The Special Regime Law for the Establishment and Operation of Multinational Companies Related to Manufacturing (EMMA) was created on August 31, 2020, with the objective of increasing the competitiveness and attractiveness of investment in Panama and thanks to the good functioning of the Multinational Companies Headquarters Law (SEM), which grants a license that allows activities such as accounting, logistics, finance, among others, for the benefit of multinational companies.
The EMMA law grants a license that allows multinational companies to provide the following services to their business group:
- Machinery and equipment for:
- Product manufacturing
- Product assembly
- Product maintenance and repair
- Product remanufacturing
- Product reconditioning
- Product development, research, or innovation of existing products or processes
- Analysis, laboratory, testing, or other manufacturing-related activities
- Any other similar services
EMMA license requirements and application
The requirements to obtain this license are established by the Multinational Enterprise Licensing Commission:
- Assets of the multinational enterprise
- Operating locations of affiliates, parent companies, or subsidiaries of the multinational enterprise.
- Commercial or industrial activities or operations of the company.
- Stock listing on a local or international stock exchange.
- The minimum number of full-time employees and annual operating expenses.
- Any other information that the committee deems relevant to evaluate as a requirement.
Applications must be made in writing to the Technical Secretariat of the Commission on a form prepared by the Commission. Attached to the application must be a letter from the interested company containing a sworn statement expressing its interest in establishing a multinational company that provides manufacturing-related services.
If the application is approved, a license will be granted for an indefinite period of time.
Advantages of the EMMA license
EMMA licensed companies will be subject to a special tax regime:
- Net taxable income tax on services rendered at a rate of 5%.
- No Tax on the Transfer of Movable Goods and Services (ITBMS or VAT in other countries) as long as the services are rendered to persons that do not generate taxable income in Panama
- Exemption from dividend tax, complementary tax, and branch tax.
- Not subjected to the use of fiscal equipment and will not be obliged to obtain a Notice of Operations.
- Immigration benefits such as temporary and permanent visas to foreign personnel working for the multinational company and its dependents.
- The dependents of its foreign workers with temporary or permanent visas may work in Panama.
- Legal stability of the investments to the companies established under this regime. Meaning that in the case of new legal dispositions, this will not be affected.
Read de full EMMA Law here: