Overview
Encouraged by the recent increase in foreign direct investment into Panama, the Panamanian government has seen the snowball effect and is keen to keep foreign direct investment coming, particularly in the tourism industry. Therefore, in order to assure continued foreign investment, the government has passed numerous laws in the last 10 years that have given fiscal incentives to those individuals or companies investing in certain sectors of the economy such as tourism and construction.

For Retirees
Aware of the aging North American and European populations, the government has extended similar fiscal incentive to property buyers and has even put a Retiree's Program in place offering tax breaks and discounts in an attempt to attract retirees (see list below). This combination of tremendous natural wealth (climate, geography and ecological diversity), fiscal and social incentives and a variety of other intangibles have resulted in Panama being ranked as one of the top retirement destinations for Americans outside of the United States.

Some of these fiscal incentives include:

• Property tax exemptions ranging from 5-20 years on new construction, contingent upon the value of the property, and when it was/is constructed.
• One-time tax exemption from duties on the importation of household goods (up to $10,000)
• An exemption every two years on duties from the importation or local purchase of a car (only sales tax and luxury tax would still apply)
• No income tax on incomes earned outside of Panama.

Discounts offered to officially registered "Retirees"

• 50% discount on ticket prices for admission to movies, sporting events, concerts and public shows.
• 50% discount during the week on rack rates for hotel rooms in Panama.
  • 30% discount on Friday, Saturday and Sunday.
• 50% discount on the cost of your passport.
• 50% discount on costs or commissions on personal and commercial loans.
• 15% discount on loan rates for personal and commercial loans.
• 1% discount on the interest rates for mortgages taken out for personal use (except when there are special rates constituted by law).
• 30% discount on buses, trains and ships.
• 25% discount on flights within Panama.
• 25% discount on electric, telephone services and water bills.
• 25% discount on restaurant bills (except those that do not require a commercial license).
• 20% discount on physician fees, even specialists.
• 20% discount on prosthetic and health products.
• 20% discount on technical and professional services.
• 15% discount fast food franchise meals.
• 15% discount on hospital services and other health services when they are covered by health insurance (discount applied by insurance companies to their rates).
• 10% discount in pharmacies, even for prescription medicine.

Requirements to qualify for Pensionado (Retiree) Program

• Over 18 years of age.
• Proof of monthly income of $500 ($600 for couples) from a government agency (i.e. social security, disability, armed forces) or from a company.
• One-time application for Retirement Visa

Costs to Obtain Residency
Total costs to apply and for the necessary legal fees average around $2,000 and will give you residency for life!

For Investors
Both private and corporate investors are taking notice of Panama for many of the same reasons retirees are,…tax incentives! The Panamanian government has been very eager to preserve the country's natural resources and develop its infrastructure and tourism sector. With those goals in mind, laws have been passed to protect investors and encourage them to develop these two aspects of the country, and as a result, some of the world's largest hotel chains have already taken advantage of the benefits already in place. The following is a list of some of the laws in place and the tax benefits they offer:

Tourism Incentive Law (Law 8 of 1994) : According to this law, the government of Panama grants as much as 20 years exemption on importation tax and property tax, or 15 years exemption on income tax, among others, to tourism operators willing to invest at least $ 50,000 into certain tourism activities such as lodging, receptive tourism agencies, tourist transport services, tourist restaurants, nightclubs, specialized tourism centers, recreational parks, theme parks, zoos, convention centers, marinas and others.

Decree Law 9 (1997) : This law creates similar tax incentives for property developers interested in Panama City's old quarter, "Casco Viejo."

The Investment Stability Law (Law 54 of 1998) : This law guarantees all foreign and national investors equal rights in terms of investments and business practices. This law provides 10 years stability with respect to the registration of an investment, thereby guaranteeing that taxes, customs, municipal and labor regulations will remain unchanged for the investor from those in place at the time of the registration.

2005 Tax Law : Profits generated by reforestation are tax free for 25 years when started in the next 17 years.

New Tourism Investment Draft Bill #132 : This draft bill works to further enhance the already existing Law 8 of 1994, know as the Tourism Incentive Law. This bill would include residential and vacation home developments as a tourism interest and would allow the Ministry of Commerce to grant concessions (the transfer of titled government land) to developers for up to 60 years, extendable for another 30 years on islands, costal land and government land located in Designated Tourism Zones.