a clear structure of the business one wants to open.
Alvarán specifies that the capital required for the minimum investment in a new construction is 200,000 dollars in Panama; however, if the person does not have that amount, he affirms that they can choose to apply for a loan to purchase real estate in the isthmus, but first “they must be well advised because it is not an easy task if they are not familiar with the subject”.
Where should I seek advice?
We are Activentas, your real estate partner with a solid track record of more than 40 years in Panama. Our team of professionals have extensive knowledge of the real estate market and will provide you with the advice you need to find the best option for buying, selling or renting properties that fit your requirements.
Contact us at +507 213-7777 or at +507- 6616-7776 / e-mail us at info@activentas.com
