November 2017 public holidays

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November 2017 public holidays

Please note that our office will be closed the following dates in November 2017, for public holidays:

  • Friday – November 3 – Separation from Colombia
  • Monday – November 6 – November 5th is Colon Day, and as this falls on a Sunday, the public holiday is celebrated on Monday
  • Friday – November 10 – Panama remembers its Primer Grito de Independencia – its first cry for independence from Spain
  • Tuesday – November 28 – Independence from Spain

November 2017 public holidays – their meanings

In November, Panama celebrates a month of national festivities. Throughout November 2017, all around the country the flag and patriotic symbols are displayed (offices are draped with the flag or colors, most cars fly a small flag inside). There are four days of great historical importance for Panama in November.

The 3rd, 5th, 10th and 28th of November are public holidays, and as the 5th falls on a Sunday in November 2017, marches will be done on the Sunday, but the 6th will be a day off. The 2nd and 4th are also days on which school bands march and there are generally parades in all towns.  The celebrations these days are due to the separation of Panama from Colombia, the “cry” of independence and the independence from Spain, respectively.

In case you are unaware of the meaning of each of these public holidays, the following is a very short summary of what each day represents:

Separation from Colombia

Known as Separation Day, this holiday celebrates the independence of Panama from Colombia in 1903.  Panama came under Spanish control with the arrival of settlers in the 16th century. From 1538 until 1821 Panama was governed as part of the Viceroyalty of Peru. On 28 November 1821, Panama become independent from Spain as the region was a department within the Republic of Greater Colombia. In 1903, Colombia and Panama disagreed on whether the U.S. should be allowed to build a canal across Panama. With the support of the U.S., Panama broke away from Colombia on 3 November 1903.

Colon Day

Celebration of Colon Day is connected with the history of independence of Panama from Colombia. The USA assisted Panama in separation from Colombia, but the latter didn’t want to recognize independence of Panama. Officially Panama declared its independence on November 3, 1903, but the battle didn’t finish. The government of Colombia ordered the Army to march on Panama City. On November 3, 1903 the Panamanians had to stay their grounds in the city of Colon, that is a strategic place near the Caribbean Sea.

Primer Grito de la Independencia

This public holiday commemorates the beginning of Panama’s struggle for independence from Spain in 1821. Rufina Alfaro was a young woman who lived in a small village near Los Santos. On November 10, 1821 she led a group of Panamanians, shouting “Viva la Libertad” (Long live liberty).

People armed with sticks and stones seized Spanish barracks without spilling a single drop of blood. After the uprising, citizens of Azuero Peninsula declared their independence from Spain. Apparently a letter was also penned to the legendary Simon Bolivar, asking him for assistance in getting independence and complaining about the Spanish Governor.

Independence Day

On November 28th, Panama celebrates Independence from Spain. On November 28, 1821, eighteen days after Primer Grito de Independencia, Panama was declared a sovereign entity. This declaration said that Panama was free from the control of the Spanish Monarchy. It immediately thereafter decided to join “Gran Colombia” (fearing that Spain might attempt to retake the country).

Foreign professionals working in Panama

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Foreign professionals working in Panama

It would seem that drafting and knowing how to write is everything. A better draft or ability to write clearly could have avoided many problems.  At the beginning of September, there was furor among Panamanian professionals. The Ministry of Commerce published a resolution authorizing Multinational companies to hire foreign professionals… or so they said. I read headlines such as: “Opening to foreign professionals will impact the middle class”. The negotiations regarding TiSA (Trade in Services Agreement, a proposed international trade treaty) caused this furor, particularly with Panama’s measures to qualify. Panama participates in the TiSA negotiations with 23 members of the WTO. These negotiations continue in December 2017, after being stalled by the US.

Multinational – requirements for headquarters in Panama

The licensing commission for Multinational Company Headquarters issued a resolution for Multinationals. This resolution indicated the new qualifying requirements. One of the requirements is to have 2,500 professionally qualified employees. However, this resolution indicated that said professionals needed to be qualified in their countries of origin, without needing to be verified by respective professional boards in Panama. Specifically, this resolution indicated that the foreigner would be considered qualified if they had a Bachelor’s Degree, a Master’s Degree or Doctorate, or were duly licensed to practice in their qualifying country.  The reactions from professional guilds were hat this would affect not only the working class, but also the middle class.

This discussion seemed to miss the purpose of the requirements entirely. Multinationals are not required to have 2,500 professionally qualified employees in Panama in order to qualify. They must have 2,500 professionals in their offices, worldwide, in order to qualify. It is therefore obvious that such professionals would be duly qualified in their respective nations, and not Panamanian nationals. The second major requirements is a capitalization of 200 million US dollars.  The new resolution sought to establish that for those multinationals that did not qualify with a consolidated capital of 200 million, they could qualify if they had the 2,500 professionals worldwide. After reviewing the wording of the resolution, Panaman’s Law Society (Colegio Nacional de Abogados) requested that it be redrafted.

Foreign professionals in Panama

Panama is a small market: we have a population of only 3.9 million (depending on which day of the week you count). This means that the professional workforce also has its limitations when there is unexpected growth in some industries. Studies have shown that Panama does need foreign professionals to meet these labor needs. Official sources indicate that Panama lacks some 159,000 specialized professionals for the needs of the country. But there is also resistance to allowing foreign professionals to come work in Panama, with the fear that “they will steal all the good jobs”.

Of course, for the executives and employees of Multinationals who have qualified under the special licensing rules: there are special rules and exceptions. It is possible for a multinational company to hire a professional, duly qualified to do the job internationally, have them working in Panama, and they simply are not allowed to sign off on documents in Panama (i.e. a lawyer could work in-house for a multinational, but would need a Panamanian lawyer to sign off on any legal documents for Panama).

Salaries in Panama

It is important to understand the idiosyncrasies of the Panamanian labor market. Salaries for highly qualified jobs pay less than in North America or Europe. Executives of the multinationals are among the highest paid employees in Panama: these jobs are highly coveted. English and Spanish are essential: for working internationally and locally in Panama. One of the biggest constraints to foreign employment is the 10% and 15% limits established for work permits and immigration: a Panamanian company can only have 10% maximum of its workforce (averaged out over salaries, not just the number of employees) as foreigners. For highly technical staff or experts in a field, this increases to 15%. Additionally, some professions are exclusively reserved for Panamanians: for example, medicine, dentistry, nutrition, pharmacy, accounting, psychology, architecture, journalism, and law.

The minimum wage in Panama is between $500.00 to $700.00 (lower for some areas of the economy, such as domestic help). Normal working hours are 8-hour days (9 hours including lunch hour) and overtime for more than this. Additionally, there are special rules regarding shifts starting or ending before 6.00 a.m. or 6 p.m., and there are not rules regarding flexi-time (which basically ensures that employers avoid it, because the Labor Code specifies that the employee is always right). So, if you had an employee that worked 12 hours Monday and then 4 hours Tuesday and they alleged that 4 hours of the time worked on Monday was overtime, the employer could be liable to pay this. There are companies working with flexi-time, but it is outside of the archaic constructs of the Labor Code.

Real costs versus “salary”:

Additionally, Panama offers 30 days (calendar, not working) holiday pay each year and additionally pays the 13th month. When you calculate the cost of an employee (contingent liabilities plus Social Security costs), you should expect this to cost about 1.41 times the actual declared salary. So an employee earning $600.00 a month, with contingent liabilities calculated, costs about $850.00 a month. An employee earning $700.00 a month costs the company about $1,000.00 a month, with contingent liabilities.  These are rough estimates.

Average salaries:

According to figures released in August 2017, the following are average salaries:

  • $2,435.00 – Multinationals
  • $1,085.00 – Mining companies
  • $1,063.00 – Education (includes universities & private training)
  • $1,029.00 – Doctors, medicine & health
  • $985.00 – Finance (banking sector)
  • $681.00 – Average monthly salary

Of course, as mentioned, these are the averages.

New resolution:

On the 12th of September, the same MICI office that had issued the “problematic” resolution mentioning 2,500 foreign professionals, issued a new resolution. This resolution left the previous one without effect, and presented different requirements for Multinationals wishing to be established in Panama.

These requirements are:

  1. capital of 200 million USD or more
  2. presence in 40 countries or more

There is no mention in the new resolution of the number of foreign professionals working for the multinational.  The new resolution is Resolution No. 20-17 (Sept. 11, 2017).

For more information regarding the requirements to establish Multinational offices in Panama or for foreign professionals to work in Panama, please do not hesitate to contact our office.

 

 

Personal bank account in Panama: opening requirements

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Personal bank account in Panama: opening requirements

While you don’t need a personal bank account in Panama to live here, it may lower transaction prices and make paying bills easier.

Reasons to set up a personal bank account

Many expats have differing views on whether or not you need to open a personal bank account. If you have an account in USD, it may make little difference in the bank charges. In other currencies, the bank charges could be high and might be reason enough to set up your account here.

Another reason for setting up a personal bank account in Panama is to apply for the friendly nations visa. One requirement is that you have a personal account with no less than a mid-four figure balance. You should deposit at least USD$5,000 in the account, then.  The friendly nations visa will provide you with permanent residency, It also provides a work permit (depending on which application you make). And it allows you to eventually naturalize as a Panamanian (if having a second passport is your goal).

Paying bills online: many of the banks will allow you to pay bills online, although this is not for all utilities companies. Some still requirement payment at their office or through an approved intermediary. You can also pay your personal taxes online through some banks (such as income tax or property taxes).

Requirements: personal bank account

The requirements vary slightly from bank to bank. Nonetheless, the general requirements are the same:

  • Complete the bank account application forms, all of them
  • Your passport (the bank will make its own copy)
  • 2nd ID – such as driver’s license
  • Professional reference letter – such as from a lawyer / accountant / company you have done work with
  • Banking reference – they are looking for proof of a banking relationship of more than 2-3 years
    • If you don’t have a “bank account” but have a credit union account, this will usually work
    • They may accept an investment account letter instead of a “bank”
  • Minimum opening deposit: $1,000.00 (some banks do require less)
  • Minimum balance:
    • checking: usually somewhere between $250.00 to $1,000.00
    • savings: usually somewhere between $500.00 to $1,000.00

The forms ask for proof of source of funds: the bank is interested in knowing how you support yourself financially and where they should expect to receive income from.

If you are applying for your friendly nations visa through our office, we would be happy to accompany you to the bank for your initial interview.

Choosing a bank:

Consider the following when choosing where to apply for your personal bank account:

  1. Where you live and branches that you have close by
  2. Online banking – which ones have their website in English
  3. What online banking services do they offer?
  4. Do you / your friend / the company you work for already have a relationship with the bank?
  5. Expat opinions regarding customer service – you will be able to find complaints against every bank, but some are worse than others
  6. What is their online security platform? Will you need a widget in order to pay bills and make transfers?
  7. Number of ATM machines available in your area of town if you like to get cash out

For more information, do not hesitate to contact our office for assistance.

 

 

Relocation Questions – July 2017 – Immigration Update

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Panama City - relocation questions

Panama – Casco Antiguo

Common Relocation Questions: Panama

We often hear relocation questions from clients who are moving to Panama for the first time and getting settled in to their new homes.  I share a couple of them here to help you get an idea of what is easy and what is hard when you are relocating.

Bank account – Driver’s License – Utilities

Relocation Questions: Opening a bank account

I went to a local Panamanian Bank the other day, having just arrived in Panama. They would not allow me to open anything because I didn’t have a banking reference letter or a letter from an employer here in Panama.  Can I open a bank account without a banking reference?

Panamanian banks, even before the Panama Papers, made it difficult for foreigners to open bank accounts here. Ideally, you want to be introduced to the bank by someone (your lawyer, your employer, a business associate). If you are applying for residency, let the bank know: this will make it easier to open the account. If you already have residency, make sure you take your immigration card or cédula with you.

Know Your Client: KYC

Banks here are required to complete their “Know Your Client” procedures, and all banks have a compliance officer that reviews and approves accounts. This is not the customer service representative that you meet. You will not meet the compliance person (that would hinder the purpose of having compliance). So, you need to have all the papers that they need to tick the boxes. Those papers include:

  1. Your passport
  2. 2nd ID of some kind
  3. Utility bill – that shows you have a place in Panama
  4. Professional reference – preferrably two – from lawyers, accountants, insurance brokers, realtors. No more than 3 months old.
  5. Banking references – no more than 3 months old; a relationship longer than 2 years (ideally)

And then you need patience: sit down and complete all the bank forms. Follow up on the account opening. Patience.

Can you open an account without a banking reference? Yes, if

  • You are 18 years old or just recently became an adult
  • Your employer refers you to the bank to open your payroll account
  • A business associate or family member introduces you to the bank as a first time account holder. This one will only work in a couple of banks and in limited cases.

Relocation Questions: Driver’s License

I heard that my driver’s license is only valid for 90 days after I arrive in Panama, but my tourist visa is valid for 180 days? What can I do?

That is right: your foreign driver’s license is only valid for 90 days, but your tourist visa for 180 days. If you are living here on the tourist visa, and driving, then you either leave every 90 days or apply for residency.  Panama does not offer a driver’s license to non-residents.

I am applying for my residency and would like to get my Panamanian driver’s license, what do I need to do?

Once you have your residency approved, you may apply for your driver’s license.  You will need to have your foreign license (copy) certified by your Consulate. The Panamanian Ministry of Foreign Affairs then needs to stamp this copy, to make it valid for use here in Panama. The documents you need to take to Sertracen are:

  • Your driver’s license + photocopy
  • The copy stamped by the Consulate and Foreign Affairs
  • Immigration Card – original + copy
  • Passport – original + copy
  • Blood test – blood type – laboratory approved by ATTT (if this is already printed on your driver’s license, not required)
  • Do sight and hearing tests at Sertracen (wear your glasses and/or hearing aids, if applicable)
  • Pay $40.00 at Sertracen – includes sight and hearing test

Be in good standing with ATTT –  i.e. not have any tickets.

Utilities

Another one of the relocation questions that we get is regarding utilities:

How hard is it to get your home connected to utilities: water, electricity, phone & internet?

This depends on where you are going to live in Panama:

Water:

Most water in Panama is provided by IDAAN, the national water institute. This applies to most small towns and urban areas.  However, you need to check with people who live in the area how often the water gets cut off. You might want to buy a water tank to have a back-up system for your home. It is quite common in the rural areas, during the dry season, to only have water a couple of hours each day. Water is rationed, and you will want to have your personal tank for water storage.

In some remote areas, you will need to have your own well and filter system.

Electricity:

Most of the country of Panama is on an electrical grid and has electricity available, without having to go to solar power or diesel generators.  However, I know of a couple of areas (Bocas del Toro, for example) that do not have electricity and where hotels or hostals rely on their own generators or solor power systems for their electricity.

You definitely need UPS batteries on all electronic equipment in Panama becuase of the electricity spikes.  While theoretically the electric company is meant to replace electronics that get blown because of these spikes, the reality is that we don’t see this happening. Get prevention!

Phone & Internet:

There is phone and internet coverage in most of the country, although quality may be dodgy. I had clients in Bocas that struggled with phone coverage, because a hill blocked the cellphone tower.  I have also been in parts of Chiriqui where you need to walk to the top of “that” hill in order to be able to make a phone call. But both of these locations where quite “off the grid”. You have a choice in Panama of Cable & Wireless (MasMóvil), Claro, Movistar and Digicel.  Depending on which part of Panama (country) you are in, one provider may have better coverage than another.

For internet connection, there is limited fiber optics in some parts of Panama City. If you require high speed internet, you definitely want to check out availability. Speak with other expats regarding their experiences before deciding on a location.  But if you are only looking for internet for personal use or limited office use, coverage is reliable in most areas.  Please note: when there is a thunder storm we often have to restart our modem.

Panama City:

If you live in Panama City, and you are moving into an apartment, it should already have water connected.  If it is a rental, it may already have the electricity connected, you need to check with the realtor. In Panama City you have numerous options for internet and phone, but you should check regarding the quality in your area. As I mentioned above, in some parts of Panama City, you will have fiber optics available.

Coronado & Beaches:

In Coronado, most of the apartment buildings have emergency water tanks, but you should check before you rent or buy. The electricity in Coronado has a wide coverage, but you may want a generator if you want 24-hour air-conditioning.

Pedasi & Las Tablas

You will want to make sure you have water storage tanks, as this area of Panama is known as the “dry belt”. There is water, but it will get rationed in the dry season.  Internet: I am not sure of the quality, so you should ask expats that live in the area.

Boquete

Boquete has a great supply of water, so this never seems to be a problem. You may suffer power outages due to rain storms, so if having electricity 24-hours a day is important to you, you will want to have a backup system.  You should ask neighbours which internet provider is the best.

Please contact Joan Villanueva for more information regarding relocating to Panama.

Bearer Share Custody (part 2)

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beth-gray

In part 2 of this article, I will present the technical requirements for holding the shares in custody, such as the documentation that the Authorised Custodian should request and what the client should expect to provide in order to have the shares held in custody.

This article will briefly look at the requirements for an Authorised Custodian, especially for a foreign custodian to be authorised, as well as looking briefly at their responsibilities.  It will also specify the details of the affidavit that the beneficial owner (referred to as “ultimate beneficial owner” or “UBO”) will need to sign for the Authorised Custodian and other documentation, and what a UBO will need to do in the case of the sale of the shares of the company to another person or for their estate planning needs.

Authorised Custodian

As mentioned in our previous article on the Custody of Bearer Shares, a local authorised custodian can be:

It is also possible for foreign custodians to be authorised to hold the bearer shares in custody.  The requirements for foreign banks, trust companies or financial intermediaries are:

  • they must be from a FATF member jurisdiction, or
  • they must be from a member jurisdiction associated with FATF; and
  • they must be registered before the Banking Superintendence of Panama, which will have a special registry of foreign companies.

The minimum requirements for a foreign custodian are:

  1. General incorporation details – incorporation date, legal details, and contact details
  2. Certification of licenses held (banking, trust or financial services), which should be translated to Spanish
  3. Designation of a Panamanian notification agent
  4. Affidavit which confirms that
    1. it has full KYC requirements that meet the standards required by Law 2 (2011)
    2. That it will provide the company’s registered agent with the full details of the beneficial owner of the shares whose certificates it holds in custody.

The Banking Superintendence of Panama has full authority to regulate these requirements, which they have done by Accord No. 4 (2015), which was published in June 2015 in the Gazette.  For more information, please see their page: Authorised Custodians for Bearer Shares.  So far, no foreign custodians appear to have registered.

Authorised Custodian responsibilities

The authorised custodian has the following responsibilities:

  1. hold all documentation regarding this service at their Panamanian headquarters (or in the case of foreign custodians, at their registered address)
  2. have the physical custody of the share certificates at their Panamanian headquarters (or in the case of foreign custodians, at their registered address)
  3. hold all of the above under strict confidentiality, as required by Law 47 (2013)
  4. provide this information when required by the competent Panamanian authorities (which will not be considered a breach of the strict confidentiality required above or a breach of confidentiality or the right to privacy)
  5. issue a certification regarding who is the owner of the shares, when so required by court order, the beneficial owner of the shares or the lien holder (in the case there is a lien on the shares)

In the case of a foreign custodian, there is the additional requirement that they may either:

  1. put up a bond of $25,000 or
  2. provide the registered agent of each company for which they are holding the shares with a notice of their appointment as authorised custodian, as well as the complete name and details of the owner(s) of the shares that they hold in their custody (which will not be considered a breach of the strict confidentiality required above or a breach of confidentiality or the right to privacy).

If they put up the bond, the foreign custodian is only required to provide the registered agent with the notification that they are the designated custodian of the shares, and then will only be required to provide the information regarding the ultimate beneficial owner when there is a request from a competent Panamanian authority.

Affidavit of Beneficial Owner

Articles 8 and 9 of the law specify different information and affidavits for companies incorporated before the law entered into effect and for companies incorporated (permitting bearer shares to be held in custody, as of August 4, 2015):

Article 8: companies incorporated before August 4, 2015:  At the moment of handing the bearer share certificate into custody, the following information should be provided by Affidavit:

  1. Details of the owner(s) – UBO:
    1. complete name
    2. nationality (or jurisdiction, in the case of another legal entity)
    3. cédula (national ID card), passport or registration number (in the case of another legal entity)
    4. phone number and email address (or fax number)
  2. Registered agent details:
    1. complete name
    2. physical address
    3. phone number and email address (or fax number)

The owner of the bearer shares will in all cases be deemed to be the person that appears in this sworn affidavit.  (Please note that the Authorised Custodian may request additional information.  These are merely the minimum requirements).

Article 9: companies incorporated after August 4, 2015:  At the moment of handing the bearer share certificate into custody, the following information should be provided by Affidavit:

  1. Details of the owner(s) – UBO:
    1. complete name
    2. nationality (or jurisdiction, in the case of another legal entity)
    3. cédula (national ID card), passport or registration number (in the case of another legal entity)
    4. address
    5. phone number and email address (or fax number)
  2. Registered agent details:
    1. complete name
    2. physical address
    3. phone number and email address (or fax number)

The owner of the bearer shares will in all cases be deemed to be the person that appears in this sworn affidavit.

Transfer of the Shares

One significant change in the handling of bearer shares, now that they will be in custody, is that the transfer of ownership no longer happens by the simple delivery of the share certificate to another person.  Previously, to transfer bearer shares, you simply handed the share certificate to another person (no contracts or documentation required), and they were the new owner.  But since the UBO will no longer have the share certificate in their power, the minimum requirement will be that the custodian must be formally notified in writing of the transfer, and the new owner must deliver to the authorised custodian the affidavit required for the beneficial owner.  We would recommend to clients that they consider documenting the transfer with a contract or donation document, depending on the case.

Estate planning considerations

Likewise, for the transfer of the shares in the case of the death of the ultimate beneficial owner, it will no longer be as simple as giving the future beneficiary the location or access to the key of the safety deposit box or telling them “the share certificates are under my bed”.  The UBO will need to provide the Authorised Custodian instructions in writing (we have not yet seen any regulations regarding this part, but for now would recommend to the client a notarised letter of wishes) instructions regarding how the shares are to be transferred in the event of their death.  These instructions take prevalence over any hereditary rights or rules in the UBO’s country of residence, according to article 13 of Law 47 (2013).

It should be noted that this transfer does not give the heirs any rights during the lifetime of the UBO, but only upon the death of the UBO, for which the heir(s) must present the death certificate (but no court order is required).

Any specific questions regarding these clauses should be addressed to a lawyer for advice.

Americas Summit – 2015

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Sorry, this entry is only available in European Spanish. For the sake of viewer convenience, the content is shown below in the alternative language. You may click the link to switch the active language.

Por: Judith Chiari.

judithchiari2
Como es ya sabido orgullosamente nuestro Panamá ha sido el país Anfitrión de la VII versión de la Cumbre de las Américas, donde se nos otorgo la oportunidad y confianza de albergar a más de una treintena de Gobernantes de distintos países, logrando el objetivo de brindarles un lugar cálido, seguro y sobretodo, democrático; para presentar sus ideas, argumentos, opiniones; aún si estas no eran bien aceptadas por la mayoría.

Vestimos y reforzamos nuestro país y no los defraudamos. Fuimos sede de un momento histórico para el Mundo, el encuentro esperado entre el Presidente Barack Obama y el Presidente Raúl Castro.

Un poco más de medio siglo transcurrió para poder presenciar este momento de finalización de la Guerra Fría entre esta gran potencia, como lo es los Estados Unidos y la bella Isla de Cuba; abriendo con esto, un sinnúmero de posibilidades para ambos países en donde obviamente Cuba saldrá enormemente beneficiada a nivel económico y sus conciudadanos. Read More