Panama

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Business Environment

Business Practices

General information: Doing Business in Panama
Opening hours and days: Banks open Monday to Friday from 9 AM to 4 PM in Bogota and from 8 AM to 11.30 AM then 2 PM to 4.30 PM in the rest of the country. They close at 12 PM on every last day of work of each month. Government offices are open Monday to Friday from 8 AM to 12 PM and 2 PM to 6 PM.

Offices are open Monday to Friday and sometimes Saturday from 8 AM to 12 PM and 1 PM to 5 PM.

Businesses are open from Monday to Saturday 9 AM to 7 PM.

Shopping centers are open everyday from 10 AM to 7 PM. Some Supermarkets are open around the clock everyday.

Public holidays

New Year	January 1st
Martyrs' Day	January 9th
Carnival	February 4th and 5th
Ash Wednesday	February (Wednesday First week)
Maundy Thursday and Good Friday	End of March
Labor Day	May 1st
Panama City, District of Panama and Province of Panama Foundation	14th August
Independence Day (From Columbia)	November 3rd
Flag Day	November 4th
Independence Day (From Spain)	November 28th
Christmas	25th November

Periods when companies usually close

Holy Week	End of March, week before Easter
Christmas Holidays	From December 15th to January 12th

Accounting Rules

Tax year: The fiscal year begins on January 1st and ends December 31st of the same year.
Accounting standards: The National Accounting Management created an intergrated system of financial administration. For more information, refer to this link. (Spanish only)
Accounting regulation bodies: National Accounting Management
Accounting reports: BALANCE SHEET: on December 31 x year, to be compared to December 31st x-1 year

1) Assets

- current assets

- liquidity

- bad debt reserves

- salaries

- miscellaneous

- income tax

- invetory

- accrued expenses

- total current assets

2) Equipment, machines: material property - depreciation

3) Other Assets

4) Total Assets Statement: on December 31st x year, compared to x-1 year

1) Operating income

2) Gross profit

3) Operating expenses

4) Revenue

5) Total cost

6) Profit before tax

7) Net profit
Publication requirements: The Panamanian commercial law does not itemize the contents that have to be included in the accounting or the certification of the accounts. It is generally established practise that companies maintain a journal, a big ledger, the inventory and also annually prepare the necessary documents for financial analysis (balance sheet, income statement, management balance, appendices).
Professional accountancy bodies: Panama College of Public Certified Accountants
Certification and auditing: In Panama, all companies as well as subsidiaries of foreign companies are required to seek the services of an external auditor to carry out an annual financial audit on their organization. The auditors have to be certified public accountants and have to satisfy the government of the accuracy of the published accounting information.
Accounting news: Panama Association of Certified Public Accountants

Tax Rates

Consumption taxes

Nature of the tax: IVA: Value Added Tax
Tax rate: The VAT standard rate is 5% except on alcoholic drinks (10%) and tobacco products (15%).
Reduced tax rate: Certain goods and services are exempt from VAT: foodstuffs, medical and commercial services, fuel, books and basic agricultural products.

Corporate taxes

Company tax: 30%
Capital gains taxation: Capital Gains Tax is 10%.
Other corporate taxes

Individual taxes

Tax rate

Individual income tax	Progressive rate from 0% up to 27%
PAB 0 - 9,500	0%
PAB 9,501 - 12,000	20.5%
PAB 12,001 - 15,000	21.5%
PAB 15,001 - 20,000	23%
PAB 20,001 - 30,000	24%
Over PAB 30,001	27%

Allowable deductions and tax credit: All medical expenses incurred in Panama, donations, interest on residential mortgage loans, student loans and home improvement loans can be deducted.
Special expatriate tax regime: Foreigners who remain in Panama for 180 days or more within one calendar year are considered as taxable residents, their immigration status notwithstanding. If the person has been in Panama for less than 180 days within a calender year, he is subject to a tax of 15% plus and education tax of 2.75%.

Double taxation treaties

Countries with whom a double taxation treaty have been signed: Panama has not signed any tax agreements with other countries.
Whithholding taxes: Dividends:10%/20%, Interest: 15%, Royalties: 15%

Sources of fiscal information

Tax Authorities: Tax Collection Directorate (Spanish only)
Customs (Spanish only)
Taxation in Panama
Other domestic resources: Ministry of Economy and Finance

Intellectual Property

National organizations: Panama signed the General Inter-American Convention for Trade Mark and Commercial Protection of 1929.
The new intellectual Property Law, approved in April 1996 fulfils the WTO requirements. The law strongly punishes brand name and patent piracy and provides for speedy proceedings in the case of conflict.
International membership: Member of the WIPO
Signatory to the Paris Convention for the Protection of Intellectual Property

National regulation and international agreements

Type of property and law	Validity	International agreements signed
Patent Law 35 of May 10th 1996	Validity period of 20 years (Spanish only)	Patent Cooperation Treaty (PCT)
Trademark Law 35 of May 10th 1996	10 years, renewable for 10 years (Spanish only)	Trademark law treaty Nice agreement
Design Law 35 of May 10th 1996	10 years, period can be extended up to 5 more years (Spanish only)
Copyright Law 15 on copyright 1994	Lifetime right for the author and his heirs as provided by the text.	Berne convention Convention for the Protection of Producers of Phonograms against unauthorized duplication of their phonograms Rome convention for the protection of performers, producers of phonograms and Broadcasting organizations WIPO copyright treaty WIPO performances and Phonograms treaty
Industrial Models Law 35 of May 10th 1996	10 years, see text

Legal Framework

Independence of justice: Despite the fact that the constitution provides for an independent judiciary, it remains inefficient, politicized and prone to corruption.
Equal treatment of nationals and foreigners: From the judiciary's point of view, foreign nationals can expect the same treatment as Panamanians.
The language of justice: Spanish.
Recourse to an interpreter: It is always possible to have an interpreter (contact your Embassy).
Sources of the law and legal similarities: The main source of the law is the Constitution of 1972 (amended several times, last amendment in 2004). The legal system is based on a civil law system. Panama accepts compulsory ICJ jurisdiction but with reservations.
Checking national laws online: Panama Judiciary (Spanish Only)

Standards

National standards organizations: Panama Committee of Industrial and Technical Standards.
Integration in the international standards network: The body in charge of the standardization and certification of products in Panama is the Panama Commission of Industrial and Technical Standards (COPANIT).
Panama is a member country of the International Organization of Legal Metrology (OIML) and the International Organization of Standardization (ISO).
The importation of certain products requires preliminary licensing from several governmental institutions: the Department of Food Control and Veterinarian Vigilance of the Ministry of Health is responsible for the sanitary registration of foodstuffs. The Pharmacy Department of the same ministry authorizes the registration of pharmaceutical products.
The Panama Institute of Foreign Trade (IPCE) ensures the conformity of the imports to the bilateral agreements.
Classification of standards: The body responsible for standardization is the Panama Commission of Industrial and Technical Standards (COPANIT).
Online consultation of standards: The Panama Commission of Industrial and Technical Standards (COPANIT) is under the Ministry of Commerce and Industry.
The executive body of COPANIT IS DGNIT (Management of Standards and Industrial Technology) whose principal objectives are:
- the development of standards in the context of technical committees;
- the implementation of standardization programs, quality certification, metrology and conversion to the international unit system.
Certification organizations: Management of Standards and Industrial Technology DGNIT

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