Law 57 of October 24, 2018 amends Law 41 of 2007, which creates the Special Regime for Headquarters of Multinational Companies.
Some General Modifications
Services that SEMs may provide: technical, financial, and/or administrative assistance, as well as support services, including financial management services, risk analysis, credit analysis, due diligence, compliance, custody, and filing of documentation, data, and/or document processing and corporate treasury services, as well as loans between companies related to the corporate group.
Additional requirements to obtain an SEM license: maintain a minimum number of full-time employees and annual operating expenses of the multinational company in Panama, in both cases appropriate to the nature of the business.
Cancellation of SEM license: the license will be canceled in case of activities different from those authorized.
Income tax: a 5% rate is imposed on the net taxable income derived from the services rendered. Expenses incurred in labor remunerations may also be deducted even when the worker is exempt from Income Tax.
Payments by Panamanian taxpayers: Panamanian taxpayers rendering services from a company with an SEM license must withhold a 5% rate on the amount to be remitted to the company.
Remittance payments abroad: SEM-licensed companies that benefit from services, loans, financing, or acts rendered by a non-resident in Panama, must withhold a 5% rate on 50% of the amount to be remitted, i.e. an effective rate of 2.5%.
Capital gain: gains or losses from the transfer of shares or securities issued by companies holding SEM licenses, are subject to income tax on capital gains at a fixed rate of 2%.
For more details on Law 57, which modifies aspects of the headquarters of multinational companies, click here: