Panama's multinational HQ regime (SEM) is modified

Law 57 of 2018 modifies Law 41 of 2007 on Panama's multinational headquarters regime, also known as SEMs (sedes de empresas multinacionales) in Spanish.

For reference, it has been published in Panama's Official Gazette No.28641 https://www.gacetaoficial.gob.pa/pdfTemp/28641/69856.pdf.

The main changes include that now SEMs will pay 5% income tax on their net taxable income.

SEMs are also now subject to transfer pricing regulations. The exemption on dividend and complimentary tax and taxes applicable to branches of foreign companies is maintained.

The new law grants automatic legal stability protection pursuant to Law 54 of 1998 to SEMs.

Capital gains tax derived from the transfer of shares of SEMs is also applicable at a fixed rate of 2% and 1% WHT rate (instead of the 10% rate and 5% WHT rate otherwise applicable).

Ivette Martínez - imartinez@ims.legal