Casco Viejo, a UNESCO World Heritage site, offers a special tax incentive regime aimed at attracting private investment for the restoration and economic development of the area. The key applicable laws include Law 136 of 2013, Law 4 of 2002, and related executive decrees. Below is a concise summary tailored for investors looking to purchase property and start businesses in the area.
1. Property Tax Exemption Applicable Law: Law 136 of 2013 Benefit:
• Buildings that are newly constructed, reconstructed, or restored and obtain their occupancy permit after the enactment of this law are exempt from property tax on the land and improvements for up to 30 years.
How to Take Advantage:
• Ensure that the restoration project meets all regulatory requirements and obtain the required occupancy permit.
2. Income Tax (ISR) Exemption Applicable Law: Law 136 of 2013 Benefit:
• Owners of buildings in Casco Viejo that have been constructed, restored, or reconstructed (fully or partially) are exempt from income tax on:
o The sale of the property (fully or partially).o Commercial activities conducted within the property.
Duration:• This exemption applies for 10 years from the date the occupancy permit is obtained.
How to Take Advantage:
• Register the restoration project and obtain the occupancy permit within the specified period.
3. Real Estate Transfer Tax (ITBMS) Exemption Applicable Law: Law 136 of 2013Benefit:
• The first transfer of a restored building or land within Casco Viejo is exempt from real estate transfer tax, provided it occurs after the law's enactment.
How to Take Advantage:• Investors must make a minimum investment of $50,000 and complete the transfer after
restoration and occupancy permit issuance.
4. Import Tax Exemption for Equipment and Materials Applicable Law: Law 136 of 2013Benefit:
• Equipment and materials used for the construction, reconstruction, restoration, and furnishing of properties within Casco Viejo are exempt from import tax, provided these materials are not produced in Panama in sufficient quantity or quality.
How to Take Advantage:
• Obtain certification from the National Directorate of Cultural Heritage, confirming that the materials are not available locally in sufficient quantity or quality.
5. Preferential Mortgage Rates Applicable Law: Law 136 of 2013 Benefit:
• Panamanian banks offer "Preferential Mortgage Loans for the Enhancement of Casco Viejo," with an interest rate discount of up to 3% below the national mortgage reference rate.
How to Take Advantage:
• Apply for financing from participating banks and ensure the funds are used exclusively for the restoration, reconstruction, or purchase of properties in Casco Viejo.
Key Considerations for Investors
It’s important to note that some of these incentives had specific timeframes to be claimed. For example, Law 136 of 2013 originally provided a 10-year window, which ended in December 2023. However, in August 2024, the Panamanian government approved an extension of these benefits to the buffer zone of Casco Viejo, covering areas such as Santa Ana, El Chorrillo, and Plaza 5 de Mayo, as well as the Historic District of Colón.
For accurate and up-to-date information, it is recommended to consult with a legal or tax advisor specializing in Panamanian real estate and tax law.
LEY 136:
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