Article 4. For the effects of Law No.8 of 14 June 1994, tourist supply will be understood as the activities carried out by the following enterprises:
Hotel: An establishment whose entire structure is devoted to public lodging and which is built and furnished especially to permanently provide its guests, in exchange for a fee, lodging, restaurant, and other facilities such as a reception desk, lobby, public telephone, and daily cleaning of its rooms and other installations.
Investments made for golf and tennis courts, saunas, gymnasiums, discotheques, restaurants, and all other activities that are linked to hotel investment will be eligible for the incentives provided under Law No.8, of June 14, 1994.
Motel: An establishment for the lodging of tourist, located in rural areas or close to beaches or highways, and which are aimed at providing motorists room and board in exchange for a fee.
Apart-Hotel: A building equipped with the necessary furnishings to be rented to national foreign tourists, and which offers daily cleaning services and individual cooking facilities so that guests can prepare their own meals.
Cabin or Bungalow: A group of individual welling aimed at providing in rural areas and at beaches, seaside resorts, and other sites devoted to ecological tourism.
Time-Share: This arrangement allows the owner or co-owners of a structure used for the public lodging of tourists to subject it to a contract management system by which different persons obtain the right to use the structure in different periods of the year.
Horizontal Property for use by Tourist: A building where each residential unit is acquired by a different owner, as long as the entire building is aimed at providing the service of public lodging for tourists by means of a hotel-type management arrangement.
Camping sites: An area destined for the exploitation of ecological tourism and which is equipped with toilets, potable water, and first aid equipment.
Theme Park: In which a certain theme or themes are developed within a defined area, with an easily identifiable theme that can cover any topic from history to fantasy to the world of the future..
Family-run Hostel: A tourist facility operated by an individual or family alongside the rooms or house of the owners. There are small establishments that offer personalized service and regional home-style cooking, and whose design closely resembles the architectural style that is popular in the area.
Inn : A lodging facility located at a tourist site for the use of travelers, and where guests attend to themselves as far as food and other services are concerned.
Convention Center: A facility adequately equipped to hold conferences; meetings; or technological, cultural, and tourist events; where clerical and simultaneous interpreting services into several languages are available, and several events may be held concurrently.
Article 5. The incentives and benefits provided under this Law are available to natural persons or companies engaged in tourist activities as defined herein, who are registered at the National Registry of Tourism.
Article 7. The right to claim benefits under this Law is recognized upon registration of a company at the National Registry of Tourism (Registro Nacional de Turismo), and the issuance of a certification by the Panama Government Tourism Bureau (Instituto Panameño de Turismo-IPAT), specifying the rights and duties of the party entitled to such benefits.
CHAPTER III
INCENTIVES AND BENEFITS
Article 8. For the purpose of encouraging investment in new projects and activities to offer tourist facilities, the following tax incentives are granted to natural persons or companies covered by the provisions of this Law.
A. Complete exoneration for a twenty-year (20) period of the import tax due on the introduction of materials, equipment, fixtures, furnishings, and vessels and automotive vehicles with a minimum capacity of eight passengers. The Panama Government Tourist Bureau must have declared the latter as indispensable for the normal development of the tourist activity. The exonerated material must be used in the construction and the equipment, fixtures, and furnishings in the equipping, of the public lodging establishments. This incentive will be granted if these materials are not produced in the country or are not produced in a large enough amount, of good enough quality, or at a similar price. Likewise, any equipment that the company imports to contribute to energy savings efforts or to provide safety in the project area will be exonerated.
B. In the case of ecological tourism, the exoneration of import tax will be allowed for wheel drive vehicles with a minimum capacity of five (5) passengers.
C. A twenty (20) years exoneration from real property tax, starting on the date of registration of the company at the National Registry of Tourism (Registro Nacional de Turismo). This exoneration shall cover all real property owned by the company, provided it is used in its entirety for tourist activities.
D. Exoneration from any tax or assessment on its capital.
E. Exoneration from warfare or any fee for landing on piers, airports, or heliports owned, built, or repaired by the company. The Government of Panama may use these facilities free of charge.
F. Exemption from payment of income tax on any interest earned by creditors in operations for investing in public lodging establishments.
G. An annual rate of ten per cent (10%) shall be for allowed real property depreciation, not including the cost of the land.
A. Investment in Historic Landmarks
The following incentives are granted for the activities contemplated in Article 6, 5 of this Law located within Historic Landmarks, for which the National Institute of Culture (Instituto Nacional de Cultura-INAC) authorizes the construction of projects with a minimum investment of one hundred thousand dollars (US$100,000.00), not including the cost of the land.
H. A ten (10) years exoneration from real property tax on the land, and thirty (30) years exoneration for improvements to real property.
I. Exoneration from income tax on the company 's profits during the first five (5) years of operation of the appropriate commercial activity. After this period expires, the company may deduct any losses as expenses during the first three (3) fiscal years following the fiscal year in which such losses were sustained.
J. A one time exoneration from import duties on any equipment and materials used in construction, remodeling, and furnishing, provided such items are not produced locally in sufficient quantity or of the proper quality, and that they are not for sale to the general public.
Article 16. Fiscal incentives will be granted for the construction, equipping, and operation of convention centers, theme parks, zoos, marinas, and centers for research info and interpretation of the nation's natural and cultural heritage: Special Tourism Zones
Artícle 17. At the request of IPAT, the Panama Cabinet Council may declare as Tourist Development Zones of National Interest those areas that meet the requirements as special tourist development zone, who meet the established minimum investment, shall enjoy the following tax incentives:
A twenty (20) years full exoneration from the payment of real property tax on the land or any improvements owned and being used for tourist development activities.
A fifteen (15 years full exoneration from the payment of income tax on the company's activities.
A twenty (20) years full exoneration import duties, contributions, or taxes, as well as the sales tax (ITBM tax) on the imported materials, equipment, furniture, accessories, and spare parts used to construct, renovate, and furnish their establishments, provided such items are not produced locally, or are not produced in sufficient quantity or of the proper quality.
For the purposes of this Law the term "equipment" is understood to mean vehicles with a minimum capacity of 8 passengers, aircraft, helicopters, minimum capacity of 8 passengers, aircraft, helicopters, motorboats, ships, or sports supplies used exclusively for tourist activities.
A twenty (20) years exoneration from duties, contributions, taxes, or fees on the use to piers or airports built by the company. The Government of Panama may use these facilities free of charges, according to the appropriated regulations.
A twenty (20) years exoneration from the payment of income tax in interest earned by creditors from operations for investing in the tourist activity being conducted.
Employment Certificates
Article 18. Any public tourist lodging company or restaurant not covered by the above articles, but solely engaged in a tourist activity; outside the metropolitan area according to this Law shall have the operation of being entitled to a Tourism Employment Certificate (Certificado de Empleo al Turismo-CET) issued its name, equivalent to twenty-one and a half per cent (21.5%) of the gross monthly payroll as of the promulgation of this Law, provided this gross monthly payroll does not exceed four hundred dollars (US$400.00).
In the case of restaurants, this option shall be for a period of three (3) years.
Article 19. CET's as contemplated in this Law, shall be issued in Panamanian currency by the Ministry of Finance and Treasury, and may be applied to the payment of income, dividend, complementary, real property, or sales taxes, as well as import duties.
These are nominal certificates transferable by endorsement. They are exempt from all types of taxis, and may not earn interest
Article 20. To be entitled to CET's, companies must meet all the requirements set forth in this Law. CET's may be used six (6) months after their date of issue, but not within the same year of issue. They shall be valid for a period of three (3) years from their issue date.
Article 21. Wages of foreign employees, or those for any employment period of less than twelve (12) months may not be included in the payroll for the purposes of calculating the CET's established herein.
Payroll control procedures shall be established.
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