Panama*
PROFILE CONTENTS
}}
INTRODUCTION2
LEGAL AND REGULATORY
4
TAXATION6
BANKING13
PAYMENT INSTRUMENTS
14
PAYMENT SYSTEMS
16
CASH MANAGEMENT
17
ELECTRONIC BANKING
19
TRADE FINANCE
20
USEFUL CONTACTS
22
* Guides specifically designed for treasury managers offering a detailed picture of the banking and cash management arrangements for an extensive range of locations.
Please note the information is of a general nature only and is subject to change. It does not constitute financial, legal, tax or other professional advice.
Country Profile
PANAMA
INTRODUCTION
}}
General
Capital/Other major cities:
Area:
Population:
Languages:
Currency:
Country telephone code:
Weekend:
National holidays:
Source: www.goodbusinessday.com.
Business hours:
Banking hours:
Panama City/David, Colón
75,420km2
3.61m
Spanish (official), English
Panamanian balboa (PAB), US dollar (USD)
507
Saturday and Sunday
2nd half 2015 — 3–5, 10, 28 Nov, 8, 25 Dec
2016 — 1, 9 Jan, 8–10 Feb, 24, 25 Mar, 2 May, 3–5, 10, 28 Nov, 8, 26 Dec
08:00–17:00 (Mon–Fri)
08:00–15:00 (Mon–Fri), 09:00–12:00 (Sat)
Note: some branches operate until 15:00 (Saturday) and 14:00–18:00 (Sunday).
Stock exchange:
Leading share index:
Bolsa de Valores de Panamá (BVP)
BVPSI
Government
Legislature
}}Presidential republic with a unicameral National Assembly (Asamblea Nacional).
}}National Assembly – 71 members elected to serve five-year terms.
}}The president is directly elected every five years.
Head of state and political leader
}}Juan Carlos Varela, president (head of state and government) since 1 July 2014.
Sectoral distribution of GDP (% of GDP)
Agriculture
3.7%
Industry
17.9%
Services
78.4% (2013 estimate)
Please note that the information contained in this document is of a general nature only and is subject to change whether for economic, political, social or other reasons. It is not intended to be
comprehensive and does not constitute financial, legal, tax or other professional advice on which you should rely. Accordingly if you are planning any business activity in the country or taking, or
refraining from any action on the basis of the information in this document, you must obtain your own independent professional advice.
The materials contained in this document were assembled in March 2015 (unless otherwise dated) and were based on the law enforceable and information available at that time. We make no
representations, warranties or guarantees (express or implied) that the information in this document is complete, accurate or up to date. We will not be liable for any liabilities arising under or in
connection with the use of, or any reliance on, this document or the information contained within it.
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PANAMA
Economy
2009
2010
2011
2012
2013
Exchange rate* (PAB/USD)**
1.0000
1.0000
1.0000
1.0000
0.42
0.28
0.30
0.25
Interest rate (MMR)** (%)
Unemployment (%)
2014
2015
Q2
Q3
Q4
Year
Q4
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
0.81
1.12
0.79
0.80
0.90
NA
6.4
NA
5.0
NA
NA
NA
NA
NA
NA
NA
Consumer inflation*** (%)
+ 2.4
+ 3.5
+ 5.9
+ 5.7
+ 4.0
+ 3.3
+ 2.3
+ 1.7
+ 2.6
+ 0.2
GDP volume growth*** (%)
+ 3.9
+ 7.5
+ 10.9
+ 10.8
NA
NA
NA
NA
NA
NA
GDP (PAB m)
24,163
27,053
31,320
35,938
NA
–
–
–
NA
–
GDP (USD m)
24,163
27,053
31,320
35,938
NA
–
–
–
NA
–
6,675
7,351
8,374
9,457
NA
–
–
–
NA
–
– 1.2
– 11.9
– 16.8
– 10.1
NA
–
–
–
NA
–
GDP per capita (USD)
BoP (goods/services/income) as % GDP
* Official rate. ** Period average. *** Year on year. Sources: IMF, International Financial Statistics, May 2015 and 2014 Yearbook; and World DataBank.
Country credit rating
Fitch Ratings rates Panama for issuer default as:
Term
Local currency
rating
Foreign currency
rating
Short
–
F3
Long
BBB
BBB
Long-term rating outlook
Stable
Source: www.fitchratings.com, June 2015.
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PANAMA
LEGAL AND REGULATORY
}}
Central bank
}}Panama has no central bank. The state-owned Banco Nacional de Panamá
serves as a repository for public-sector funds and is the government’s official
banker and treasurer, as well as the country’s national clearing house.
Bank supervision
}}The Banking Superintendency supervises the banking sector within Panama.
Resident/non-resident status
}}A company is resident if it is incorporated under Panamanian law or if its
central management and control is exercised in Panama. The following factors
indicate that a company is managed and controlled in Panama:
}}Decisions that affect the direction or management of the company are made
at board meetings in Panama;
}}All or most of the members of the board of directors (or equivalent governing
body) have delegated their management or administrative responsibilities to
third parties that exercise these responsibilities in Panama; and
}}The company’s headquarters that conducts business activities or provides
support to other companies is located in Panama, regardless of the source of
its income.
Bank accounts
}}Foreign exchange accounts and domestic currency (PAB) accounts can be
held by residents both domestically and abroad. Resident domestic currency
accounts are convertible into foreign currency.
}}Non-resident bank accounts are permitted in foreign and domestic (PAB)
currency. Non-resident domestic currency accounts are convertible into
foreign currency.
}}Interest can be offered on current accounts.
}}Overdraft facilities are available to residents and non-residents.
Reporting
}}General transaction information is sent to the General Controller for balance of
payments purposes. However, detailed statistical information on transactions is
not required.
}}Income and expenditure on a client’s account is used by the General Controller
to ascertain the capital of and payments to/from the current account, while the
client’s structure of patrimonial participation is used to determine the levels of
direct foreign investment.
}}Deposits exceeding USD 10,000 on residents’ accounts held abroad must be
accompanied by information detailing the party effecting the transaction and
the source of the funds.
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Exchange controls
}}The Panamanian balboa (PAB) is Panama’s official currency. The US dollar (USD)
is also legal tender in Panama and has been since 1904. The PAB is pegged to
the USD at a rate of PAB 1 per USD 1.
}}There are no exchange controls in Panama.
}}Individuals importing or exporting in excess of USD 10,000 of its equivalent in
cash are required to file a report with the Ministry of Economy and Finance’s
customs offices.
Anti-money laundering/counter-terrorist financing
Supplied by BCL Burton Copeland (www.bcl.com). Data as at January 2015.
}}Panama has implemented anti-money laundering legislation (Law No 41 of
2000; Law No 42 of 2000; Agreement No 9 of 2000; Law No 6 of 2002 (Financial
Crimes); Law No 45 of 2003; Law No 50 of 2003; Law No 1 of 2004, Law 16 of
2005; Agreement No 12 of 2005; Law No 14 of 2007; Resolution 8 of October
2008; Law No 68 of 2009 and Law No 2 of 2011).
}}Panama is a member of the Caribbean Financial Action Task Force (CFATF)
and the South American Financial Action Task Force (GAFISUD) and has an
action plan for implementing FATF-49 recommendations. Panama is also a
member of the Group of International Finance Centre Supervisors (GIFCS)
and the Organisation of American States/Inter-American Drug Abuse Control
Commission (OAS/CICAD).
}}Panama has established a financial intelligence unit (FIU), the Unidad de Analisis
Financiero (UAF), which is a member of the Egmont Group.
}}In June 2014, Panama made a high-level political commitment to work with the
FATF and GAFISUD to address its ‘strategic AML/CTF deficiencies’. In its October
2014 public statement, the FATF acknowledged that these deficiencies remain
and encouraged ‘Panama to continue implementing its action plan’.
}}Account opening procedures require formal identification of the customer.
}}Banks must keep a record of customers who regularly conduct transactions
exceeding PAB 10,000. The record should include the type, number, volume
and frequency of the banking operations, products or services that will later
be reflected in the client’s account. If within a week successive deposits or
withdrawals have exceeded PAB 10,000, these must also be reported.
}}Trust companies must identify clients and beneficial owners. For trusts, judicial
persons and corporations, the certificates of incorporation must be shown.
Directors, officers, attorneys and legal representatives must also be identified to
establish and identify the beneficial owners of the account.
}}Insurance companies, reinsurance companies and casinos are exempt from the
due diligence duties faced by other financial institutions.
}}Financial institutions in the broadest sense are required to report to the UAF
suspicious transactions and also currency transactions above USD 10,000.
}}Individuals bringing in cash exceeding USD 10,000 into Panama must declare it
to the customs authorities.
}}All records and documents must be kept for at least five years.
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TAXATION
}}
All tax information supplied by Deloitte Touche Tohmatsu (www.deloitte.com) and Deloitte Highlight, 2015.
Resident/non-resident
}}A company is resident if it is incorporated under Panamanian law or if its
central management and control is exercised in Panama. The following factors
indicate that a company is managed and controlled in Panama:
}}Whether meetings of the members of the board of directors, in which
decisions that affect the direction or management of the company are made,
are carried in Panama; and
}}Whether business activities or activities to support other companies are
carried out from a headquarters located in Panama, regardless of the
source of income. For purposes of determining tax residence, if all or most
of the members of the board of directors or equivalent governing body
have (legally or effectively) delegated their management or administrative
responsibilities to third parties, the delegation is disregarded if the persons
exercising such responsibilities are in Panama at the time of exercise.
}}Any income produced from transactions carried out within the territory of the
Republic of Panama is taxable. Income obtained from operations carried out
abroad is not taxable in Panama.
}}There are certain exemptions to this principle: for example, companies that
are established in the Colon Free Zone are subject to a different set of rules
that exempt them from the payment of income tax. Multinational companies
under the Multinational Headquarter Regime will be generally tax-exempt and
subject to special tax treatment. The following situations are also exempt:
}}Interest and commission paid by banking institutions in Panama to
international banks or financial institutions established abroad in connection
with loans, bankers’ acceptances and any other debt instruments, even if the
resources are utilised by the borrowing bank in the generation of productive
assets in Panama;
}}Interest paid to official or semi-official institutions of international bodies or
of foreign governments; and
}}Interest paid to foreign investors, provided that the capital on which this is
paid is exclusively intended for housing projects for people of low income, as
determined by the Housing and City Planning Institute, and that the loan is
guaranteed by a foreign government or governmental institution.
Tax authorities
}}Ministry of Economy and Finance.
}}Revenue General Office.
}}Cadastral General Office.
}}Customs General Office.
Tax year/filing
}}The tax year corresponds to the calendar year. However, exceptions to this rule
may be approved by the tax authorities.
}}Tax returns are due 90 days after the close of the fiscal year. However, tax
regulations provide for a one-month extension to file an income tax return, but
this extension is only provided for the submission of the tax return; the income
tax due must be paid by 90 days after the close of the fiscal year. Any payments
outstanding at the time of filing are subject to late interest charges and fines.
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}}Additionally, companies must report an estimated income tax for the following
year; such estimated income tax must be calculated in the tax return that is
being filed.
}}Estimated income tax should be paid in three instalments, the first one
six months after the close of the fiscal year reported, the second and third
instalments nine and 12 months respectively after the close of the fiscal year
being reported (30 June, 30 September, 31 December). Such estimated income
tax is calculated using the taxable income of the past year. Therefore this
estimated tax should not be smaller than the income tax being reported in the
year of declaration. This estimated income tax may be used as a credit against
income tax of the next tax return, as this constitutes an advance payment. For
example, in the income tax return for the 2014 fiscal period, the estimated
income tax for the 2015 fiscal period will be calculated and paid in advance
based on the taxable income generated for the 2014 fiscal period. Then, when
preparing the 2015 income tax return, payments made in advance through the
estimated income tax, should be included as a credit in this tax return.
}}With the exception of companies operating in free zones, corporations with no
Panamanian-source income are not required to file an income tax return.
}}Consolidated returns are not permitted and each company must file a separate
tax return.
Corporate taxation
}}Corporations, partnerships, branches of foreign corporations and any other
entities that generate taxable income pay income tax on any profits or income
produced within Panama. Income tax is also payable on the net income from
sales made by Free Zone companies to entities or individuals domiciled within
the fiscal territory of the Republic of Panama.
}}Income that does not arise in, or is not derived from, Panama sources is not
subject to tax in Panama.
}}The general corporate income tax rate is 25%.
}}Entities are also required to make an alternative calculation of taxable income
for purposes of the Panamanian alternative minimum tax (CAIR), calculated on
1.17% of gross taxable revenue. The higher of the two calculations is generally
considered the income tax liability for the year, subject to certain exceptions.
The CAIR calculation is not required for companies with taxable revenue of less
than USD 1.5 million.
}}There is no surtax.
}}The CAIR is assessed at the general rate of 1.17% of gross taxable income. A
taxpayer can request that the CAIR not be applied when it has net operating
losses or where the effective tax rate is higher than standard rate or the
special rate. The request must be made to the tax authorities and must be
accompanied by prescribed documentation. The authorities have discretion
to grant an exemption from the CAIR for the period requested and three
subsequent years. Companies whose taxable revenue is less than
USD 1.5 million are not required to calculate the CAIR.
}}Companies holding a notice of operations (all commercial and industrial
businesses must have a notice to engage in business, unless they are
specifically exempt) or otherwise carrying out business in Panama must
withhold tax at a rate of 10% on dividends distributed out of domestic profits
(20% in the case of bearer shares) and 5% on dividends on foreign-source
profits or export profits. Companies located within Panama’s free trade
zones (except for companies within the Howard (Panama-Pacific) Special
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Economic Area) that require a notice of operations and licensed multinational
headquarters (MHQ) companies must withhold a 5% tax on distributions.
}}The subsequent distribution of dividends will not be taxed if tax has already
been withheld at the 10% or 5% rate.
}}If a corporation does not declare dividends in a particular year, it must pay a
‘retained earnings tax’, which is a deemed dividend tax, amounting to 10%
(20% in the case of bearer shares) of 40% of its after-tax income.
}}A 2% retained earnings tax is levied on profits distributed by a company
established in a free trade zone or profits related to foreign-source income
taxed at the 5% rate.
}}The 10% dividend tax is imposed on all loans or advances granted by a
company to its shareholders, regardless of the income source (20% in the case
of bearer shares).
}}Distributions (interest) paid or credited on cumulative preferred shares issued
by companies do not result in dividend tax liability if certain requirements
are met.
}}There is no difference between the general taxation of a branch of a foreign
entity and a local subsidiary; both are taxed on profits generated within
Panama. The only difference relates to the payment of dividend tax: branches
must pay dividend tax at 10% of their taxable income less income tax. The
withholding tax is considered final and is paid when the corresponding annual
tax return is filed, even if the branch does not distribute profits to its head office.
}}Losses incurred in a particular fiscal year may be carried forward for up to
five years, with a maximum of 20% of the referred loss deductible per year.
The deduction of 20% of the loss is further capped at 50% of the taxable
income in each subsequent year, with the unutilised loss being permanently
lost. The portion of that quota not deducted in a year cannot be deducted in
subsequent years. Losses cannot be carried back.
}}Various investment incentives provide lower tax rates or exemptions. The
Howard (Panama-Pacific) Special Economic Area regime provides for tax
exemptions for offshore services; gains from the sale or transfer of shares of
companies established within the area; income from the transfer of goods
and services between companies within the area and other free trade zones;
income from the sale of goods or services to visitors and passengers while in
transit to other countries or to vessels crossing through the Panama Canal or
aircraft using authorised ports to overseas destinations; income from aviation
and airport services; income from the manufacture of high-tech products; and
income logistics and call centre services.
}}In-bond manufacturing companies may import equipment and raw materials
on a duty-free basis and subsequently export 100% of production, receiving a
tax-free benefit. Such companies do not have to pay VAT on imports.
}}Based on the territoriality principle, gains derived from ‘re-invoicing’ operations
are deemed not to be derived in Panama, provided the merchandise being reinvoiced does not enter the Panamanian territory.
}}Licensed MHQs are exempt from income tax on services provided to nonresident entities that do not derive Panama-source income, from dividend
tax and from Panamanian VAT on export services provided to non-residents
that do not generate taxable income in Panama. Foreign employees working
in Panama for an MHQ are exempt from income tax on their wages and other
remuneration that is not paid by the MHQ.
}}A variety of tax incentives are granted to encourage investment in new projects
and activities relating to tourist facilities, including an exemption from income
tax, property tax, import taxes and other taxes, depending on the amount of
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PANAMA
investment and location. The incentives will expire between 2016 and 2020.
Incentives also are available in the Petroleum Free Trade Zones, Colon Free
Trade Zone, etc.
Financial instruments
}}There are no specific tax rules for financial instruments.
Interest and financing costs
}}There are no specific tax rules regarding interest and financing costs.
Foreign exchange
}}There are no restrictions or controls for foreign exchange, other than reporting
cash transactions above USD 10,000 in order to prevent money‑laundering and
terrorist financing. Equity and debt capital, interest, dividends, branch profits,
royalties and technical services fees can be remitted without any formalities
other than the applicable taxes described elsewhere.
Annual registration fee
}}All companies registered in the Public Registry pay an annual tax of USD 300
and in subsequent years, except for Private Interest Foundations, which pay an
annual tax of USD 350 and USD 400 in subsequent years.
Advance tax ruling availability
}}Advance pricing agreements are not issued by Panama’s tax authorities.
Non‑binding opinions (on both the taxpayer and the tax administration) can be
obtained from the tax administration.
Annual licence tax
}}All businesses operating in Panama pay an annual licence fee at a rate of 2% of
their net worth.
}}The maximum amount payable of is USD 60,000 and the minimum amount
remains at USD 100.
}}Companies that operate in the Colon Free Trade Zone or other free zone,
including licensed MHQs and companies operating under special regimes
relating to international awards for contractor selection (e.g. the Howard
(Panama-Pacific) Special Economic Area) are not required to obtain a notice
of operations. However, companies operating in the free zones are subject to
an annual operations tax of 1% on the capital of the company (a minimum of
USD 100 and a maximum of USD 50,000).
Municipal taxes
}}Municipalities may impose a tax on gross sales in an amount based on the
type of activities carried out by a business. A business carrying on more than
one business activity may be taxed on each activity. Municipal taxes, which are
deductible, generally range from USD 10 to USD 2000 per month.
Property taxes
}}There is a progressive property tax based on the assessed value, with no tax
payable on the first USD 30,000, and rates of 1.75–2.1% thereafter.
}}Transfers of real property are subject to tax at a rate of 2% of the greater of the
value in the deed of transfer or the cadastral value on the date of transfer.
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Capital gains tax
}}Capital gains derived from the sale of securities and negotiable instruments are
subject to a 10% tax. The purchaser must withhold 5% of the sales price as an
advance payment of income tax and remit that amount to the tax authorities.
}}Gains from the sale or transfer of real property are considered capital gains.
If the transaction giving rise to the gains is part of the taxpayer’s ordinary
business, the gains are subject to the corporate tax rate; if the transaction is
not part of the taxpayer’s ordinary business activities, the gains are taxed at a
reduced rate of 10%. However, in the latter case, the purchaser must withhold
3% of the higher of the purchase price or the rateable value of the property as
an advance payment of tax.
Withholding tax (subject to tax treaties)
Payments to:
Resident companies
Non-resident companies in non-taxtreaty country*
Interest
Dividends
Royalties/fees
5%
0%/10%/5%/20%
None
12.5%2
5%/10%/20%3
12.5%2
1
1. If not an ‘authorised financial institution’.
2. Being the 25% corporate tax rate on 50% of the remittance.
3. Dividends paid to a non-resident on nominal shares are subject to a 5% or 10% withholding tax, depending on the source of the dividends; the rate is 20% for
bearer shares.
* Panama has negotiated ten treaties.
}}Services rendered from a non-resident entity to a resident in Panama are
subject to withholding tax at a rate of 12.5%.
}}Interest and commissions remitted overseas for loans or financing, as well as
payments for services and royalties, are subject to withholding tax at a rate of
12.50% (50% of the interest is subject to the normal 25% corporate tax rate).
}}Profit distributions made by resident entities are subject to a 10% dividend tax
in the case of dividends paid out of domestic profits, or to a 5% dividend tax in
case of dividends paid out of foreign-source profits.
}}If the dividend distributed is less than 40% of post-tax profits, the amount on
which the dividend tax is based is the difference between the dividend and
40% of post-tax profits in the case of domestic profits and 20% of post-tax
profits in the case of foreign-source profits.
}}The dividend tax at a rate of 20% applies to distributions made to holders of
shares issued to the bearer. The subsequent distribution of such dividends will
not be taxed if tax was already withheld at the 10% or 5% rate.
}}Companies located in Panamanian free trade zones, except for certain
companies in the Howard (Panama-Pacific) Special Economic Area and licensed
multinational headquarters companies, must pay a 5% dividend tax on the
distribution of profits, regardless of their source. The subsequent distribution of
such dividends will not be taxed if tax was already withheld at the 10% or 5%
rate. A 2% retained earnings tax is imposed on profits distributed by companies
established in a free trade zone or related to foreign-source income that is
taxed at the 5% rate.
Tax treaties/tax information exchange agreements (TIEAs)
}}Panama has exchange of information relationships with 25 jurisdictions
through 16 double tax treaties and nine TIEAs.
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Thin capitalisation
}}There are no formal thin capitalisation rules.
Transfer pricing
}}Transactions between related companies must be valued according to the
arm’s-length principle, applying the standards in the OECD guidelines.
}}A transfer pricing study must include a comparative analysis of transactions
carried out by independent parties, taking into account the operations,
significant economic functions or activities, contractual terms, market
characteristics and risks and commercial and business strategies. After making
the comparative analysis, one of the five transfer pricing methods stated in
Panamanian law must be selected.
}}An annual disclosure statement of the operations with related parties must be
submitted to the tax authorities within six months after the end of the fiscal
year (deadline 30 June).
}}The taxpayer has 45 days to provide the TP study, if requested to do so by the
tax authorities.
}}The tax authorities can make adjustments if the arm’s-length principle is
not followed.
Stamp duty
}}Contracts documenting transactions not covered by VAT incur stamp duty
at various rates depending on the type and value of the transaction, most
commonly at USD 0.1 for each USD 100 (or less). Bank cheques incur stamp
duty at USD 0.1 per cheque, which is charged to the client.
}}The use of existing tax stamps was eliminated as of 31 December 2011; thereafter
stamped paper and tax stamps are being issued by franking machines.
Cash pooling
}}Panama has no specific tax rules for cash pooling arrangements.
Sales taxes/VAT/excise selective consumer tax (ISC)
}}VAT (locally known as ITBMS) is levied on the sale of goods and provision
of services except for intangibles.
}}The standard VAT rate is 7%, with a special rate of 10% for alcohol and
accommodation and 15% for tobacco.
}}VAT exemption applies for food, medicine, medical services and crude oil.
}}Registration is compulsory for businesses with monthly turnover exceeding
USD 3,000 or annual turnover of USD 36,000.
}}The excise tax (impuesto selectivo al consumo – ISC) is applied to non-essential
goods and services.
Financial transactions/banking services tax
}}The annual progressive tax will be between USD 75,000 and USD 1 million
for banking institutions holding a general licence that is based on total
assets. International licence banks will pay a fixed tax of USD 75,000. Financial
institutions pay a 2.5% annual tax on their capital as at 31 December. The top
limit payable is USD 50,000.
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Payroll and social security taxes
}}The following contributions are required:
Contributions to:
Employers
Employees
Social security
13.5%
9.75%
Education tax
1.50%
1.25%
}}There are no earnings limits on these contributions.
}}The Social Security Institute provides health, maternity, disability, pensions and
occupational accident cover.
}}Companies pay 0.56–5.67% of the total payroll to cover workers’ compensation
insurance. The rate paid depends on the degree of risk.
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BANKING
}}
Major banks
Total assets (USD millions)
31 December 2014
Bank
Banco General
12,295
Banco Nacional de Panamá
9,546
Banco Lationamericano de Comercio Exterior
8,119
BAC International Bank
6,359
Global Bank Corporation
5,009
Sources: Superintendencia de Bancos de Panamá and
www.accuity.com, March 2015.
Overview
}}Panama has established itself as a major offshore banking centre. The
International Banking Centre hosts 80 banks with total assets of approximately
USD 108.66 billion.
}}Three types of licences are granted to banks in Panama by the Banking
Superintendency: a general licence, which permits banks to operate in both
domestic and international operations; an international licence, which permits
banks to operate only in international operations, but permits operations
in the national interbank market; and a representation licence granted to
representative offices of foreign banks, which permits these banks only to carry
out promotions of their services.
}}Of the 80 banks currently operating in Panama, two are state owned (Banco
Nacional de Panamá (BNP) and Caja de Ahorros), 50 have general licences
and 28 have international licences. There are also 14 representative offices of
foreign banks that are not authorised to do business in or from Panama.
}}Foreign banks, including Bancolombia and Citibank, are active and prominent
in Panama. BNP Paribas (Panama branch) and Israel’s Banco Leumi Le-Israel
(Panamá) are currently undergoing a voluntary liquidation process.
}}In August 2014, the Banking Superintendency ordered the compulsory
liquidation of ES Bank (Panamá) a subsidiary of Portugal’s troubled Espirito
Santo Financial Group.
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PAYMENT INSTRUMENTS
}}
Cash
}}Cash is an important payment medium in Panama, particularly for low-value
retail transactions.
Credit transfers
}}Electronic credit transfers are used by the government and companies for
salary, supplier and benefit payments.
}}Credit transfers are batched and processed through ACH Directo. Funds are
available to beneficiaries on T+1.
Direct debits
}}Direct debits are available in Panama and used for low-value recurring
payments such as utility bills.
}}Direct debits may be used for one-time or recurring payments, provided there
is a signed authorisation in place.
}}Direct debits are batched and processed through ACH Directo. Funds from
direct debits are available to beneficiaries (originator) on T+1.
}}The maximum amount for a direct debit transaction is USD 500,000.
Cheques
}}The cheque is an important cashless payment instrument in Panama and is
used for both retail and commercial transactions.
}}Cheques drawn on a bank and deposited by 15:00 at the same bank in the
same or a different city are available on T+1. Cheques drawn on a bank and
deposited by 15:00 at a different bank in the same or a different city are
generally available to the beneficiary on a T+1 or T+2 basis.
Card payments
}}The use of payments cards in Panama has increased over the past decade.
}}There are approximately 779,000 credit cards in circulation in Panama.
}}Visa is the principal credit card brand issued in Panama, although MasterCard,
American Express and Diners Club credit cards are also available.
}}There were over 1800 ATMs and 30,000 POS terminals in Panama at the end
of 2014.
}}Sistema Clave, operated by Telered SA, is a shared ATM network with more than
40 participants (banks and cooperatives). There were more than 1800 Sistema
Clave ATMs and an estimated one million Sistema Clave debit cardholders in
Panama at the end of 2014.
}}Sistema Clave processes Visa and MasterCard debit card payments.
}}Telered has started to migrate to EMV standards for both payment cards and
POS terminals.
}}Electronic money schemes are available in Panama in the form of reloadable
pre-paid cards.
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Other payments
}}Funds transfers within Panama can be made via a cashier’s cheque where
a client goes to a bank branch and requests that funds be transferred to a
beneficiary at another branch of the same bank. The beneficiary goes to the
designated receiving branch location to receive the funds via cheque or cash.
The beneficiary may or may not have an account at the receiving bank.
}}Remittances from Panamanians residing in the USA are often sent to Panama
through services such as MoneyGram and Western Union.
}}Panama participates in the US FedGlobal ACH Payments. The service is a joint
effort between the US FedACH and Panama’s ACH Directo. The service is used
by the US government as a low-cost way to send pension payments to retired
US military personnel living in Panama.
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PAYMENT SYSTEMS
}}
Type
}}ACH Directo is operated by the privately owned Telered SA. Net settlement
takes place each day in participants’ accounts at the Banco Nacional de
Panamá, which serves as the national clearing and settlement agent in Panama
(Cámara de Compensación de Panamá). The file structures and messages used
by ACH Directo were developed in accordance with the operating rules and
regulations of the National Automated Clearing House Association (NACHA) in
the USA.
}}Panama has one cheque clearing session per day in Panama City. Cheques
received at the branches of banks located outside Panama City are delivered to
each bank’s respective main branch in Panama City, where they are processed
and sorted into cash letters. Around 06:00 EST (Eastern Standard Time) each
business day, all of Panama’s banks exchange physical cheques (and return
items) in Panama City. Net settlement takes place in participants’ accounts at
the Banco Nacional de Panamá.
Participants
}}There are 40 participants (35 banks and five savings cooperatives) in ACH Directo.
}}All deposit-taking financial institutions participate in the national cheque
clearing house.
Transaction types processed
}}ACH Directo processes credit transfers such as payroll and vendor payments, as
well as direct debit transactions.
}}The national clearing house clears and settles cheques.
Operating hours
}}ACH Directo operates throughout the day. Participating banks must observe
the specific input and processing deadlines established by ACH Directo.
}}The cheque clearing house operates from 15:00 to 03:00 EST (Eastern Standard
Time) to receive cheque presentment information. The physical exchange of
cheques and net settlement takes place daily at 06:00 EST.
Clearing cycle details
}}ACH credits and debits submitted by participating banks to ACH Directo
by 12:00 EST on T+0 are available to the beneficiary on T+1. Net settlement
in participants’ accounts takes place at 06:00 on T+1. Funds are available to
beneficiaries after 08:00 EST on T+1.
}}Cheques drawn on banks in Panama clear within three business days. Net
settlement in participants’ accounts takes place at 06:00 EST.
Currency centre holidays*
2nd half 2015
2016
3–5, 10, 28 Nov, 8, 25 Dec
1, 9 Jan, 8–10 Feb, 25 Mar, 2 May, 3–5, 10, 28 Nov, 8, 26 Dec
* Source: www.goodbusinessday.com.
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CASH MANAGEMENT
}}
Domestic
Notional pooling
}}Pooling of cash (USD) may be done by holding companies and offshore finance
companies. The latter often operate on a regional basis and serve as in-house
banks, providing working capital financing to their subsidiaries.
}}No specific legislation permitting notional pooling has been identified.
Cash concentration
}}Cash concentration in the form of zero balance accounts is permitted in Panama.
Collections
}}Because the mail system in Panama is not used for sending payments,
many clients make their payments directly at a bank branch. The use of
special deposit tickets or client codes allows the bank to capture remittance
information about the payment at the time it is made. Remittance information
is provided to the collecting company via electronic banking, file transfer or
report. Some banks provide online payment and remittance information.
}}Cobradores (private couriers or collection services) and/or sales persons are
often used by companies to facilitate collections by delivering invoices and
picking up payments from their clients.
Cross-border
}}Cross-border payments are routed via SWIFT and settled through accounts
held with correspondent banks abroad.
Lifting fees
}}Fees are applied on funds transfers between resident and non-resident accounts.
Short-term investments
}}Interest can be earned on resident and non-resident current accounts.
}}Time deposits (depósitos a plazo fijo) are available in PAB and USD, with
maturities of one, three, six and 12 months.
}}Certificates of deposit (certificados de depósito a plazo) are issued by banks in
Panama. Foreign banks usually link their rates to Libor.
}}Commercial paper (valores comerciales negociable – VCN) is available in
Panama. VCNs are traded on the Panama stock exchange.
}}Treasury bills are issued by the Ministry of Economy and Finance, with six,
12 and 18-month terms.
}}Repurchase agreements are available for a range of maturities; 30, 90, 180 and
270-day terms are the most common.
}}Money market funds are available in Panama.
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Custody and securities settlement
Information provided by www.globalcustody.net and www.latinclear.com, 2015.
Depository
}}Central Latinoamericana De Valores SA (Latinclear).
}}Latinclear provides custody and administration services, international
custody services (LatinClear has links with Clearstream and seven other
central securities depositories in Central America), electronic clearing and
settlement, account transfers, pledging, repo transactions, ISIN Code allocation
(International Securities Identification Number), bonds/coupon redemptions
and corporate actions: cash and stock dividends, stock splits and proxy voting.
Settlement cycle
}}T+3.
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PANAMA
ELECTRONIC BANKING
}}
}}Electronic banking is available in Panama and offered by the country’s leading
banks.
}}There is no bank-independent electronic banking standard in Panama; each
bank offers its own proprietary system for corporate banking purposes.
}}Major banks in Panama offer internet-based electronic banking systems.
Services available include balance and transaction reporting and payment
initiation.
}}Panama’s Law 51 addresses electronic documents and signatures.
}}Internet banking is available in Panama. Services available include balance
reporting and payment initiation.
}}Panama had an internet penetration rate of 52.7% at the end of June 2014.
}}Mobile banking is offered by Panama’s leading banks providing services such
as balance reporting and payment initiation.
}}There were an estimated 6.3 million mobile phone subscribers in Panama at
the end of 2013, a penetration rate of 189.5%.
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TRADE FINANCE
}}
Trading partners*
Import
Export
USA 23.6%, China 6.4%, Costa Rica 4.6%, Mexico 4.4%.
USA 20.2%, Canada 14.6%, Costa Rica 6.6%, Netherlands 5.9%, Sweden 4.8%,
China 4.1%, Italy 4%.
* The World Factbook 2013-14. Washington, DC: Central Intelligence Agency, 2013
(www.cia.gov/library/publications/the-world-factbook/index.html).
Imports
Documents
}}In order to import goods into Panama, a commercial invoice (four copies in
English or Spanish), which must include a full description of the imported
goods, import declaration, bill of lading and, in certain cases, certificate of
origin, are required.
Licences
}}Companies engaging in commercial or industrial activities require commercial
or industrial licences and tax clearance certificates.
}}Import permits for agricultural goods are issued by the Ministry of Agriculture.
Taxes/tariffs and other fees
}}Panama has established free trade agreements with Canada, Chile, Costa Rica,
El Salvador, Guatemala, Nicaragua, Peru, Singapore, Taiwan, the USA and the
European Free Trade Association (EFTA) member states (Iceland, Liechtenstein,
Norway and Switzerland). It has also signed partial preferential agreements
with Cuba, Colombia, Mexico and the Dominican Republic.
}}Panama has signed free trade agreements with Colombia and Mexico and a
partial preferential agreement with Trinidad & Tobago, but these agreements
have not come into force yet.
}}Tariffs are levied on imports ad valorem at 0%, 3%, 5%, 10% and 15%.
}}Import tariffs applied exceed 15% in the case of motor cars (17%), sugar (50%)
and numerous other food products (20–300% for some poultry).
}}Imports into the Colon Free Zone (CFZ) and into Panama’s export-processing
zones are exempt from duties.
Prohibited imports
}}A negative list (of products that may not be imported) is in operation.
}}It is prohibited to import certain commodities into Panama, in order to protect
public health, and for national security and moral reasons.
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Exports
Documents
}}In order to export goods from Panama, a commercial invoice, export
declaration, bill of lading and, in certain cases, certificate of origin are required.
Licences
}}Licences are not required for the majority of exports.
Taxes/tariffs and other fees
}}Export tariffs are applied to gold, silver, platinum, manganese, other minerals,
scrap metal, pearls, rubber and unrefined sugar.
}}Exports of products imported into the CFZ are exempt from customs procedures.
}}Products exported from export-processing zones are also exempt from tax.
}}Exports subject to taxes require an export authorisation from the Ministry
of Finance.
Prohibited exports
}}A negative list (of products that may not be exported) is in operation.
Financing imports and exports
Imports
}}There are no financing requirements for imports.
Exports
}}There are no financing requirements for exports.
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USEFUL CONTACTS
}}
Banco Nacional de Panamá
www.banconal.com.pa
Leading banks:
Banco General
www.bgeneral.com
BAC International Bank
Banco Lationamericano de Comercio Exterior Banco Nacional de Panamá
Global Bank Corporation www.bac.net/panama
www.bladex.com
www.banconal.com.pa
www.globalbank.com.pa
Banking Superintendency
www.superbancos.gob.pa
Banking Association of Panama
www.asociacionbancaria.com
Ministry of Economy and Finance
www.mef.gob.pa
Ministry of Commerce and Industry
www.mici.gob.pa
Panama Chamber of Commerce, Industry and Agriculture
Business Panama Group
www.panacamara.com
www.businesspanama.com
Bolsa de Valores de Panamá
www.panabolsa.com
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