"With this new Law, financial assistance services that SEM companies can provide "to companies of the same business group...
Through Law 57 of 2018, Law 41 of 2007 that creates the Special Regime for the establishment and operation of Headquarters of Multinational Companies and the Commission of Headquarters of Multinational Companies, and dictates other provisions, is amended.
With this new Law, financial assistance services that SEM companies can provide to companies of the same business group, including technical, financial and/or administrative assistance as well as other support services such as financial management services, risk analysis, due diligence, compliance, custody and filing of documentation, the center for processing data and /or documents and corporate treasury services are expanded as well as loans between related companies of the business group.
It is added that in the event that some of the aforementioned services are provided to entities that carry out the banking, insurance, reinsurance and / or securities business in Panama or abroad, the company must previously notify the corresponding regulatory entity of its intention to obtain a SEM License.
Law 57 of 2018, states emphatically that unless the expressly provided exceptions under the Law, SEM companies may only provide services to companies of their business group.
It is added as part of the characteristics of a SEM license:
i. Maintain a minimum of full-time employees and annual operating expenses of the multinational company in Panama, in both cases appropriate to the nature of the business.
ii. They will automatically enjoy the Legal Stability of Investments regime
iii. They will pay income tax at a rate of 5% on the net taxable income applicable to the services provided;
iv. They may deduct the expenses incurred in labor remuneration even when the employee is exempt from Income Tax;
v. A regime is established for the application of tax credits where the SEM will pay a minimum of 2% of the net taxable income.
vi. Permanent Residence for the foreigner who works in a SEM, under certain conditions.
The SEM license may be canceled if it is verified that it carries out activities different from those authorized by its license, with imposition of penalties.
A term is granted until June 30, 2021, so that companies that hold a Multinational Company Headquarters License have implemented the changes established in article 12 of Law 41 of 2007).