Panama Tax & Retirement Incentives

Panama maintains a Constitutional Democracy with a Legal system based on the civil law system. Current President, Martin Erasto Torrijos Espino, was elected to office in May of 2004.      Panama Has One Of The Healthiest Economies In Latin America. The country has maintained an annual inflation rate of less than two percent for the last 40 years, and just 1.1 percent in 2001. Panama has no restrictions on the outflow of capital or outward direct investment. Panama is Latin America's Most Globalized Economy, according to the 2005 Globalization Index from A.T. Kearney and Foreign Policy magazine.      Panama's economy rests primarily on a well-developed services sector that accounts for three-fourths of GDP. Services include operating the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism. The high levels of Panamanian trade are in large part due to the Colon Free Trade Zone, the largest free trade zone in the WesternHemisphere. Last year the zone accounted for 92 percent of Panama's exports and 65 percent of its imports, according to an analysis of figures from the Colon zone management and estimates of Panama's trade by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) (www.wikipedia.org). The government has implemented tax reforms, as well as social security reforms, and backs regional trade agreements and development of tourism. In October 2006, voters passed a referendum to expand the Panama Canal to accommodate ships that are now too large to cross the transoceanic crossway. Not a CAFTA signatory, Panama in December 2006 independently negotiated a free trade agreement with the United States, which, when implemented, will help promote the country's economic growth (www.cia.com).      The Panamanian Government is Extremely Pro-Active & Supportive of Foreign Investment. One of the many excellent benefits offered by the Panamanian Government allows properties to enjoy a period real estate tax exemption, depending on their total value, as follows: up to $100,000USD is exempted for 15 years; above $100,000USD & up to $250,000USD is exempted for 10 years & those having a value exceeding $250,000USD are exempted for 5 years. Projects that received their construction permits before September 1, 2006 were granted 20 years of tax exemption, regardless of the value of the property, on condition that the registration of the improvements is performed before August 31, 2007.

• No Tax Reporting Requirements

• No Income Tax

• No Capital Gains Tax

• No Interest income tax

• No Sales Tax

• No Tax on Issuance of Corporate Shares

• No Tax to Shareholders

• No Stock Sale or Transfer tax

• No Capital Stock Tax

• No Estate Tax

• No Gift Tax

• No Stamp Tax

• No Succession Tax

 

• 50% Discount off of the ticket price charged for movies, theaters and Panama sporting events like soccer, boxing, baseball etc.

• 30% Discount for City Buses, Panama Trains and Boats (not cruise boats)

• 25% Discount on airfare if the flight is in-country or if the ticket is purchased with COPA airlines in Panama

• 50% Discount on Hotels from Monday to Thursday and 30% on Friday, Saturday and Sunday

• 25% Discount in food formal restaurants

• 15% Discount in fast food establishments

• 15% Discount on services in hospitals and private clinics

• 10% Discount for prescription medicines in pharmacies

• 20% Discount on any professional services utilized in Panama

• 20% Discount for all prosthetic devices

• 50% Discount on the price of a Panama passport

• 25% Discount on your electric bill up to 600KW's

• 25% Discount to the basic residential phone service charges when the phone (one phone only) is registered in the name of the Pensionado

• 25% Discount on primary residential water bill if the bill is in the name of the Pensionado and the monthly bill does not exceed $30.00

• Plus discounts on the following medical services:
  - 20% Discount for medical doctors fees
  - 15% for dentist fees
  - 15% for optometric examinations

• Health Insurance shall adjust fees for Pensionados & Jubilados

• A Pensionado can buy a car every two years free of import duty

• A Pensionado can bring in $10,000 worth of personal goods one time with no import duty

 

Once you have qualified as a Panamanian resident with a pensionado visa you qualify for these benefits. Foreign residents of Panama, regardless of the type of visa they obtain, who are over the age of 55 years for a woman and 60 years for a man, are entitled to most of the retiree incentives listed above with the exception of the importation of tax free cars.
     Also regulated by Law Number 9 of June 24, 1987, the retiree or *pensionado* residence status requires that applicant demonstrates an income on pension of only US$500.00 per month and $100.00 for each dependent.
Additional Requirements to Obtain the Retiree Status Include:
Power of attorney; Good health medical certificate & HIV Test; Good standing report from police or municipal authorities; Complete copy of passport; Letter certifying applicant condition as a retiree and amount earned per month (If it is a private entity, proof of its existence must be supplied); and Marriage certificate.
**Note: Except for the retiree certification, the same documents must be supplied by the spouse. All documents must be certified before a Panama consulate at the place of issuance.
     You will need a passport valid for at least six months as well. The health certificate is done in Panama. All applications must be in person. Plan on being in Panama for at least four days to apply. In approximately 60 days you will need to return to pick up the Pensionado. You can stay in Panama during the application process or leave and return.