Some amendments were recently made to the Multinational Companies Headquarters (SEM) regime, by means of Law 45 of 2012, initially set forth by means of Law 41 of 2007.  Amendments are of organic, migratory and tax nature. The present article is focused on tax changes incorporated to Law 45.

Dividend Tax and Complementary Tax

With the amendment referred to above, it is expressly established that the SEM are subject neither to Dividend Tax payment nor to Complementary Tax.  The juridical situation was previously rather uncertain, and there was a reasonable doubt about whether the SEM were subject to Dividend Tax and Complementary Tax (which is paid only when a company distributes less than 40% in dividends from their net profits). This is so, due to the manner in which it is set forth in the Tax Code, the source of these taxes that makes difference in terms of tax rate depending on whether dividends being paid come from Panama or foreign source.

Therefore, the express exclusion of income generated by SEM from the application of said taxes becomes a positive amendment to the law, causing legal certainty to one aspect in which there was a little of uncertainty.

Transfer of Personal Property and Services Tax (I.T.B.M.S.)

The Transfer of Personal Property and Services Tax (I.T.B.M.S.), had previously to be paid from all sales of goods and services made by one SEM, either to companies of their same group or not, either to persons who generate income in Panama or not.  Now, sales of properties and services by a SEM shall be subject to I.T.B.M.S. payment when sale is made to a person or company which generates net taxable income in Panama. That is to say, when sale is made by a person or company that does not generate taxable income, the operation is not subject to I.T.B.M.S. payment.

This is an important change that in practice, exonerates SEM from I.T.B.M.S., as they trade primarily with persons or companies that do not generate taxable income in Panama.

Staff Income

Amendment to Law 45 clarifies the tax situation, in regards to Income Tax (ISR), on wages and other remunerations received by the staff with Permanent Visa of SEM. It is more clarified than before, that said wages and remunerations are not subject to ISR to the extent that they are from foreign source.  Further, in this sense, the requirement for said tax treatment, that is to say, that said wages and remunerations were to be paid by the headquarters was eliminated.


With the recent Law 45, tax regime of SEM is remarkable improved.  It is evident that SEM are not subject to Dividend Tax and, in consequence, to the Complementary Tax either; sales of SEM only pay I.T.B.M.S., to the extent that they are made to persons or companies that generate taxable income in Panama, and the foreign source income treatment regime is flexible to wages and remunerations of SEM staff who have Permanent Staff Visa of Multinational Companies Headquarters. And, as if it weren't enough, SEM that only generate income from foreign sources become exempted from having tax equipment (tax printers).

Due to the above reasons, SEM tax regime, which was very good, is now better.