The (Tax) Benefits of Law No. 8
Date: 06/28/2005Dear International Living Reader,
In 1994 Panama passed Law No. 8--the most modern and comprehensive law for the promotion of tourism investment in Latin America and the Caribbean.
Since the law was enacted, dozens of the world's largest hotel chains have swept in to take advantage of it, such as the Marriott, the Radisson, Holiday Inn, the Sheraton, and the Intercontinental. Plus, an estimated $550 million worth of new projects are either in the pipeline or under development as big business bets on Panama's potential as a rising tourist destination. But Panama's attractive tourism investment laws are not just for big business. Anyone willing to invest as little as $50,000 in a tourism project can take advantage of the enormous tax and financial incentives available here.
You could build a guesthouse in the hills of Boquete…start a charter-dive operation on Bocas Del Toro, or a white-water rafting outfit in Chiriqui Viejo…open a surf-board rental shop at Playa Santa Catalina…trek tour groups through the wild and uncharted Darien Gap…open a marina, a hotel, or a nightclub along the beaches of the Pacific Coast…launch a horse-drawn carriage service on Taboga, "the Island of Flowers" that has no cars…take tour groups through the historical ruins of Panama's Colonial era…open a riverside restaurant in Boquete…
The opportunities are endless…
With a minimum investment of $50,000 anywhere in Panama's interior you can receive:
* 20-year exemption of any import taxes due on materials, furniture, equipment, and vehicles.
* A 20-year exemption on real estate taxes for all assets of the enterprise.
* Exemption from any tax levied for the use of airports and piers.
* Accelerated depreciation of 10% per year for real estate assets.
The investment amount does not include the price of the land and, for projects in the metropolitan area, the minimum investment requirement is $300,000. But, if you start up a tourism-related business in one of the specially designated tourist zones, you can also receive a 15-year exemption on your income taxes.
For more information on Panama's investment incentives for tourism-related businesses, go to www.ipat.gob.pa or get in touch with the staff of IL's Local Office in Panama by e-mail: Panama@Internationalliving.com.
Excerpted from Panama: The Owner's Manual
Prepared by Scott McDonagh and the Staff of International Living
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