In recent days, our associate Nicole Fernández participated as moderator in a panel discussion organized by IFA (International Fiscal Association), Panama Chapter, on the Opportunities and Competitive Advantages of the EMMA Law. EMMA (Special Regime for the Establishment and Operation of Multinational Companies for the Provision of Services Related to Manufacture), is a regime that promotes foreign investment, providing benefits and incentives of different kinds, such as migratory, labor, and tax.
Together with respected colleagues, the most relevant aspects of said law were discussed, taking into account that, from a competitive economic point of view, Panama seeks to be a benchmark in matters of special regimes that integrate, within current regulations, the development of industries that promote the economic development of the country.
EMMA provides benefits for specific activities, such as:
- Maintenance and repair
- Product conditioning
- Research and development (R&D)
- Logistics and warehousing
A company that is classified as EMMA can be established in Panama Pacifico, Free Trade Zone, or in any other part of the territory where the development of its activities is allowed.
Some of the most significant tax incentives offered by this regime are:
- Reduced income tax at a rate of 5%
- Exemption of VAT tax (known locally as ITBMS) on services provided by EMMA to subsidiaries that do not produce taxable income in Panama
- Exemption of VAT tax (known locally as ITBMS) on the purchase and import of goods and services
- Exemption of use of fiscal printer
- Reduced withholding rate of 2.5% on amounts remitted to companies established abroad
- Exemption from dividend tax and complementary tax
- Reduced capital gains tax rate of 2% on the sale of shares of an EMMA company.
- Operation’s Notice tax exemption.