Panama: Changes to tourism investment incentives
Incentives for investment and financing for new tourism establishments or expansions of existing ones
Incentives for investment and financing for new tourism establishments
Law No. 314 (20 June 2022)—which becomes effective 21 July 2022— modifies Law No. 80 (2012) and replaces Law No. 122 (2019), which provide incentives for investment and financing for new tourism establishments or expansions of existing ones, including tourism products and their complementary services that are registered in the National Registry of Tourism, located in regions, destinations, or areas of tourist interest (with the exception of those located in the district of Panama).
The new law provides for:
- 60% (formerly 100%) tax credit for the total value of a project declared before the tourism authority, excluding the value of the farm and the infrastructure of the master plan
- 5% tax credit for the value of the infrastructure of the master plan (i.e., costs required to provide the tourism project with basic services including access road development, electrification, drinking water, sewage, among others) declared before the tourism authority
- Tax incentive period until 31 December 2024 (formerly 31 December 2025)
- Application of the tax credit annually from the second year of the investment, up to a maximum amount equivalent to 50% of the income tax due, the complementary tax, and the estimated income tax—provided that does not exceed 15% of the initial amount of the tax credit per year—until the entire tax credit is consumed for a maximum period of 15 years
- Assignment of all or any unused portion of the tax credit, regardless of whether or not the shares, bonds, and other financial instruments have been transferred
Natural or legal persons that, upon the effective date of the new law, have an environmental impact study and authorization of the Superintendent of the Stock Market of Panama for the issuance of bonds, shares, and other financial instruments, to be issued by a tourist company or real estate investment company, or have a tax credit recognition resolution issued by the tax authority, are entitled to a 100% tax credit for the total value of the project declared before the tourism authority, excluding the value of the farm and the debts or investments that the tourist company or real estate investment company made before the effective date of the new law. The deadline to initiate a claim under this provision is 30 July 2022.
Read a July 2022 report (Spanish) prepared by the KPMG member firm in Panama
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