You are here :: Panama Real Estate » Real-estate-investments » Panama-investment-tax-incentive

Panama’s laws, tax incentive, and general business climate are conducive to foreign investment. This has resulted in Panama foreign investment being equal or greater than foreign investment in any other Latin American country. Per capital Panama has far and away the highest foreign investment in Latin America. Foreign investment is likely to stay and continue to drive Panama’s economic expansion for years to come.

Panama Tax Incentive and Foreign Investment

When the USA ran the Panama Canal Panama was considered by many to be a US colony. That perception went away with the hand over of the Panama Canal in 1999. Since that time Panama has been selling Panama Canal Zone property for housing and business development.

Developers of assembly and export facilities take advantage the tax incentives in a number of Panamanian laws. Both foreign and domestic investors in companies that manufacture or process materials in Panama solely for export receive tax exemptions on exports as well as importation of raw materials and equipment.

A company or group of companies can become export processing zone taking advantage of proximity to facilities in the Panama Canal Zone, access to materials from throughout the world, and easy access to shipping of finished products. Panama tax incentives for these companies include exemption from import duties as well as the waiving of withholding taxes on dividends, interest payments.

Who Is Taking Advantage of Panama’s Tax Incentive and Positive Business Climate?

An example of an international company attracted to Panama by a positive business climate is Caterpillar.

The April 12, 2008 edition of La Prensa, Panama reports that Caterpillar, the world's largest manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines, has purchased land in Veraguas, district of Arraiján, Panama for a training center.

The Panama Caterpillar training center will be part of a complex including a regional office, logistics and distribution center and a full apprenticeship training facility for operating and maintaining Caterpillar’s various brands of heavy equipment.

Like any investment Caterpillar’s investment in Panama will move through the economy many times. Construction jobs will be created to build facilities and construction pay will go to pay for mortgages for new housing. Jobs at the training center, offices, and distribution facilities will support a surrounding service industry. One need not be directly affiliated with Caterpillar to benefit from their investment.

ABPanama is partial to investment in commercial real estate. The investment by a company such as Caterpillar provides the opportunity for commercial real estate developments to provide retail and office space as well as housing.

Panama does not appear to be rethinking its tax incentives. In fact as Panama benefits from actions such as Hugo Chavez’s nationalization of private businesses in Venezuela it is likely that Panama will continue its pro business stance for years to come.

If you would like to look into investment opportunities in Panama including real estate please contact us at ABPanama. We have over 23 years experience managing real estate portfolios and would be pleased to help you become a successful Panama expatriate.