After the fall of its military dictatorship in 1989, Panama actively sought to develop investment laws that promoted growth in the tourism industry. Panama foreign investment was actively encouraged and Panama property incentives and laws were made to sustain this growth. One such piece of legislation was Law No. 8, which was written into investment law on June 14, 1994.

The objective of this investment law was to establish a simple, prompt, and rational process for developing tourism activities throughout Panama. This Panama law granted property incentives and benefits to people involved in tourist activities, allowing them the necessary rights to promote tourism in Panama. This law declared tourism a public service industry and made distinctions between hotels, motels, condos, time-shares, restaurants, camp sites, theme parks and convention centers.

In addition to defining various types of tourist locations, Law No. 8 also established a number of incentives for people or companies that provided such tourist-promoting ventures. These incentives include:

The following incentives are granted for the construction, furnishing, and efficient development of the public lodging establishments in the Special Tourism Zones. The minimum amount of investment, not including land, is set at $300,000. The property incentives in Panama law no. 8 are:

• A twenty year tax exemption for any materials, appliances, furniture, equipment, vessels, and automotive vehicles with a minimum capacity of eight passengers. In the case of ecotourism activities, the exoneration of four-wheel traction vehicles with a minimum capacity of five passengers shall be allowed.
• A twenty year tax exemption from property tax. This exoneration shall cover all real property owned by the company, provided it is used in its entirety for tourist activities.
• Exemption from any tax or assessment on its capital.
• Exemption from any fee for landing on piers, airports, or heliports owned, built, or repaired by the company. The Government of Panama may use these facilities free of charge.
• Exemption from income tax on any interest earned by creditors in operations for investing in public lodging establishments.
• An annual rate of 10% shall be for allowed real property depreciation, not including the cost of the land.

The following incentives are granted for the activities for Historic Landmarks, for which the National Institute of Culture authorizes the construction of projects with a minimum investment of $100,000.00, not including the cost of the land.

• A ten year tax exemption property tax on the land, and thirty years exemption for improvements to property.
• Income tax exemption on company 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 fiscal years following the fiscal year in which such losses were sustained.
• A one-time exemption from import duties on any equipment and materials used in construction, remodeling, and furnishing a historic landmark if the materials cannot be obtained locally.

• 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, as well as investments made in tourist promotion or education.
• 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.
• Companies engaged in restaurant, discotheque, or nightclub activities that have been certified by IPAT and have a minimum investment of $120,000 if located in the metropolitan area, and of a minimum of $20,000 if located in the rest of the territory of the Republic of Panama, are exonerated for a period of three years.
• The following benefits are granted to any company conducting activities within 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 Panama prior to, during, or at the end of such event:
  1. Full exoneration from income tax on profits from such event, 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, contributions, 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 exported upon completion of the event.
  4. Income tax exoneration to any sportsmen, or national and foreign artists participating in such events.
• Income derived from exploitation vessels or aircraft 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.
• 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 ecotourism resorts, and marinas:
  1. A three year exemption from import duties on materials and equipment used in their construction and furnishing, provided such items are not for sale, are not produced locally.
  2. A ten year depreciation for real property.
  3. A twenty year exemption from property tax.

Panama is committed to expanding their tourism and encouraging foreign investment in Panama. Property incentives and laws such as Panama No. 8 are helping to strengthen the country's investment laws.