Panama's Tax Incentives Planned To Attract More Multinationals
There are many exemptions and benefits offered by the Law 41. It exempts money earned abroad from income tax. This is the biggest benefit that multinationals get especially that they only operate in Panama but render services abroad. Panama's infrastructure and location also allows these corporations to operate from a strategic point without undergoing the usual red tape for foreign owners and CEO's.
It is also a big plus that the country uses the US dollar as its official currency. Multinationals have the convenience of being in a global banking hub as well as having a strategic geographical location which connects the North to the South America.
Hiring personnel and staff have also become easy through the said law. It allows international companies to hire foreign born employees without worrying about immigration restrictions. This even includes visa assistance to employee's families which allow them to stay in Panama even without obtaining work permits. Note the similarity of this process to the one found in Singapore where multinationals have tax and visa incentives as well as other great benefits.
The Panamanian Ministry of Commerce and Industry claims that the country has had 500 more jobs since Law 41 was implemented.
The initial half of 2009 is also expected to bring in eight multinationals to benefit from the law. The country's foreign trade deputy minister, Minister Severo Sousa informs that there are current negotiations with these companies without revealing their names. He has also indicated the several campaigns to promote Panama as the best place for foreign investors, this includes the launching of the trade missions campaigns to Europe and America.
Despite the crisis in the United States, Sousa remains positive that many companies will take the advantage of the security of investments in Panama as well as the great incentives they offer. He expressed his belief that Panama is one of the most economically stable places where multinationals can have their operations.
He is also very proud of the law's results saying that it is only in Panama where these kinds of business incentives are found.
The pharmaceutical multinational Procter and Gamble was set as one of the examples that show the success of the law. The company moved its operations in the country and not only did it bring most of its personnel to the country but it also continues to hire employees from Panama as well.
Companies that have decided to benefit from Panama's laws include Hyundai Heavy Industries, Caterpillar, Western Union, Peugeout, Roche and Merck.
According to the trade deputy minister, the country is expecting to receive at least twenty five more companies to take part of the project and experience the benefits that Law 41 offers.
The seventeen multinational companies that have taken advantage of the said law have also met a requirement. This requirement, being an investment commitment, amounts to almost $1.3 billion in Panama's economy.
Panama Labor
Sousa informs that they are already having discussions with the National Institute of Vocational Training and Human Development (INADEH) to solve deficiencies in skills. He also says that Panama is in fact equipped with trained personnel in management, information technology accounting as well as English. Panama's labor force may not transform as quickly as its development but multinationals continue to take advantage of the infrastructure and benefits found in the country. With this, the Panama government is fueled to continue training and instructing new specialized professionals.
International businesses considering moving to Panama are also required to have at least $200 million as their fixed assets. The multinationals should also provide insurance policy coverage for foreign employees, bank references and financial statements.
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