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BUSINESS LETTER
Latest news from Panama!
October 2017
In this edition
- Economic Activity grows in Panama.
- Foreign Investment Remains Stable in Panama.
- Aviation Industry Generates Millions.
- New Requirements for Multinational Companies.
- New Taxes for Real State.
- New Aeronautical Service Center in Panama.
- Panama Ship Registry opens new offices.
- More...
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Economic activity grows 5,9%
From the report of the Republic’s General Comptroller:
The Monthly Index of Economic Activities (IMAE) in the Republic, for the accumulated period from January-July 2017, grew by 5.85% compared to the same period in 2016. The categories of economic activity that showed the highest growth were: transport, storage and communications (includes the Canal, ports, and aviation), construction, electricity, and water, and mine and quarry exploitation. The categories that presented favorable impact, but at a lower rhythm, were the manufacturing industry, public administration, private teaching, financial intermediation, legal and real estate services, and community activities (including casinos).
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Panama Ship Registry declared "non pernicious” by the OECD
During the session of the 47th Forum on Pernicious Tax Practices, held in France by the Organization for Economic Cooperation and Development (OECD), this past month of September, the Panama Ship Registry was declared “Non Pernicious”.
The term “Non Pernicious”, refers to “absence of risks”, and “non damaging” to tax basis in other countries.
Panama’s Minister of Maritime Affairs, Jorge Barakat, stated that “ the OECD’s decision shows that the Panama International Ship Registry not only complies with international agreements regarding maritime affairs; but that it also respects tax regulatory frameworks at the international level, thus confirming its status of registry
par excellence and as the number one globally”.
The 24/7 service from the General Bureau for Public Registry of Ship Ownership becomes official
Patton, Moreno & Asvat, as an active member of the maritime community, celebrated that for the first time in the 100 years of history of ship registry it is possible to inscribe deeds for the permanent registry of titles and mortgages, assignments, amendments and cancellations uninterruptedly 24 hours a day, since this past September 27th. During a statement to the media, our partner, Belisario Porras pointed out that “this action further elevates the competitiveness of the Panamanian registry vis a vis our competitors".
Likewise, Patton Moreno & Asvat, leading firm in maritime services, was the first to present the first deed under the new schedule.
Footnote: Photo courtesy of the AMP
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New One-Stop Scheme for Maritime Affairs
As of September 21 the Panama One-Stop Window for Maritime Affairs started operating for ships. It is a joint initiative between the Panama Canal Authority (ACP) and the Panama Maritime Authority (AMP), with the support of other national entities, the purpose of which is as well as providing maritime clients with a more efficient system, to improve the processes for reception, staying, and departure.
During this first delivery, the processes for all related entities were homologated, for ships that transit the Panama Canal and use the port terminals of PSA, PATSA, Hutchinson Port-Cristobal, and Hutchinson Port-Balboa, thus covering 80% of international shipping vessels that visit Panamanian ports. The remaining ports in the country maintain their current process until the other phases of the One-Stop Scheme are delivered.
Panama Ship Registry inaugurates offices in London, Dubai, and Manila
With the goal of “diversifying the Panamanian maritime registry business” such as cruise ships, yachts, and vessels dedicated to the transport of liquefied natural gas, the Panama Maritime Authority (AMP), announced the opening of technical Segumar offices in London, Manila, and Dubai.
With these new offices, that makes 9 established offices (London, Manila, Dubai, Panama, Miami, Istanbul, Busan, Seoul, and Tokyo), reinforcing our presence in Europe and Asia. AMP highlighted that as well as the Segumar offices, the network of services provided by the Panama Ship Registry “is composed of 60 consulates dedicated to merchant marine services, including ship registry, and all other aspects related to these matters, (change of ownership, change of tonnage, cancellations, etc.), for which it has more than 200 Flag inspectors around the world.”
According to official statistics, during 2016 Panama’s merchant marine gathered 18% of the world fleet, and registered a total of 8.094 vessels, and 226,6 million tons.
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Newly Updated Requirements for Headquarters of Multinational Companies in Panama
Panama’s Commission of Licenses for Headquarters of Multinational Companies has recently revoked Resolution No. 19-17 of 31 August 2017, published in Official Gazette Number 28356-C, and issued Resolution 20-17 of 11 September 2017, whereby they clarify and update the new requirements for granting of licenses to Headquarters of Multinational Companies which apply for the application of the benefits under Law 41 of 2007.
The Commission’s intention was to update the requirements, which were previously approved 10 years ago, and had previously expanded the scope of applicant companies to those who had 2,500 professional employees. This was met with criticism in Panama, which made the government change the requirement. Now, the criteria to apply is to have either US$200 million in assets or operating under a same brand or commercial name and in the same type of business in more than 40 countries.
The main changes in the requirements are:
- Applicants will now need to file fully translated financial statements, which must be audited or certified by an independent certified public accountant.
- Applicants must file a company chart showing the relationship between its headquarter, the applicant, and the companies of the group to whom the applicant will provide services.
- Applicants may qualify as a multinational on the basis of 2 criteria: they may certify that they have a minimum of US$200 million in assets, or they may certify that they operate under a same brand or commercial name and in the same type of business in more than 40 countries.
For more information on the establishment of Headquarters of Multinational Companies, please contact Khatiya Asvat at kasvat@pmalawyers.com.
Turkey is considering opening a commercial center in the Colon Free Zone
In recent days, approximately 30 business people, and the vice-president of the Turkish Assembly of Exporters visited the Colon Free Zone, with the goal of implementing an economic plan for Latin American countries and opening a Commerce Center. Currently there are 29 companies in the Colon Free Zone that trade with Turkey.
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Moody's improves perspective on Panama
This past September 27th, Moody’s rating agency increased the perspective from stable to positive and reaffirmed the Baa2 investment grade, arguing that the economic growth will continue its upward trend, and that it will be higher than its peers.
Integration of Panama – El Salvador stock exchanges
Four months the virtual process of integrating these two markets was initiated. Currently five exchanges are already performing transactions and another four are processing the permit to be remote operators. Once the process is completed in El Salvador, the intention of the exchanges and the regulators will be to include new markets in this scheme. The first on the list would be Dominican Republic and Costa Rica.
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Aviation Industry generates $7,300 million per year in Panama
According to the report prepared for “Oxford Economics” in collaboration with the International Association of Aerial Transportation (IATA), the aviation industry represents 14.8% of the Panama’s gross domestic product (GDP) and generates 260,000 indirect jobs.
This percentage represents the highest contribution percent wise for aviation in the Americas. The document states that Panama is followed by the Dominican Republic, whose contribution to the sector is 11.5% of GDP, whereas countries like Mexico, Argentina, and Brazil barely reach 3%.
In terms of modernizing Panamanian aerial space, currently the documentation required for a bid to study redesigning Panama’s aerial space is being prepared, as this has not been done for over a decade, and it will most likely be programmed for the firs semester in 2018.
Patton, Moreno & Asvat participates in the 11th Annual Meeting "ALTA Aviation Law Americas 2017" and in the "L2B Annual Meeting"
Once more, our partner, María de Lourdes Marengo, represented Patton, Moreno & Asvat at the 11th conference “ALTA Aviation Law Americas”, the main legal conference in the region that focuses specifically on the aviation industry, held this year in Bogota-Colombia.
Attendants included the most renowned law firms, aviation experts, and airlines in the Americas, who focused on exchanging points of view, ideas and best practices regarding legal, financial, and political issues and challenges that the industry is currently facing in the region.
We also participated in the annual “L2B” meeting, which was held on these dates, and our partner participated as the Panamanian representative at this renowned association of the aeronautical industry.
Aeronautical Maintenance Service Center in Panama
The Honda aeronautical maintenance center will be built within the facilities of the Panama Pacifico international airport, and will be only center in the region authorized to perform inspections on HondaJet airplanes.
The company’s representative stated that Panama was chosen because of its geopolitical, economic and investment safety characteristics, which make it the ideal place to install the first service center for Honda executive airplanes.
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Direct Foreign Investment continues to grow
Direct foreign investment received in Panama during the first semester was 6% higher than that registered for the same period last year.
A large part of this investment (66,6%) corresponds to the reinvestment of utilities, in other words, the earnings of foreign businesses that stay in Panama, instead of being remitted to their countries of origin. An 8% corresponds to the purchase of shares in Panamanian companies, and the remaining 25,4% is grouped under “other capital”.
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New Fee for Property Taxes
Recently the new fee for property taxes was approved, highlighting the following changes:
- Residences that cost between $120,001 and $700,000 will pay 0.5%. Above $700,000, they will pay 0.7%
- Main homes with a cost lower than $120,000 will be exempt of tax payments. The exempted amount will be reviewed every five years.
- In the case of second homes, commercial and industrial properties that cost between $30,000 and $250,000, they will pay 0.6%. Above $250,000 up to $500,000, they will pay 0.8%. From $500,000 and above, they will pay 1%.
- Moratorium in force until December 31, 2017
By: Gilberto Arosemena Callan.
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National Oratory Contest, 2017
Under the theme: “Panama, 100 years of ship registration. Connecting ports, seas and people”, Panama holds the 13th edition of the National Oratory Contest, presented by the Panama Maritime Authority. The National Oratory Contest is a Corporate Social Responsibility project that has a positive impact on society at large, and directly on the more than 135 thousand students in middle school.
Patton, Moreno & Asvat, committed to education and the development of future professionals, supported the Panama Maritime Authority on this endeavor, and joined the group of sponsors that supported the activities during the week prior to the inauguration. Our attorneys that specialize in Maritime Law shared with the contestants during a friendly lunch, where participants were able to go further in depth into topics related to ship registration.
The grand finale will be on Sunday, November 19th, 2017.
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