Panama has adopted legislation renewing and expanding tax incentives and reimbursements for forestry activities in the country. Law No. 69 of October 30, 2017, creates an incentive program for forest cover and natural forest conservation in Panama, in compliance with the objectives set by the Million Hectare Alliance of Panama and those of the Sustainable Development Goals 2030 of the United Nations.
The impact of this law is environmental while also containing important commercial benefits. It seeks to consolidate Panama as one of the first countries with a legal framework that promotes the achievement of Goal 15 of the UN’s Sustainable Development Goals 2030, specifically the sustainable management of terrestrial ecosystems, sustainable forest management, and the fight against desertification, land degradation and loss of biological diversity.
What activities will benefit from the forest incentive program?
- Commercial forest plantations
- Exportation of forest products
- Processing of timber and non-timber forest products
- Protection and conservation of natural forests
- Assisted natural regeneration
- Restoration of natural forests
- Agroforestry systems: silvopasture and silvoagriculture
- Sustainable forest management of natural forests
- Forest research, development and innovation
Who can qualify for the forest incentive program?
Individuals or legal entities that are owners, lessees, concessionaires or beneficiaries of titles constituting domain of the lands dedicated to the activities referenced above. The law does not restrict foreign owners from participating in the incentives.
Who is in charge of supervising compliance with the program?
The Law creates the forest regency, established by the Forest Directorate of the Ministry of the Environment, and will be carried out by a forest manager, a professional accredited by this Directorate.
What are the tax and general incentives available under this program?
- Exemption from income tax
- Exemption from property tax
- Exemption from property transfer tax
- Exemption from imported goods tax
- Direct non-reimbursable financing, which will be granted for projects that cover the activities indicated in the Law
Notably, the Law creates a Fund called “Reforesta Panama,” which will be funded by the General Budget of the State, donations and private contributions. The fund will serve as the source of certain direct non-reimbursable financing for qualifying projects.
With this legislation, Panama seeks to become a key player in forest management, agroforestry, ecotourism and biotrade, presenting an opportunity to enhance the development of the forest industry.
This article was also written by Jose Agustin Preciado at Fabrega Molino