The Republic of Panama offers unique prospects for investors, owing to its strategic location and function in international trade processes. This nation not only serves as a nexus of world maritime routes, courtesy of the famed Panama Canal, but also boasts exceptional infrastructure and a stable economy, rendering it an attractive regional investment market.
Full-scale investment assistance in Panama provided by YB CASE encompasses not only assistance at the initial stages of market entry but also ongoing investment management and provision of investment services throughout all project implementation phases. Effective support in the investment sphere and comprehensive consultancy on investment projects in Panama aid YB CASE clients in mitigating potential risks and expediting the attainment of anticipated outcomes.
Ensuring the effectiveness of investment processes in Panama through professional facilitation of investment realization and integrated consultancy on investment matters enables YB CASE to establish long-term and mutually beneficial relationships with each client.
Overview of Panama as an investment destination
Panama occupies a unique geographic position that enhances its attractiveness as a major investment hub, specifically for world commerce and monetary amenities. The country is renowned for its stable economy with above-average income levels and a significant share of foreign direct investment (FDI) in GDP.
Panama holds leading positions in terms of the volume of FDI among Central American countries, alongside Costa Rica. The UNCTAD report for 2023 indicates that in 2022, the inflow of foreign capital into Panama increased by 203%, reaching $2.64 billion compared to $1.92 billion in the previous year. By the end of this period, the total volume of foreign investments in the country amounted to $61.68 billion, approximately equal to 85.7% of Panama's gross domestic product.
Panama maintains privileged diplomatic relations with the United States, ensuring additional stability and security for investments. Furthermore, the nation utilizes the American dollar, thereby ensuring currency stability and facilitating cross-border transactions.
The Panamanian government actively facilitates the attraction of foreign capital investments, boasting a high caliber of investment services, including consulting on investment projects and legal support for investors. Substantial tax incentives are extended to investors, particularly in the establishment of local headquarters for multinational corporations. The SEM program (Sedes de Empresas Multinacionales) was bolstered in the first half of 2023 through the creation of six new multinational companies, underscoring Panama's dedication to enhancing the fields of engineering, building, and telecommunications.
According to Executive Decree No. 722, adopted in October 2020, a new immigration category has been established, granting permanent residency to qualified investors who have made initial investments of $300,000. Companies investing a minimum of $2 million in Panama's economy receive guarantees of legal stability, as well as national, municipal, and customs tax preferences. Additionally, they are provided with labor condition stability for a period of ten years.
Key sectors to contribute to in Panama
The Republic of Panama offers modern infrastructure and burgeoning real estate and travelscape segments. The country's economy is oriented towards strategic pillars such as banking and maritime traffic. Special economic zones, like the Colón Free Trade Zone, provide additional customs and tax incentives, positioning Panama as an attractive jurisdiction for global manufacturers and distributors.
Special Economic Zones (SEZ) in Panama
Situated in a pivotal geographical nexus, bridging North and South America, and serving as a nexus between the Atlantic and Pacific Oceans, Panama actively attracts international investment, leveraging its unique geographical and economic advantages. The government, recognizing the significance of foreign investment for economic growth and technological modernization, has implemented a series of specialized economic zones. These zones are established to foster a conducive investment climate, attracting international corporations and fostering the development of key economic sectors.
SEZ in Panama offers various incentives for investors, including tax breaks, streamlining of customs and administrative processes, as well as special provisions for attracting highly skilled foreign workers. These initiatives not only contribute to sustaining current economic activity but also open up prospects for long-term sustainable development.
Colón Free Zone
This area represents one of the most important open trading regions globally and the largest in the Western Hemisphere. Companies here benefit from exemptions from numerous tax obligations, including duties on the import and export of goods, rendering it attractive for international trade and logistics operations.
Panama Pacifico
This is a SEZ established on the site of a former United States military air base. The zone provides tax incentives for enterprises operating in the manufacturing, logistics, high technology, and service sectors. Enterprises located within this territory benefit from reduced income taxes, streamlined customs procedures, and exemptions from import tariffs.
City of Knowledge
This complex located at the entrance of the Panama Canal serves as an innovation hub and business incubator specializing in technology, education, ecology, and humanities. Companies in this zone can avail themselves of numerous tax incentives, such as exemption from income tax and import duties, as well as special conditions for attracting foreign specialists.
These territories offer exceptional tax privileges and enhanced visa regime conditions for multinational companies choosing to establish their regional or worldwide headquarters in the Republic of Panama. These include income tax exemptions, streamlined procedures for issuing work visas to foreign employees and their families.
Assistance in the implementation of investment projects through public-private partnerships (PPP) in Panama
PPPs in Panama serve as an effective mechanism for facilitating the implementation of large-scale investment initiatives, leveraging the opportunities and expertise of both the state and private sector. These partnerships enable the execution of significant projects that would be challenging or impossible for one party to accomplish independently.
Basic principles and advantages of PPP in Panama
PPPs in Panama are oriented towards the creation, enhancement, and maintenance of public infrastructure, as well as the provision of services pivotal to the economic and social advancement of the nation. The core tenets of these companies entail comprehensive facilitation of investors within Panama, support for investment projects across all stages of implementation, and the provision of investment services to ensure transparency and legislative compliance.
Sectors targeted by PPP
PPPs in Panama are actively used in several key sectors:
- Infrastructure: construction and management of roads, bridges, ports and airports.
- Healthcare: advancement and operation of medical facilities and centers.
- Education: construction and management of educational institutions, including schools and universities.
- Energy: projects in the field of renewable energy and traditional energy.
One prominent example of PPP is the development of Panama's transportation infrastructure, including the expansion and modernization of the Panama Canal, made possible through international public-private collaboration. This project not only enhanced the canal's throughput capacity but also significantly boosted the efficiency of global transportation routes.
Overview of Panama's legal framework for investment
Panama presents an attractive legal framework for foreign investors, supported by a robust body of legislation and regulations crafted to foster economic development and safeguard investments. Core elements of the legislation extend beyond mere financial inducements, also providing investor certainty, which positions Panama as a magnet for international commerce.
The Investment Stability Law (Law No. 54 of July 22, 1998) ensures that foreign investors injecting a minimum of 2 million USD into Panama's economy shall enjoy commensurate rights and obligations akin to domestic enterprises, thereby fostering a stable and foreseeable investment milieu.
Law No. 41 of 2007 was specifically crafted to incentivize and bolster multinational enterprises, enticing them to establish their regional headquarters in Panama. It entails a suite of tax breaks, including profit tax reductions and other supportive measures.
Complementing these regulatory structures, Panama is enacting a suite of legislative instruments to govern activities within its free trade zones, encompassing the Colón Free Trade Zone and the Panama Pacifico SEZ. These legislative instruments confer substantial tax breaks and customs advantages to businesses operating within these designated zones.
Panama has also taken measures to enhance transaction transparency and protect investor rights. Special attention is given to corporate governance accountability and shareholder litigation capabilities, fostering a favorable investment climate.
The Ministry of Commerce and Industry acts as a cornerstone in regulating FDI. It establishes a yearly strategy to cultivate FDI and offers investors with the necessary services to streamline the investment process and facilitate project development.
Consulting on investment projects in Panama often includes assistance in navigating these laws, ensuring that foreign investments comply with all national requirements. This not only streamlines the investment process but also enhances its efficiency.
Supporting foreign investment in Panama
Investment project support in Panama is facilitated at various levels, with institutional bodies playing a significant role. Among the pivotal players in this process is the Investment Attraction Agency PROPANAMA. This agency assumes a central role in streamlining and expediting procedures for foreign investors, offering investment services in Panama, encompassing legal counsel for investors, administrative support, and assistance in obtaining requisite permits and licenses.
PROPANAMA also provides consultative services aimed at furnishing investors with all necessary information regarding local economic conditions, market trends, and opportunities. These services facilitate effective facilitation in investment endeavors and contribute to the successful implementation of investment projects.
International agreements
Panama actively engages in the negotiation of international agreements aimed at facilitating business operations and foreign investment for overseas firms. These measures include:
- Free trade agreements. Panama has inked many bilateral trade treaties with different nations and groups, furnishing companies with preferential access to global markets.
- Bilateral investment treaties are another facet of Panama's approach to cultivate an inviting atmosphere for FDI. These agreements serve to shield and bolster investments, thereby guaranteeing legal recourse for foreign enterprises conducting business within Panama's borders. These treaties act as a catalyst for foreign investor confidence by establishing well-defined and transparent parameters for investment undertakings.
These global pacts highlight Panama's pivotal location as a center for worldwide logistics and finance, boosting its reputation as a desirable target for foreign capital infusion. Facilitating investment operations and providing consultancy on investment matters in Panama contributes to strengthening international economic relations and maintaining the country's sustainable economic progress.
Key benefits of investing in Panama
- Economic prosperity. In defiance of the prevailing global economic slowdown, Panama's economy exhibits stellar growth metrics, boasting an exceptional average annual GDP growth rate of 8.56% over the past decade. Furthermore, Panama enjoys remarkably low inflation of just 1% and minimal unemployment. This robust economic development and stability significantly surpass the GDP performance of the United States.
- Political and monetary stability. Panama adopts the US dollar as its official currency, ensuring currency stability and facilitating cross-border financial transactions.
- Strategic ties with the USA. Robust and sustaining economic and political alliances with the United States cultivate economic buoyancy and invigorate investor sentiment.
- Significant fiscal preferences for capital investors. In addition to the incentives offered in SEZ, Panama provides a broad array of tax stimuli, encompassing reduced corporate tax tariffs and incentives for investments in specific sectors and projects.
- Sophisticated infrastructure and global market accessibility. The country's advanced infrastructure network, incorporating the Panama Canal, global airports, and harbors, signifies extraordinary prospects for cross-border logistics and transportation undertakings.
- Strategic location. Panama occupies a strategically advantageous location. It functions as a crucial passageway connecting North and South America, and also serves as a central transit and logistics hub connecting the Pacific and Atlantic Oceans.
Panama represents an efficacious blend of economic resilience, advantageous fiscal regime, and strategic geographical positioning, rendering it one of the most coveted hubs for foreign investments in the Latin American region.
YB CASE services for launching and supporting investment projects in Panama
YB CASE offers an extensive array of services to assist and bolster investment initiatives in Panama. These services encompass comprehensive legal servicing, specialized facilitation in interfacing with governmental entities, and facilitation in securing economic incentives. Clients of YB CASE benefit from continuous support throughout all stages of the investment cycle, commencing with company registration and culminating in its stable operation.
Comprehensive legal services
Specialized services
YB CASE ensures a comprehensive approach to investment management, from initial ideation to full project launch. The company offers not only legal support but also strategic planning, rendering it an indispensable partner for conducting commercial activities in Panama.
Stages of support for investment projects in Panama with the support of YB CASE
At each stage, YB CASE aims to provide comprehensive support to its clients, leveraging profound insights into the local market and legislation. Delivering investment services in Panama, accompanying business ventures, and assisting in investment operations afford investors the requisite support for the successful execution of their projects in this strategically significant jurisdiction.
