PANAMA

On August 17, during the plenary session of the National Assembly, Deputy Alina Gonzalez (PRD – ruling party) presented a bill that establishes incentives to attract foreign companies engaged in the sale and provision of services related to digital commerce. The aim of the bill, according to the deputy proposer, is to generate income for the national economy. It was submitted to the Trade and Economic Affairs Committee, where it is expected to be discussed in the short term.

Among the main provisions of the draft bill, it is possible to mention:

• It defines digital commerce as the sale of non-physical (intangible, virtual) products, such as software or programs, entertainment or streaming platforms, among others, through a predetermined sales platform.

• It indicates that its purpose is to offer incentives to attract capital from multinationals related to the sale of digital products or services.

• The incentives include the possibility for companies to obtain a Multinational Company Seat Licence (SEM in Spanish) which will allow them to obtain a reduced income tax rate.

• It taxes capital transfers of these companies with the Tax on the Transfer of Tangible Goods and Services (ITBMS in Spanish). The rate of this tax is 7%. The funds collected from it will be used to promote development programs for small and medium-sized enterprises.

• It establishes that the management of bank accounts of foreign companies engaged in digital commerce will be subject to national laws, regulations of the Superintendency of Banks and international agreements signed by Panama. They will also receive the legal protection established by Panamanian law.

• The Executive Branch, once the proposal is enacted, will have 30 days to issue regulations for it.