So far this year, 17 new company licenses have been approved in the country under the Multinational Companies Headquarters regime, a figure that is higher than the 7 that were reported throughout 2018.
In addition to the 17 companies that already obtained their licenses in 2019, there are 7 other companies that are in the phase of evaluation by the Commission of Headquarters of Multinational Enterprises of the Ministry of Commerce and Industry (MICI).
Millicom CAM SEM, S.A. and Upfield NL Holdings Two B.V., were the companies that were recently established as Multinational Companies Headquarters in the country.
From the MICI statement:
MICI 13-08-2019. The Commission of Headquarters of Multinational Enterprises (SEM) of the Ministry of Commerce and Industries (MICI) recently approved the establishment of two new multinationals in the country, after complying with all the requirements set forth in the Law.
Modifications made to the law regulating the SEM regime in the country, would have been the reason for reporting during last year the establishment of only seven new companies of this type.
Among the reforms to the special regime for the establishment and operation of Sedes de Empresas Multinacionales (SEM) made in 2018, it is worth highlighting that companies must have a minimum number of full-time permanent employees, and in addition, a tax rate of 5% was imposed on the net taxable income derived from the services rendered.
Having a minimum of five full-time permanent employees is one of the requirements that companies must meet in order to obtain a Regional Offices of Multinational Corporations license, if a bill from the Varela administration succeeds.
The bill presented by the Ministry of Commerce and Industries (Mici) to the National Assembly contemplates, among other things, the new conditions that must be met by companies seeking to obtain a license as Regional Offices of Multinational Corporations (SEM by their initials in Spanish).In addition, it details a proposed law reform, under which companies must generate annual operating expenses in the country of at least $500,000.
Six new foreign companies will be establishing their regional headquarters in the country, under the conditions of the Multinational Company Headquarters regime in Panama.
From a statement issued by the Ministry of Trade and Industry:
MICI 11-12-2017.Confirming once again the competitive advantages offered by the Panamanian isthmus as the great connection of the Americas to the world, six new companies will be establishing their regional headquarters in Panama, with a direct investment -only in its first year of operation under the SEM regime. - of more than four million dollars and the creation of some 200 jobs.
Cities far away from the capital which have free zone regimes, labor and are close to ports, are becoming attractive places for businesses.
The characteristics of the so-called "emerging cities" outside of the greater metropolitan area, are mainly being exploited by multinational companies who want to operate under free zone schemes and near port terminals and areas with good road access.
The special tax regime for multinationals which have an established site in Panama remains the main factor, while the low supply of trained personnel has been identified as a serious problem.
In addition to tax incentives offered to companies that set up offices, there are also special areas such as Panama Pacific and the Colon Free Zone, whose special schemes offer other incentives for companies to set up there.
New licenses have been approved for five multinational companies in the finance, engineering and customs security sectors, who will operate under the incentive scheme of Act 41 of 2007.
The companies which were recently authorized to operate under the Law of Multinational Companies come from countries such as France, South Korea, Switzerland, China and the Netherlands.
The activities carried out in Panama by multinational companies will be incorporated into the scheme of legal stability for investment.
From a press release issued by the Government of Panama:
The Cabinet Council approved incorporating activities by companies with multinational company licenses into the benefits provided by Act 54 of 1998, known as stability for the legal status of investments.
As a result of the economic dynamism, there is a constant arrival or creation of companies offering products and services to the Panamanian market.
La Chorrera, Arraiján, San Miguelito and Panama City are the areas where announcement of start of operations are being made, the basic procedure for starting a business.
In an article in Martesfinanciero.com Virgil Sousa, national director of the Ministry of Commerce Trade and Industry (Mici), notes that "the areas where there have been the most announcements for operations registered are Chorrera, Arraiján, San Miguelito and the capital. This is due to the construction of new shopping centers in these development points. "
Some 58 multinationals have settled in Panama in the past two years, particularly in the special area of Panama Pacífico, contributing $40 million with the start of their operations.
The Minister of Trade and Industry, Ricardo Quijano, said the opening of these 58 multinational operations contributed $40 million and multiplied opportunities for economic growth.
Efforts to promote the country in Sao Paulo, Toronto and Madrid among other cities, are now generating tangible results.
25 multinational companies from around the world have expressed interest in setting up in Panama under the Law of Multinational Corporations (SEM in Spanish).
The stable economic growth being experienced in Panama is one of the reasons why international companies are interested in the country, in addition to the benefits provided by being in close proximity to the canal.
BASF and Unilever are two of the companies that have recently joined the list of businesses that are operating in the Panama Pacific Special Economic Area.
Some 80 multinationals are currently operating in the Panama Pacific Special Economic Area (AEPP) and this figure is expected to continue rising, as is the number of new jobs.
The German group BASF and Unilever have recently joined the list of companies that are operating under Act 41 on multinational sites.
Electronics corporation Phillips, luxury car maker BWM and Genzyme Corporation labs will install regional headquarters in the country.
These companies have applied under Law 41, which created a special regime for Headquarters of Multinational Corporations.
"BMW Latin America ... will expand its regional operations, absorbing part of its administrative and operational functions from Venezuela, Brazil and Argentina.
With a system of laws to generate competitiveness and legal security for multinational companies, Panama is on its way to repeating the experience of Singapore and Switzerland.
Panama is strengthening its strategic position in Latin America as a commercial, banking, insurance, and logistical center by starting to repeat the first fruits of Law 41 (from August 2007), which provides incentives to international companies to set up their regional headquarters in the country.