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The following information was copied and reproduced here for those considering the possiblity of investing in Panama. This information is in the exact format as found in the English section of www. IPAT.GOB.PA  web site. All typos and errors were printed in order to maintain a true image of the article.  As in LAW 8, special encentives for bringing retired persons to Panama, the following laws were also passed  to motiva the development of the tourist industry. May I bring special attention to Artticle 17 of these laws. Not only has the government  Panama passed a host of  generious laws for the investor, Article 17 pertains to the Areas of Special Interest designated by the goverment. Volcan, Boquete and Bocas del Torro are  located in just such an area and  qualifies under this article.  The  government of Panama once again is

William Hemingway has a website under construction. His article Hemingway’s Hideaway - Retiring In Panama which was featured in the last edition drew a lot of favorable email.  William is currently building a website on investing & retiring in Panama.  He can be contacted at the following: Tel  CC 507-284-4175 day, 232-5443 eve, e-mail,  HP3XBH@hotmail.com Box 5301  Balboa, Ancon R. de Panama

CHAPTER III
INCENTIVES AND BENEFITS
Article 8. For the purpose of encouraging investment in new projects and activities to offer tourist facilities, the following tax incentives are granted to natural persons or companies covered by the provisions of this Law:

1. Public Tourist Lodging: The following incentives are granted for the construction, furnishing, and efficient development of the public lodging establishments covered by Article 6, 1, of this Law, in which a minimum, not including the cost of the land, of three hundred thousand   (US$300,000.00) must be invested if these lodgings are located in the metropolitan area, and fifty thousand (US$50,000.00) if they are located in the rest of the Republic of Panama, except in the case of inns and bed and breakfasts, for which the minimum investment shall be set by IPAT. 
2. 
a. A twenty- (20) year, full exoneration from import duties, contributions, taxes, or fees of any type or class, for the introduction into Panama of any materials, appliances, furniture, equipment, vessels, and automotive vehicles with a minimum capacity of eight (8) passengers. The latter must be certified by IPAT as indispensable for the regular conduct of tourist activities. These materials and equipment must be used to build and furnish public lodging, establishments. This incentive shall be granted provided these items are not produced locally, or they are not produced locally in sufficient quantity or of the proper quality. Any equipment a company may bring, into Panama for the purpose of saving energy or providing the necessary safety at the project area shall also be exonerated. 

In the case of eco-tourism activities covered by Article 6 of this Law, the exoneration of four-wheel traction vehicles with a minimum capacity of five (5) passengers shall be allowed.

b. A twenty- (20) year exoneration from real property tax, starting on the date of registration of the company at the National Registry of Tourism (Registro Nacional de Turismo). This exoneration shall cover all real property owned by the company, provided it is used in its entirety for tourist activities.
c.  Exoneration from any tax or assessment on its capital.

d. Exoneration from warfare or any fee for landing on piers, airports, or heliports owned, built, or repaired by the company. These facilities may be used free of charge by the Government of Panama.

e. Exemption from payment of income tax on any interest earned by creditors in operations for investing in public lodging establishments.

f. An annual rate of ten per cent (10%) shall be allowed for real property depreciation, not including, the cost of the lan

3. Investment in Historic Landmarks:
4. The following incentives are granted for the activities contemplated in Article 6, 5 of this Law, located within Historic Landmarks, for which the National Institute of Culture (Instituto Nacional de Cultura - INAC) authorizes the construction of projects with a minimum investment of one hundred thousand (US$100,000.00), not including the cost of the land.

a. A ten- (10) year exoneration from real property tax on the land, and a thirty- (30) year exoneration for improvements to real property.
e. An exoneration from income tax on the company's profits during the first five (5) years of operation of the appropriate commercial activity. After this period expires, the company may deduct any losses as expenses during the first three (3) fiscal years following the fiscal year in which such losses were sustained.
f. 
c. A one-time exoneration from import duties on any equipment and materials used in construction, remodeling, and furnishing, provided such items are not produced locally in sufficient quantity or of the proper quality, and that they are not for sale to the general public.

Article 9. A natural person or company may treat as tax deductible any investment it makes in the restoration, maintenance, or lighting of Historic Landmarks, municipal parks, national parks, or public site; also, any investment made in tourist promotion or education considered by the Ministry of Finance and Treasury in coordination with IPAT; as activities that encourage the development of tourism.

Article 10. The following tax incentive is granted to companies engaged exclusively as operators of incoming tourism in the Republic of Panama: 

Exoneration, every three (3) years, from import duties on microbuses, limousines, vessels, and their spare parts, provided they are so certified by IPAT as indispensable for the proper operation of tourist services. Such equipment may be resold upon payment of the appropriate duties.

Article 11. Natural persons or companies providing mass transportation to tourists at airports, piers, and hotels are exonerated from import duties on automotive vehicles exclusively destined to tourist activities, as approved by IPAT.

Article 12. Companies engaged in restaurant, discotheque, or nightclub activities that have been certified by IPAT as being of tourist interest, in which a minimum investment has been made, not including the cost of the land, of one hundred twenty thousand (US$120,000.00) if located in the metropolitan area, and of a minimum of twenty thousand (US$20,000.00) if located in the rest of the territory of the Republic of Panama, are exonerated for a period of three (3) years as of the date of their registration in the National Tourism Registry (Registro Nacional de Turismo), from import duties on the materials, equipment, and appliances used in the construction and furnishing of such establishments, provided they are not produced locally, or are not produced locally in sufficient quantity or of the proper quality, and are considered by IPAT as important for the development of such activities.

Article 13. The following benefits are granted to any company conducting activities within the territory of the Republic of Panama for the filming of international feature films or artistic, sports, or any other type of international events to be broadcast abroad, that include spots promoting tourism in the Republic of Panama prior to, during, or at the end of such event.

1. Full exoneration from income tax on profits from such events, unless a tax paid in Panama is considered a tax credit in the company’s country of origin.
2. Full exoneration from any national tax on such events.
3. Temporary exoneration from any import duty, contribution, tax, charge, or fee on any type or class of equipment, supplies, spare parts, or technical material brought into the Republic of Panama by communications companies for the broadcast of events to other countries; or on all the material used during the event, which shall be re-exported upon completion of the event.
3. Income tax exoneration to any sportsmen, or national and foreign artists participating in such events. 

Article 14. All tourism publicity material is exonerated from import duties, provided it is distributed free of charge, subject to inspection by IPAT.
IPAT shall have a period of fifteen (15) working days to approve or object to the material to which this article refers.

Article 15. Income derived from the following activities is exonerated from income tax:
1. The exploitation of vessels or aircraft of registered in foreign countries, if reciprocity is granted there to Panamanian merchant marine vessels or aircraft registered in Panama, for income derived in such countries;
2. The exploitation of vessels or aircraft of any nationality by foreign nationals residing in the territory of the Republic of Panama, provided the country of nationality of the natural person or company, or the country under whose laws the company is chartered, grants an equivalent exemption to companies chartered under the laws of the Republic of Panama, or to persons who have established their domicile in the Republic of Panama, by virtue of the principle of reciprocity.

Article 16. The following tax incentives are granted for the construction, furnishing, building of access infrastructures, restoration, and operation of convention centers, recreational parks, zoos, tourist and eco-tourism resorts, and marinas:

1. A three- (3) year exoneration from import duties on materials and equipment used in their construction and furnishing, provided such items are not for sale, are not produced locally, and are considered by IPAT as important for the development of such activities.
2. A ten- (10) year depreciation for real property.
3. A twenty- (20) year exoneration from real property tax.

Article 17. At the request of IPAT, the Panama Cabinet Council may declare as tourist development zones of national interest those areas that meet the requirements as special tourist attractions, but lack the basic infrastructure to develop such activities. Parties investing in a tourist development zone, who meet the established minimum investment, shall enjoy the following tax incentives:

1. A twenty- (20) year full exoneration from the payment of real property tax on the land or any improvements owned and being used for tourist development activities.
2. A fifteen- (15) year full exoneration from the payment of income tax on the company's activities.

1. A twenty- (20) year full exoneration from import duties, contributions, or taxes, as well as the sales tax (ITBM tax) on the imported materials, equipment, furniture, accessories, and spare parts used to construct, renovate, and furnish their establishments, provided such items are not produced locally, or are not produced in sufficient quantity or of the proper quality. 
2. 
For the purposes of this Law, the term "equipment" is understood to mean vehicles with a minimum capacity of 8 passengers, aircraft, helicopters, motorboats, ships, or sports supplies used exclusively for tourist activities.

4. A twenty- (20) year exoneration from duties, contributions, taxes, or fees on the use of piers or airports built by the company. These facilities may he used free of charge by the Government of Panama, according to the appropriate regulations.
5. A twenty- (20) year exoneration from the payment of income tax on interest earned by creditors from operations for investing in the tourist activity being conducted.

Article 18. Any public tourist lodging company or restaurant not covered by the above articles, but solely engaged in a tourist activity outside the metropolitan area according to this law shall have the option of being entitled to a Tourism Employment Certificate (Certificado de Empleo al Turismo - CET) issued in its name, equivalent to twenty-one and a half per cent (21.5%) of the gross monthly payroll as of the promulgation of this law, provided this gross monthly payroll does not exceed four hundred (US$400.00). In the case of restaurants this option shall be for a period of three (3) years.

Article 19. CET'S, as contemplated in this Law, shall be issued in Panamanian currency by the Ministry of Finance and Treasury, and may be applied to the payment of income, dividend, complementary, real property, or sales taxes, as well as import duties. These are nominal certificates transferable by endorsement. They are exempt from all types of taxes, and may not earn interest.

Article 20. To be entitled to CET’s, companies must meet all the requirements set forth in this Law. CET's may be used six (6) months after their date of issue, but not within the same year of issue. They shall be valid for a period of three (3) years from their issue date.

Article 21. Wages of foreign employees, or those for any employment period of less than twelve (112) months may not be included in the payroll for the purposes of calculating the CET's established herein. Payroll control procedures shall be established.

Article 22. Natural persons or companies engaged in tourist activities may use their vehicles to transport their own materials, furniture, or equipment. They may also provide tourist transportation service to their facilities, and to and from airports and seaports.

Article 23. In order to encourage investment and financing for the development of the tourist industry and the construction of hotels outside the metropolitan area, public tourist lodging companies may issue nominal tourist investment instruments until January 1, 2000. 

The following incentive is granted to investors in these instruments who are not connected directly or indirectly with public tourist lodging, are not the result of the division of a company into several companies, or affiliates or subsidiaries of tourist companies:

For income tax purposes, fifty per cent (50%) of the amounts invested by natural persons or companies in the purchase of bonds, shares of stock, or other nominal instruments issued by tourist companies may be considered as deductible expenses. The Ministry of Finance and Treasury (Ministerio de Hacienda y Tesoro) shall regulate the application of this article.

Companies registered with the National Tourism Registry (Registro Nacional de Turismo) must register, any bonds, shares of stock, or other financial instruments with Panama's National Securities Commission, and must issue them within the first three (3) years from its registration.

A company issuing such bonds, shares of stock, or other nominal instruments may not redeem them in any manner whatsoever for at least ten (10) years. Any bonds or instruments issued by a tourist company shall be valid for a minimum period of ten (10) years, and may not be redeemed earlier. These companies may not purchase their own shares of stock, contributions, or convertible bonds, and may not grant loans to the holders of any such bonds, shares of stock, or nominal instruments; nor may they make use of any other mode for the purchase or payment of said financial instruments for a minimum period of ten (10) years.

Article 24. Tourist yachts calling at ports in the Republic of Panama, whose stay does not exceed ninety (90) days are exonerated from the payment of any and all types of the usual charges, taxes, or service fees upon arrival or anchorage. Customs authorities may only perform their routine inspection duties. No processing of documents by these agencies shall be required. The Executive Branch shall regulate this provision