Panama offers a number of special visas for executives, international sales positions and special trade zones. One such executive visa is that associated with the SEM (Multinational Corporation Headquarters) or the special visas offered to Professors or Researchers with the City of Knowledge or to executives of companies in Panama Pacific. There are a number of Special Economic Areas which we will deal with in the following section, before looking at the MHQ executives.
Special Economic Areas
The following special economic areas exists with special rules and regulations regarding operation and special visa options:
- Colon Free Zone
- Panama Pacifico
- City of Knowledge
- Free Zones & Processing Zones
- Film Companies
Until the past two to three years, the Colon Free Zone was certainly considered the most important zone. This has declined with the fall-out from the Venezuelan and Latin American market changes, but it continues to be a primary economic force.
Another special economic zone which continues to grow in importance is the City of Knowledge, as a scientific, technological and entrepreneurial park – which may be assisted by the proposed laws recommended by the Ministry of Economy & Finance – FinTech.
Another strong economic area is that of Panama Pacifico (Law 41 – 2004), which includes value-added and technology to the production of goods and services. Panama Pacifico is a 2,500 hectare site of special economic zone, that incorporates housing development as well as business parks. It is unique in that it has an “on site immigration office” that handles all work permit and visa applications within the project. These immigration applications offer three to five year special visas for investors and workers.
Other special zones (Law 32, 2011) provide for tax incentives (particularly import-export duties) for value-added services in processing zones. These additionally offer immigration and labour incentives. Most of these zones are closely tied with the logistics and transportation of the Panama Canal or the international airport of Tocumen, allowing for easy transport of goods.
Film companies, for example, have special visa requirements and tax incentives for operating in Panama on a temporary basis.
For an in-depth look of how this has benefited Panama, particularly with respect to the “spill-over” of knowledge and skill-level, have a look at the Harvard University Working Papers “Special Economic Zones in Panama”.
MHQ – Multinational Headquarters Executive
Law 41 (2007) establishes the possibility of Regional or Multinational Company Headquarters in Panama, for companies with an international assets over US$200M and a capitalisation over US$2M. The purpose of the headquarters in Panama is to offer services to their Main Office or subsidiaries, affiliates or affiliated companies and business groups. It is possible to establish in Panama the Main Office or simply a Regional office. This law establishes important tax and immigration incentives in a single legal framework, including exemption from income tax (as all income earned is international), exemption from sales tax for services to international group members, and the possibility of negotiating tax agreements with MHQs whose countries have celebrated double-tax agreements with Panama.
Middle and general management (executive) personnel are exempt from income tax in Panama, as well as being exempt from social security and education contributions, as long as their salaries are paid from abroad. The visas which are available for the management and executives are issued for 5 years, but always in the capacity of “temporary” residency, rather than permanent residents. On the other hand, they are not required to apply for work permits. They are not able to apply for naturalization and citizenship in Panama.
Panama residency options: For more information regarding executive visas, please contact Joan Villanueva.