New entry requirements for Panama as of July 26, 2021

For Fully Vaccinated passengers as of Monday, July 26, 2021:

1. Passengers must present a COVID-19 vaccination card that indicates the record of the last dose at least 14 days prior to arrival in Panama. Passengers must upload the COVID-19 vaccination card in the health declaration form before traveling. In addition, upon arrival, the traveler must physically present the vaccination card or the Digital Certificate issued by the competent authority.
2. Passengers must upload a negative COVID-19 test (PCR or antigen) in the health declaration form up to 72 hours before entering Panama. Additionally, the passenger must present the negative test upon arrival.
3. Passengers who meet requirements 1 and 2 ( vaccination and negative test) from Non-High-Risk countries will not need to carry out a second COVID-19 test at entry or to quarantine.
4. For passengers who meet requirements 1 and 2 (vaccination and negative test) from countries that the Ministry of Health of Panama (MINSA) identifies as *High Risk, a second COVID-19 test must be performed at the country’s entry points, at the passenger’s expense, and if negative, they will not need to quarantine.
5. If the traveler does not have a negative COVID-19 test performed a maximum of 72 hours before traveling, it will be mandatory to undergo testing at the country’s entry points. The passenger must cover the cost of this test. If the test is positive, the passenger must comply, at their own expense, with the quarantine established by the MINSA.

For Unvaccinated Travelers:

1. The passenger must upload a negative COVID-19 test (PCR or antigen) in the health declaration form up to 72 hours before entering Panama.
2. Passengers traveling from Non-High-Risk countries must present a negative COVID-19 test (PCR or antigen) performed up to 72 hours prior to arrival. If they do not present the test, they will have to carry out a test at the country’s entry points upon arrival, at the traveler’s expense. If the test result is negative, they will not have to quarantine.
3. Passengers traveling from High-Risk countries must undergo a second COVID-19 test at the points of entry to the country, and if negative, they will have to comply with three (3) days of quarantine at the cost of the passenger as of Monday, August 9, 2021.

Surveillance Hotels authorized by the government to carry out the 3-day quarantine:

1. Westin Panama
2. Westin Playa Bonita
3. The Bristol Panama
4. Wyndham Panama Albrook Mall
5. Sortis Hotel
6. The Santa Maria Hotel

* To date, Panama considers India, the United Kingdom, South Africa, and countries in South America as high-risk countries.  

By Ayleen Quintero – Associate

(Executive Decree No. 145 of May 1st, 2020)

Due to the State of National Emergency, new provisions related to lease agreements have been enacted in order to guarantee compliance with the rights and obligations of both parties under the contractual relationship. The following is a summary of these provisions.

Leasing fees
In accordance with the new provisions, for the duration of the State of Emergency and until two (2) months after the lifting of said measure have elapsed, the amount of the rent (in leases for residential, commercial, industrial, professional, and educational use) frozen, as well as all contractual clauses related to the following matters shall remain unaltered:

1. Increases due to unilateral termination of the agreement.
2. Penalty for unilateral termination of the agreement.
3. Interest on arrears.

About the conflicts that may arise between the Lessor and Lessee due to rent not paid
The Lessor and Lessee may reach a mutual agreement on the conflicts that arise between them due to unpaid rent and must register said agreement with the General Directorate of Leases of the Ministry of Housing and Territorial Ordering. These agreements shall have a validity of two (2) years, effective from the date on which it is registered with the General Directorate of Leases, and will remain in force as long as the Lessee does not breach the agreement.

Expiration and validity of lease agreements
If the lease expires during the period of suspension of the eviction measures, its validity will be extended for the same period as the Executive Decree that has established these new provisions (Executive Decree No. 145 of May 1st, 2020), and the other contractual conditions will be maintained.

Actions that will give rise to the respective sanctions

• The Lessee refuses to pay rental fees even though the effects of the declaration of the State of National Emergency have already ceased.
• Tenants whose income has not been affected by the effects of the State of National Emergency and, despite of this, do not comply with the payment of the rent.
• Lessors that use pressure mechanisms against lessees to vacate the property, such as the suspension of the supply of public services (gas, water, electricity, among others).

Suspension of the eviction proceedings

All the eviction proceedings are suspended, without distinction of the amount of the rent or the purpose of the use of the property, be it residential, commercial, industrial, professional, or educational, while the State of National Emergency lasts.

By Ayleen Quintero – Associate

Given the situation that our country is facing, the National Immigration Service and the Ministry of Labor and Workforce Development have adopted measures that aim to prevent the spread of COVID-19.

Based on these regulations and in response to the most frequent questions that companies, expatriates and their families, and other foreign workers have, we have prepared a frequently asked questions guide.

What will be the validity of the migratory cards, both pending and approved?

All the expiring cards, including the ongoing process cards and those approved in general, will be valid until April 30, 2020, as long as the expiration date is March 13, 2020 or later.

What will be the validity of the approved work permit cards?All approved work permit cards will be valid until April 30, 2020, as long as they expired on March 12, 2020 or later.

What happens if I was notified of my approved Resolution, but I do not have the corresponding ID card?

For Resolutions issued by the National Immigration Service:

Even if the corresponding ID cards have not been obtained, the effect of the resolution protects the foreigner during its validity. If it expires during this period, its validity will extend until April 30, 2020, or for the period that the authorities may establish.

For Resolutions issued by the Ministry of Labor and Workforce Development:

Similar to the previous case, even when the corresponding ID cards have not been obtained, the effect of the resolution protects the foreigner during its validity. If it expires during this period, its validity will extend until April 30, 2020, or for the period that the authorities may establish.

What happens if I have a Resolution issued, but I could not be notified?

For Resolutions issued by the National Immigration Service:

The ongoing process card will be valid until April 30, 2020, or for the time that the authorities may determine in the future. Once the extension period of validity ends, the foreigner may proceed to be notified. Otherwise, the fine for the expiration of the processing card, which is fifty US dollars (US$50.00) per month expired, may come into effect. The period for purposes of the penalty would be taken into account from the expiration of the last extension period established in the regulations, this is without prejudice to the fact that the authorities may determine a different treatment later on.

For cases of Resolutions issued by the Ministry of Labor and Workforce Development:

If it is a Resolution that approved a work permit, in case the interested party has not been notified, it is not in effect. Therefore, for purposes of their labor immigration status, the foreign worker will maintain the validity of the previous work permit until April 30, 2020, or the effective date determined by the authorities in future regulations, as long as the last work permit expired on March 12, 2020 or later.

Curfew and identity document to carry

Regardless of immigration status, all foreigners have the right to use their passport during the hours established by the authorities as a result of the decreed total curfew. Given that the last number of the passport will determine the hours during which the foreigner can leave his/her home, in case of passports that have a letter as the last digit, the last number right before the letter shall be the relevant number.

The Executive Decree 534 of October 3rd, 2014, which regulates the special immigration system established by Law 32 of April 5th, 2011 was published in the Official Gazette No. 27,636-A of October 6th, 2014. The aforementioned Law establishes a Special, Comprehensive and Simplified System for the setting up and operation of Free Zones, including in its Chapter VII, special provisions governing the immigration subject-matter for the foreigners which require applying for Visas or Residence Permits under the protection of this Law.

Law 32 of 2011 created new immigration sub-categories such as: Permanent Resident Permit as Free Zones Investor; Temporary Resident Permit as Personnel in the position of trust, executive, expert and/or technician of authorized companies as Promoters or Operators of Free Zones or by Companies established in Free Zones; Temporary Permit for Special Policies as Teacher, Student or Researcher of a Higher Education Center in a Free Zone; Short Stay Visa as a Free Zone Trader and Investor; among others. These new categories are the subject-matter regulated by Decree 534 in question, which contains twenty (20) articles which develop the applicable requirements and procedures for the application or extension of each one of them. This type of special immigration system has been used for several years as part of the incentives included in special laws to attract investors and companies in order that they establish their operations in various sectors of our country, as in the case of special immigration systems included within the Law which created the Panama-Pacific Special Economic Area and the Law for the Establishment and Operation of Multinational Corporations Headquarters (SEM), among others.

Regarding this subject, we must make mention Executive Decree 535 of October 3rd, 2014, published in the same Official Gazette, which establishes special requirements and procedures for those foreigners of restricted nationalities whose object is to reside in our country with the purpose of investing or working for companies attached to the Panama-Pacific Special Economic Area (Law 41 of 2004), Special System of Multinational Corporations Headquarters (Law 41 of 2007) or Special System of Free Zones (Law 32 of 2011).

Said Decree repeals Executive Decree 414 of June 13th, 2012, which allowed that foreigners from restricted nationalities, who applied for a Visa or Temporary Resident permit covered by the categories set forth within the special laws governing the Panama-Pacific Special Economic Area and the Special System of Multinational Corporations Headquarters, did not require the approval of previous recommendation from the Security Council of the Republic of Panama.

In this regard, Executive Decree 535 of 2014, primarily maintains this benefit, extending it to those foreigners who require applying to an immigration category as set forth within the law which governs the Special System of Free Zones, encouraging, once again, the foreign investment.

The guide Chambers & Partners Latin America 2018 has, once again, highlighted Icaza, González-Ruiz & Alemán by ranking us in 8 practice areas for the Panama chapter and recommending 9 of our attorneys as leaders in their fields. The areas of practice in which the firm was ranked are:

• Banking and Finance (Gabriel González-Ruiz)
• Capital Markets (Gabriel González-Ruiz)
• Corporate / Mergers & Acquisitions (Gabriel González-Ruiz and Roberto R. Alemán)
• Dispute Resolution (Marisol Ellis)
• Intellectual Property (Gabriela Tejada de Britton, Hugo Morán R.)
• Offshore (Roberto R. Alemán)
• Projects (Gabriel González-Ruiz)
• Shipping (Joel Medina and Alexis V. Herrera Jr.)

Chambers and Partners is a prestigious legal service guide, that identifies and ranks the most prominent law firms and lawyers in more than 180 jurisdictions around the world.

The Panamanian Government recently included the Bolivarian Republic of Venezuela in the list of countries whose nationals require a stamped visa by a Consul in order to enter the national territory. This new legislation entered into force on October 1st of this year, as set forth by Executive Decree No. 473 of August 23rd of 2017, published on Official Gazette No. 28,349-B of the same date.

Before considering the analysis of the changes that this entails, we deem it suitable to distinguish the three classifications that the National Immigration Service makes regarding the authorizations that a foreigner must request in order to enter the Republic of Panama. The classification is mainly due to the nationalities of those who intend to enter the country and the socio-political and immigration situation existing in those countries. Thus, some foreigners shall require: a) an Authorized Visa, or b) a Stamped Visa by the Panamanian Consul, while others shall be benefited with a Visa exemption to enter our territory.

Those who have a Visa Exemption, can enter the territory without the need of processing a prior authorization, while the Authorized Visa can be applied from Panama and the Stamped Visas can only be applied through the corresponding Panamanian Consulate.

In this particular case, the requirements to apply for the last type of Visa are subject to whether the interested party is within or outside Venezuela.

The requirements shall be those listed on the National Immigration Service website, on the online Immigration Section/Appointment for Stamped Visa in the Consulate.

The interested party must appear before the Panamanian Consulate in said country, filing the requirements for a Tourist Visa; however, in this last case, the foreigner must be temporary or permanent resident of the country where he/she is applying.

The Government established on Decree 473 that these Stamped Visas can be granted for multiple entries and exits and up to the period of three (3) years. However, its granting and validity shall depend on the verification criterion of the designated officers.

In the other hand, we must clarify that those nationals of countries with requirements of stamped visas by the Consul to enter the country, shall be exempted of applying for visa before the corresponding Consulate when they hold Visa to enter or residence granted by the following countries:

• United States
• Australia
• Canada
• United Kingdom

It is important to note that for this purpose, such Visas must be multiple-entry visas, having been previously used in the territory of the Granting State and its validity cannot be for less than one (1) yearat the time of entering the Panamanian territory.

The owners of real property which are subject to the Horizontal Property Regime are under the obligation of paying taxes both in respect to their real estate unit and the land on which the same is built. Law 66 of October 17 th , 2017 published by means of Official Gazette No. 28388-C.

The exemption granted by law in regards to the real property tax falls solely on the value of the improvements. Regarding the taxes to be paid on the value of the lands, the prior amendment implemented that the tax would be paid at a rate of one percent (1%) over the value of these lands during the period in which the value of the improvements is exempted, and once said exemption has expired, the progressive combined rate established in the Fiscal Code shall enter into force. With the recent amendment to the Fiscal Code, which shall enter into force as of January 1 st , 2019, not only the rate that shall govern was amended, but some new concepts and procedures were included that we must take into account.

The 1% tax over the value of the land is still in force for those real properties that up to this date their improvements are exempted, nevertheless, with the amendment, the taxpayer may choose a) if he keeps the exemption on the improvements effective and pays the rate of 1% over the value of the land until the expiration date of said exemption, or b) if he adheres to the concept of Family Tax Patrimony or Main Residence, waiving to the exemption, where he shall pay based on the new rate on the excess of B/.120,000.00. Those properties whose improvements value is less than B/. 120,000.00, and that are declared as Family Tax Patrimony or Main Residence would not be encumbered with the real property tax.

The real properties incorporated to the horizontal property regime which are for commercial or industrial use or those that do not constitute a Family Tax Patrimony or Main Residence, shall pay the tax at the rate of 1% of the value of the land until the expiration of the improvements exemption, and once it expires, they shall be governed by the new rates established as amended by the recent law.

The Family Tax Patrimony is that “real property intended for permanent use by the owner of the property for housing purposes with his family, living under the same roof”, while the Main Residence is that “of permanent use by the real property owner, a natural person, with housing purposes…and that do not constitute family patrimony”. For a real property to be considered a Family Tax Patrimony or Main Residence, the taxpayer must comply with the conditions arising from these definitions and must request to adhere to one of these concepts before the General Directorate of Revenues.

The recent amendment introduces the obligation for banks to act as withholding agents of the real property tax of those real properties (taxable) that had been acquired through financing or that constitute a collateral; with the exception of the first residences, which shall be exempted for up to three years, as long as the purchaser had never bought a property before.

The General Directorate of Revenues shall acknowledge the improvements exemptions to those projects, whose construction permits were valid on December 31 st , 2018. The real estate development companies whose projects are developed with construction permits issued after the date aforementioned, shall assume the real property tax falling into the improvements (units) and land, as of the establishment of the “HP properties”. The aforementioned shall be applied to all the Real Estate Development Companies, except for the real properties owned by Companies and Development Companies established in free zones, which shall have a special tax treatment for a period of 10 and 30 years, respectively.

By: Ayleen Quintero, Associate attorney.
Any Questions? Please, contact us

Law No. 52 of 2016 has been regulated by Executive Decree No. 258 of September 13 th , 2018. The scope of the law had been clearly established by this regulation, which states that legal persons who do not perform acts of commerce in Panama, must keep their Accounting Records and submit them to the General Directorate of Revenues in the event that they require the same, in accordance to the activity that they perform.

Regarding the definition established by Article 2 of Law 52 regarding “Accounting Records”, a division has been made based on the activity of the legal person, i.e., the legal person that “does not perform acts of commerce” and the legal person that “performs acts of commerce.

• Only if it is an asset holder, of any kind, the accounting records must evidence the value of said assets and the income received thereof.
• Those who perform commercial activities outside the Republic of Panama, must keep a Journal and Ledger, except for those who performs activities of purchase and sale of negotiable instruments and securities. Nevertheless, they are under the obligation of providing any supporting documentation and additional information, which may be required by the competent authority.

Additionally, the Executive Decree provides that the accounting records must be prepared pursuant to the International Financial Reporting Standards (IFRS) and must be countersigned by a Certified Public Accountant of the corresponding jurisdiction where said records are prepared.

In the event that the accounting records and supporting documentation be kept outside of the Republic of Panama, and be required by the Panamanian competent authority, the same must be provided in Spanish, and if the same are not drafted in that language, the legal person shall be under the obligation to provide a translation made by a Certified Public Translator of the Republic of Panama.

The accounting records must be sent with the certification required in their country, which guarantee the printing of the information and deems admissible the accounting system used for said records.

It is worth mentioning that the Resident Agent is under the obligation to know the physical location where the accounting records are kept and to have all the contact details regarding the same. In the event that said information is required by the Tax Entity, and cannot be provided, the Resident Agent shall be under the obligation to resign as Agent.

We are at your entire disposal for any queries or clarifications you shall require,
Sincerely yours,
ICAZA, GONZALEZ-RUIZ & ALEMAN