International Trade Regulations
Trade barriers (tariffs, non-tariff barriers and import taxes)
Traditional policies on trade and economic incentives directed agricultural and manufacturing production toward import-substitution until the end of the 1980's.
Today, Panama's, nominal tariff duties are the lowest in the region. Panama averages 15 percent in tariffs rates, except for a few agricultural products, and to an overall average of 12 percent, the lowest in the region.
The country has also made significant progress in eliminating quantitative restrictions. From 1991 to 1996, the Government of Panama enacted a trade liberalization program, with the following initial objectives:
The Government accomplished these objectives and went further by setting an import tariff ceiling of 15%, effective on 1 January 1998. Some exemptions exist for agricultural products and a few other products such as automobiles.
Panama is a full member of the World Trade Organization, (WTO). However, our import duty structure is significantly lower than the one negotiated for WTO accession.
The revised import duty structure was significantly lower than the one negotiated for WTO accession and represented a substantial commitment to trade liberalization. In October 2012, the Trade Promotion Agreement (TPA) between the United States and Panama came into effect and reduced import duties to zero for 87% of the products in the tariff schedule, with the exception of some food and agricultural products, on which duties will reduce gradually over the course of the next ten years.
As at mid-2014, Panama has signed Free Trade Agreements with other countries such as Canada and Colombia and it’s currently negotiating more trade agreements.
Also, the country has notified the WTO that it grants export subsidies through three programs: “Export Processing Zones (ZPE), the Tax Credit Certificate (CAT), and the Official National Industry Registry (ROIN). The ZPE regime grants tax exemptions to companies that fulfil a minimum local-value-added requirement; no date has been set for its elimination. The CAT offers tax credits to exporting companies that produce non-traditional products; although the CAT has been formally abolished, benefits will continue to be paid until 2010. The ROIN exempts companies that export all their production from import duties, income tax, and other domestic taxes; the ROIN was to be phased out in late 2005 but its termination was postponed following the SCM Committee's decision to extend the deadline for the elimination of subsidies notified under Article 27.4 of the SCM Agreement”.
Panama assesses import duties on an “ad valorem” basis. The ad valorem system uses the declared C.I.F. value as the basis for import duty calculations and in some cases utilizes historical price information as a reference.
In addition to the duty, all imports into Panama are subject to a 5 percent transfer or value tax (ITBM) levied on the C.I.F. value, plus import duty, and other handling charges. Pharmaceutical, foods and school supplies are exempt from the ITBM tax.
In 1995, Panama changed it international trade classification system from the Customs Cooperation Council Nomenclature (CCCN) and Brussels Tariff Nomenclature (BTN) to the Harmonized System (HS).
No import licenses are required in Panama. Any company holding a commercial license can freely import goods into Panama. A commercial or industrial license is required by individuals or companies engaged in commercial or industrial activities.
The Fiscal Code regulates all matters concerning the country's exports. The Code establishes that all national products may be exported, except:
Law 61 of 2002 abolished the requirement for some exports (primarily metals and natural resources) to pay taxes.
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