Panama has started making an international reputation as an excellent location for business investment. Panama property incentives and investment laws have created many opportunities throughout the country. While many of these possibilities have come in areas such as manufacturing and agriculture, some of the most important ones have come in real estate in and around Panama's Special Tourism Zones.

Panama has declared nine different parts of the country as Special Tourism Zones which can receive multiple tax exemptions among other benefits. These benefits include:

• Property tax exemption including land.
• Income tax exemption for a period of 15 years.
• 20 year exemption from import taxes including the 5% Sales tax.
• 20 year income tax exemption originated by the interests charged by creditors in the tourism activity investment.
• Exemption from liens due to the use of docks or airports built by the company.

Although nine Special Tourism Zones have been declared in Panama, there are other areas with great investment potential such as the mountain regions and islands, among others.

New investment law, Law No. 58, was signed on December 28, 2006 that offers incentives for investors that want to build, furnish or remodel lodging facilities outside the Panama's Special Tourism Zones. The new law establishes tax exemptions for a minimum investment of $3 million in the metropolitan area and contains exemptions on the import of material and equipment, the import of vehicles for tourism development, and a 20-year exemption of property taxes. This same opportunity exists outside of the metropolitan area for a minimum investment of $50,000.

It is believed this new law will draw more foreign investors to Panama as the country becomes more popular among expatriates from Europe and North America. This is the first time a major piece of legislation in Panama property incentives and investment laws for the tourism industry since Law No. 8 of 1994, which expired on December 31, 2005.

Foreign property ownership in Panama is guaranteed by the constitution, not only in Panama's Special Tourism Zones but throughout the country as well. Under Article 44 of Panama's Constitution it states that property rights are guaranteed as long as it is legally acquired by a natural person or legal entity. Since the Civilian Code was put into law, it has stipulated that Panamanian law is applicable to both nationals and foreigners alike. This statute governs general contracts under the principle of "autonomous of the will". The Constitution, as stated in article 18, confirms that particulars are free to act in all matters which are not prohibited by law.

Because of the ownership rights offered to foreigners, Panama's property incentives and investment laws apply to them and make investment both inside and outside of the Special Tourism Zones very appealing. With the new legislation opening tourism opportunities throughout the country, foreigners and nationals alike will find more reasons to take advantage of the investment laws and join the tourism industry.