New Multinationals established in Panama taking advantage
of the Multinational Headquarters Law
Contributed by Icaza [www.icazalaw.com]
The privileged geographical location that the Republic of
Panama
enjoys, to which we can add a booming service economy, a respected
financial center, prepared human resources and the use of
the dollar as national currency have opened the doors so that
the authorities try to position the country as an ideal destination
for multinational corporations to direct their regional operations.
By means of Law No. 41 of 2007, the Panamanian government
created the Special System of the Multinational Corporation
Headquarters, popularly known as “SEM” for its
acronym in Spanish. Law 41 defines the SEM as:
“That multinational corporation carrying out operations
from Panama intended to provide the services set forth in
this Law to its headquarters, subsidiaries, affiliates or
associated companies or establishing its headquarters in Panama,
hereinafter a Corporate Group. Headquarters shall at all time
constitute a part of multinational corporations carrying out
international or regional or major operations in their country
of origin.”
In recent publications of the Ministry of Commerce and Industries,
it was stated that the Minister of said entity, Roberto Henríquez
announced that during the year 2011 a total of fourteen (14)
SEM licenses had been approved, vastly exceeding the records
of closing of the year 2010, which added up to a total of
thirteen (13) SEM licenses. The aforementioned evidences the
growth and regional interest that the legislation has arisen.
The SEM Law provides benefits in tax,
labor, customs and immigration matters among others.
By obtaining a SEM license, the company enjoys an exemption
from the income tax payment for services rendered outside
the national territory to its Corporate Group. They also shall
be exempt from Tax on Transfer of Tangible Personal Property
and Services Rendering (ITBMS) for the services provided to
entities of the corporate group abroad.
In addition, the law provides incentives for foreign executives
of SEM corporations, by exempting them from Income Tax provided
that their salaries come from their headquarters abroad. These
employees also enjoy an exemption from import duties on household
items when the employee arrives for the first time to Panama.
Up to this date, we may point out that renowned worldwide
companies have benefited from the SEM system among which we
may mention: Procter and Gamble, Roche, Maersk, Cemex, Halliburton,
Sab Miller, Caterpillar, Adidas, BMW, Nestlé, McDonald's
, Bosch, Unilever, among others, and thus consolidating Panama
as an international business hub.
We conclude with the appropriate words from the Vice minister
of Foreign Commerce, José Domingo Arias: “Panama
is a natural meeting point for making business in the region.
The leading global companies that benefit from the expansion
of Latin American markets use Panama as a platform and their
clients and suppliers understand it so, which are also taking
advantage of the benefits that our country is offering as
a launching point for regional growth of their business ".
We are of the opinion that the above sets out the reasons
why the Panamanian authorities have given their best effort
in the creation, promotion and implementation of the SEM law.
Author: Mr.
Diego Alemán
Aquilino de la Guardia Street No. 8
IGRA Building, P.O. BOX 0823-02435
Panama, Republic of Panama
Tel: +507 205-6000
Fax: +507 269-4891
Email: igranet@icazalaw.com
Web: www.icazalaw.com
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