Almost twenty years have passed since the enactment of Law 8 of 1994, which until the end of the year 2012 regulated tourism investments and incentives in the Republic of Panama. This body of law responded to a national strategy and a master plan oriented towards promoting tourism related investments in Panama.
 
Since then Panama has experienced such a growth in the tourism sector that it has now evolved into one  the most important factors in the country`s GDP.
 
By the enactment of Law 80 of 2012 the current administration has taken the initiative of reforming Law 8 in its totality and enacted a completely new body of law classifying, regulating the tourism industry, and granting new investments incentives.
 
The new tourism law in part responds to the growing necessities in infrastructure, and to the identification of new trends in services and activities that required some level of incentive and regulation, such as:
 
Ecotourism
Agrotourism
Scientific Tourism
Convention, Fairs and Expositions Tourism Nautical Tourism, principally oriented towards developing marina infrastructure and the sports fishing industry.
 
 
Law 80 has introduced new incentives and regulations related to the hospitality industry, which are as follows:
 
I- Hospitality businesses located outside of the City of Panama District, that is to be interpreted as to the rest of the Republic of Panama, with a minimum investment of Two Hundred and Fifty Thousand US Dollars will now benefit of the following incentives:
 
1-duty free imports of any materials and equipment necessary for the business for a period of five years
2-exoneration of real estate tax for fifteen years
3-tax exemption over the use of docks or airports built by the developer
4-capital gains tax exemption for five years
5-loans to the investment are not subject to any retention
6-fiteen year income tax exemption
 
 
II- Hospitality investments in the City of Panama District will enjoy the same incentives as per above, with a required minimum investment of Eight Million US dollars .
 
III-Infrastructure, services and businesses complementary to a resort or a hotel investment can now benefit of the same incentives, such as:

Golf courses
Marinas
Discotheques
Restaurants
 
 
Additionally, Law 80 introduces new incentives to the following activities:
 
A-Convention Centers
 
Establishing Thirty million US as minimum investment, the incentives are:
1- ten years duty free exoneration on equipment and materials
2-all events that comply with a minimum of 100 person attendance and 50% international participation will be exonerated of 50% of the applicable income tax.
 
B-Cruise Ship Port infrastructure
 
Establishing as a mínimum Ten Million investment, the incentives are:
1-five years duty free exoneration over all equipment and materials
2-twenty years real estate tax exoneration
 
C-Marinas and tourism related docks and infraestructure will enjoy :
 
1-five year duty free tax over importation of materials and equipment
2-fifteen years real estate tax exoneration
3-fifteen years income tax exoneration
 
Law 80 establishes the year 2020 as the final period for which project applications can benefit of the above mentioned incentives.
 
  
Dr. Juan José Espino Sagel
jjes@padela.com