![]() submit in its statement of income tax applicable to said increase of the arm's length amount of assets used and the risks involved. The respective costs and deductions shall then be arm's length applicable to the income involved, and the net result shall be subject to a five percent tax rate. operations with related parties having a License of Office Multinational Headquarters shall be subject to the transfer price regime according to the provisions of Article 762-D of the Fiscal Code. applied to any operation conducted by an Office of Multinational Headquarters with related parties established in the Republic of Panama or with related parties that have a fiscal domicile in other jurisdictions or established in the Colón Free Zone, the Panama-Pacific Special Economic Area, Offices of Multinational Headquarters, Ciudad del Saber or any other free zone or special economic area. Offices of Multinational Headquarters are exempt of income tax on dividends, complementary tax and tax on branches, regardless of their being local or foreign source or exempt. Headquarters is not bound to have a fiscal team in its personnel, it must document its activities in invoices or equivalent documents, which may enable the Income Tax Authority (Dirección General de Ingresos) to control, register, subject to accounting and oversee the transactions it has carried out. to pay the tax stipulated in Article 1004 of the Fiscal Code because they are not required to have a Notice of Operation. and securities issued by an Office of to the provisions of the Fiscal Code and Decree 170 of 1993. If income tax is applicable to the profits obtained, it shall be at a fixed rate of two percent, and the buyer must retain one percent of the total value of the sale by way of an advance settlement of the income tax on capital gains. amended, shall stipulate the following in respect of the income of the Office of Multinational Headquarters: documented or not documented service or action provided by an Office of Multinational Headquarters must retain a rate of five percent of the amount to be remitted to the legal entity holding the License of Office of Multinational Headquarters, provided always that said services be related to producing income of a Panamanian source or preserving it, and that its value has been considered by the person receiving it as a deductible expense. Similarly, individuals or legal entities living outside of the Republic of Panama shall be subject to pay such income tax to the extent that the services provided are related to producing the income of a Panamanian source. Panama shall be subject to income tax on the interests, commissions and other charges due to loans or financing used in the Republic of Panama. involved must retain a rate of five percent of the 50 percent of the amount to be remitted to said person living outside of the Republic of Panama, unless the individual or legal entity domiciled outside of the Republic of Panama has registered as taxpayer with the Tax Authority (Dirección General de Ingresos). Multinational Headquarters are exempt from income tax, social security contributions and education insurance on the salary and other labor remunerations, including salary in kind, when said salaries and labor remunerations are paid, assumed and recognized as personnel expenses in the accounting of the entity holding a License of Office of Multinational Headquarters. obtaining a visa as permanent personnel of the Office of Multinational Headquarters in the Republic of Panama, the foreigner who may so desire may choose to obtain a permanent resident visa, but after obtaining that visa, said foreigner shall be subject to income tax, social security contributions and education tax on the amounts of money received as salary and other remunerations, including salary in kind. Headquarters may be cancelled if it is proven that it engages in activities that are not authorized by its license, and thereupon, said Office of Multinational Headquarters shall also be liable to payment of outstanding taxes with the respective sanctions, surcharges, interests and penalties stipulated by the Fiscal Code. Office of Multinational Headquarters that have a fiscal agreement with the Ministry of Economy and Finance must cancel said agreement and must implement the changes stipulated by Article 12 of Law 41 of 2007 by June 30, 2021. of Multinational Headquarters entitled to legal stability for investments under Law 54 of 1998 shall be automatically exempt from income tax on income derived from services provided, including services provided to a taxpayer in the Republic of Panama, until the expiration date of its legal stability. |