A Regional Headquarters is an office that has management control in the region and that, from Panama, provides services to its Head Office, Subsidiary or Subsidiary in other countries. These may operate as a foreign company registered in Panama or as a Panamanian company owned by the transnational company.
The Republic of Panama has a fundamentally service economy, which is why it is necessary to take advantage of globalization and world structures to create new alternatives that help the development of our country.
Our geographical position, located in the center of the American Continent, with access by land, sea and air, with a tropical climate throughout the year, free from natural disasters, with an open service economy, trained human resources, the use of the dollar as legal tender, the international financial center, the world-class communications platform and the economic, political and social stability, make Panama the ideal destination to establish Regional Offices or Multinational Company Headquarters.
However, it was necessary to have a Law to specify the conditions in order for our country to become a destination for Multinational Company Headquarters, which will undoubtedly help the national economy by investing capital, consuming local goods and services. , the generation of jobs and the transfer of technology and knowledge. Although all these tax and migratory incentives that this type of companies have already existed, when compiled in a single legal framework, it is possible to promote much more investment and the transfer of knowledge and technology to our country.
The Panamanian government approved a new law that supports the development of this important sector, through the creation of a Single Window to grant Multinational Company Headquarters Licenses.
Law No. 41 of August 24, 2007, amended by Law 45 of August 10, 2012 and Law 57 of October 24, 2018.
Through which a special regime is created for the establishment and operation of Multinational Company Headquarters and the commission of licenses for multinational company headquarters and dictates other provisions. Law No. 41 of 2007 defines a SEM company as: that multinational company that from Panama carries out operations aimed at offering the services defined in this Law to its Head Office or its subsidiaries or its subsidiaries or associated companies, or that sets its Head Office in Panama, hereinafter Grupo Empresarial. The Headquarters will always be part of multinational companies with international or regional or important operations in their country of origin.
Fiscal Benefits
Law No. 41 of August 24, 2007 and its reform laws establish benefits of a fiscal nature, which operate both for the company with a Multinational Company Headquarters License and for foreign personnel of medium-high levels working in it.
Benefits for the Company
Reduced Income Tax Rate:
The companies that have a Multinational Company Headquarters License must pay income tax in the Republic of Panama on the net taxable income derived from the services provided at a rate of 5%.
The SEM company must pay and pay the income tax by means of the annual sworn declaration of income, and may include in its deductible expenses the expenses incurred as labor compensation for all its employees, in accordance with the provisions of the Code. Fiscal.
Tax on the Transfer of Personal Property and the Provision of Services:
As they are export services, they will not cause Transfer Tax, as long as they are provided to entities of the business group abroad that do not generate taxable income within Panama.
Dividend and complementary tax and branch tax:
The companies holding a Multinational Company Headquarters License will be exempt from the payment of the dividend tax, the complementary tax and the branch tax, regardless of whether they are from a local, foreign or exempt source.
Fiscal Teams:
Companies holding a Multinational Company Headquarters License will not be subject to the use of tax equipment.
Capital gains:
The gain or loss on the transfer of shares issued by the SEM company are subject to the capital gains regime, but at a fixed rate of 2%. where the buyer will have the obligation to retain the seller an amount equivalent to 1% of the total value of the sale.
Operation notice:
The companies that have a Multinational Company Headquarters License will not have the obligation to obtain a Notice of Operation for the provision of the services established in this Law; consequently, they will not be subject to the payment of the Operation Notice Tax.
Executive Benefits
Exemption from Income Tax:
Salaries and other labor remuneration, including wages in kind, received by persons holding an SEM Visa are considered exempt from income tax and social security and educational insurance contributions, to the extent that said wages and remuneration labor, are paid, assumed and recognized as personnel expense in the accounting of the company with SEM License.
Exemption from import tax for household goods:
The holder of a Visa of Permanent Personnel of the Multinational Company Headquarters will be exempt, at the time of moving for the first time to the Republic of Panama, from the payment of taxes that due to their importation could apply to their household goods.
Motor vehicle import tax exemption:
Foreign personnel covered by a Permanent Personnel Visa for a Multinational Company Headquarters may request from the National Customs Authority a total duty exemption and once every two years, for the importation of a motor vehicle for personal or family use.
Immigration Benefits
Law No. 41 of 2007 and its reform laws establish migratory permits for foreign workers that the SEM company hires. These permits will be processed at the Ministry of Commerce and Industries.
SEM Permanent Personnel Visa
These will be granted to workers at the administrative-executive level. They will be granted for a term of five (5) years, extendable for the same term, except in those cases in which the employment contract establishes a shorter term. The foregoing without limiting the number of times in which the reference visa and card can be extended. Holders of this visa will not need work permits.
SEM Permanent Personnel Dependent Visa:
Established for spouses or couples united for a minimum of five years in conditions of uniqueness and stability, to children under the age of eighteen and up to twenty-five years of age, provided that they study regularly and are under the economic dependence of the staff. of Multinational Company Headquarters, to children with disabilities who live with them and to the parents of said staff, who remain in the national territory under the responsibility of the main interested party. These Visas will be for the same term as that granted to SEM Permanent Personnel.
SEM Temporary Personnel Visa
Established for foreign personnel that provide technical or training services to the Multinational Company Headquarters for a term not exceeding three months, extendable for a period of three additional months. Like the SEM Permanent Staff, this visa does not require a work permit.
Permanent residence
Established for foreign personnel who work or have worked for any Multinational Company Headquarters, once the five-year term has elapsed, counted from the approval of the Permanent Multinational Company Headquarters Visa.
Permit to Stay for a term of six (6) months:
All foreign personnel who hold Permanent and Temporary Personnel Visas and their Dependents of Multinational Company Headquarters, who cancel or desist from said migratory categories, will be granted a stay permit in the national territory for the term of six (6) months calendars counted from the cancellation or withdrawal of the respective headquarters of Multinational Companies.
Laboral Benefits
The SEM will be able to hire the necessary number of trusted personnel and senior management executives to carry out their operations in Panama. Dependents who wish to work may make their change of immigration status through the Single Window at the Ministry of Commerce and Industries.
Legal Stability
The activities carried out by companies with Multinational Company Headquarters Licenses, authorized to operate in the Republic of Panama in accordance with Law 41 of August 24, 2007 and its reform laws, will be considered as acceptable investments and capable of obtaining guarantees. referred to in Article 10 of Law 54 of 1998, regulated by Executive Decree 9 of February 22, 1999.
For companies that obtain an SEM License from January 1, 2019, said legal stability operates automatically.
ACTIVITIES OR SERVICES THAT A COMPANY WITH A SEM LICENSE CAN CARRY OUT
The services provided by a Multinational Company Headquarters are as follows or a combination of these:
The direction and / or administration for operations in a specific or global geographic area of a company within the business group. Refers to strategic planning, business development, personnel management and / or training, operations control and / or logistics services.
The logistics and / or storage of components or parts required for the manufacture or assembly of products that it manufactures.
Technical assistance to companies of the business group or customers who have purchased a product or service from the company and, for this reason, is obliged to provide the assistance service.
Technical, financial and / or administrative assistance, as well as other support services, to companies in the same business group, including, but not limited to, financial management services, risk analysis, credit analysis, due diligence, compliance, custody and filing of documentation, the data processing center and / or documents and corporate treasury services, as well as loans between companies related to the business group.
It is understood that the provisions of the preceding paragraph do not include activities that require a license to operate issued by the State through the Superintendency of Banks, the Superintendency of Insurance and Reinsurance, the Superintendence of the Stock Market or other regulatory entities.
In the event that any of the services previously indicated in this numeral are provided to entities that carry out the banking, insurance, reinsurance and / or securities business in the Republic of Panama or abroad, the interested company must previously notify the entity. corresponding regulator its intention to obtain a Multinational Company Headquarters License.
The accounting of the business group.
The preparation of plans that are part of designs and / or constructions, or part of them, that are part of the typical line of business activity of the parent company or any of its subsidiaries.
The electronic processing of any activity, including consolidations of the operations of the business group. This service includes network operations.
Consulting, coordination and monitoring of the marketing and advertising guidelines for goods or services produced by your business group.
The support of operations and research and development of products and services of the business group.
Any other similar service previously approved by the Cabinet Council by reasoned resolution, provided that it complies with the precepts set forth in this Law.
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