With the fastest growing economy in the Americas, Panama has often been compared to 1970’s Brazil or present day Singapore. And with ongoing projects such as a $5.3 billion expansion of the Panama Canal and a $13.6 billion government investment in infrastructure, this Central American country is not slowing down. Its sophisticated banks and stable economy attract investors worldwide.

In addition, the Panamanian government has a long history of establishing incentives and atmospheres that make investing in this beautiful landscape even more attractive. The list below highlights some of the more significant benefits:

Panama Incentives for Retirees & Expats

Retiree Tourist Visa

The Turista pensionado affords retirees (who must be a minimum of 18 years of age), who can show proof of income, the following benefits:

• Import of household goods (up to $10,000) free of taxes
• Import of a car for personal use every two years
• Property tax exemption on a home that is your only residence
• Discounts between 15-50 percent on restaurants, hotels, entertainment, and professional services

Panama Real Estate Laws

Law 54 – Foreign Investor Protection

This law grants foreign investors and their businesses the same rights and freedoms as Panama natives. They are also granted the right to dispose of their investment profits and repatriate their interest, dividends, and profits.

View translation of Law 54

Article 44 – Private Property

This section of Panama’s constitution guarantees that the rights of property owners are protected for both Panamanians and foreigners alike.

Law 24 – Reforestation Investment

This law provides benefits, including a 25-year income tax exemption, to those who purchase property for the purpose of reforestation.

View translation of Law 24

Law 2, 2006 – Island Property and Concessions

This law allows foreigners to purchase island property, for the first time ever, provided that it is used for the purpose of tourism and that certain other conditions are met. Concessions, or lease agreements, for government-owned land can also be granted for use in tourism.

View translation of Law 2

Law 9 – Casco Viejo Development

These tax deductions and exemptions were created to encourage the restoration of this section of Panama City. Renovation costs are 100% tax deductible. Income from the sale or rental of the property is exempt for 10 years, and the property itself is exempt for 30.

Panama Investment Incentives & Protections

Banking & Currency

Panama uses the U.S. dollar as its currency and, as a result, has no exchange controls in place to limit the amount of currency that can be traded.

Law 8, 1944 – Tourism Investment

With as little as a $50,000 investment ($300,000 in metropolitan areas), those who wish to start a tourist-related business can enjoy a multitude of tax exemptions. These include import and property taxes, taxes relating to the use of airports or docks, and in some cases even income tax.

View translation of Law 8

Bill 481 – Hotel Investments

This incentive is aimed mainly at hotel investments over $250,000 and include no tax on the import of building materials and tax exemptions on land and improvements for five years.

Law 58 – Outside Developments

This bill incentivizes the building or renovation of lodging facilities that are outside of the country’s Special Tourism Zones. Investment in areas such as the mountain regions or islands can result in tax-free importation of materials, equipment, and vehicles. A 20-year exemption on property taxes also applies.

Law 18 – Colon Free Zone

The Colon Free Zone is located at the Atlantic entrance to the Panama Canal. This free port is home to over 2,500 companies, employs over 28,000 people, and ships more than $16 billion each year. Companies operating within the zone, both foreign and domestic, are mostly free of taxes, provided that they meet a certain set of requirements. These include employing a minimum of 5 local workers, exporting a minimum of 60 percent of their merchandise, and maintaining certain reporting criteria.

Law 41, 2004 – Panama Pacifico

This area, formerly Howard Air Force Base, is another tax free zone established to attract certain categories of business. These include call centers, corporate headquarters, distribution and logistics centers, naval and aircraft goods and services, technology manufacturing, and the film industry. The site is also equipped with a One-Stop Shop that houses 12 governmental agencies under one roof for ease of conducting business, obtaining permits, etc.

View translation of Law 41

Law 32, 1927 – Comprehensives and Simplified Regime of Free Zones

Passed in 2011, this act allows for the establishment of tax free zones anywhere in the country, provided that they do not interfere with the local ecosystem. To date, there are 14 free zones registered, nine of which are already operating.

View translation of Law 32

Law 3 – Manufacturing Companies

Under this law, companies involved in the manufacturing and processing industry that export all of their products are exempt from direct taxes including import taxes on machinery and equipment.

Taxes

Panama is famous for its low taxes across the board. Income tax is only 7 percent after the first $9,000 and maxes out at only 27 percent. However, taxes only even apply to income from Panamanian sources. New home purchases are tax exempt for the first 20 years. Capital gains taxes are a low 10% and no inheritance tax exists.