– A summary of the newly approved amendments to Law No. 76 of 2009 –
by Radu Serrano – Trade Specialist AmCham Panama
On Tuesday, May 23rd, the President of the Republic, Juan Carlos Varela, signed into law the amendments to Law No. 76 of 2009, which will positively impact the development of the industrial sector. These benefits and rights will come into effect as of January 1st, 2018.
This new law revitalizes Law No. 76 of 2009 with fresh objectives such as:
- Articulate and coordinate the design and execution of programs and projects aimed at promoting the sustained increase in productivity and the competitiveness of the national industry;
- Design, create and implement the National Industrial Competitiveness Program, which in turn seeks to promote and strengthen the activities of the industrial and agro-industrial sector throughout the national territory;
- Strengthen the management of the National Council of Industrial Policy, as an advisory and coordinating body of the Executive Branch;
- Support the productive sector (especially micro, small and medium-sized enterprises) so that it can achieve sustainable growth, which contributes to the economic well-being, national development and use of the country's geographical position.
The amendments have also expanded the type of companies to which this law applies. These additions include enterprises engaged in the production and processing of fishery raw materials, those that adopt modalities of renewable energy production and cogeneration for self-consumption and those that are benefitting of the Investment Stability Law.
The National Industrial Competitiveness Program & the National Council of Industrial Policy
The National Industrial Competitiveness Program (PNCI by its Spanish acronym) is also defined in order to implement a national policy of industrial development, to boost productivity, industrial/agro-industrial competitiveness and investment, and to promote changes to generate greater national added value. The National Council of Industrial Policy will approve the PNCI and carry out programs that will:
- Strengthen human capital
- Strengthen the financing and development of MSMEs
- Strengthen and promote technological innovation
- Promote productive chains
- Promote markets
- Optimize infrastructure and logistics
- Promote sustainable development and energy efficiency
- Facilitate regulatory efficiency
The National Council of Industrial Policy will continuously propose to the Ministry ways to promote the attraction of investments for the manufacturing and agro-industrial sectors of Panama.
National Industry Registry
Additionally, the law creates the National Industry Registry which will:
- Consolidate a statistical base of industrial activity in Panama
- Measure indicators in priority areas
- Streamline the paperwork of the industrial sector
- Promote investment increase in the industrial and agro-industrial sector through fiscal incentives
- Maintain information on the country´s industrial activity
- Channel resources and support to the industrial and agro-industrial sector
Companies engaged in industrial manufacturing and agro-industrial activities can apply to be part of this Registry at the Ministry of Commerce and Industries. Those enterprises duly registered shall enjoy the following benefits and tax incentives:
- A 3% import tax on raw materials, semi-finished or intermediate products, machinery, equipment and spare parts, packaging and other supplies necessary for the composition or development of their products;
- A 100% deduction, as expense in the first year's income tax return, of the ITBMS (VAT) of machinery, equipment and their spare parts, which are used in the processes of industrial transformation of the food and pharmaceutical industry;
- A loss carryover regime available for the five fiscal periods following the fiscal year that sustained the loss;
- Customs reimbursement regime (in accordance with Decree-Law 1 of February 13th, 2008, and/or Paragraph 7 of Article 200 of Panama´s Constitution).
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Certificate of Industrial Development
The amendments improve the benefits of the Certificate of Industrial Development (CFI by its Spanish acronym). The certificate can only be requested in either the fiscal year in which the company makes the investment or in the subsequent 3 fiscal years. Unlike the preceding law, the certificate will be directly issued by the Ministry of Commerce and Industries, without the need of passing through other institutions, thus expediting the whole process. The certificate will award fiscal credits, to manufacturing and agro-industries, equal to 40% of the amount invested in research and development; in the implementation of general management, quality assurance and environmental management systems; in the reinvestment of profits or when investing in the improvement of production processes, production of new products or expansion of the production capacity; in the investment in training activities and training of human resources of the production area; and in the increase of the production payroll.
Industry One-Stop Shop
The Ministry will establish an Industry One-Stop Shop (VUI by its Spanish acronym) in order to centralize the execution of the specific functions relative to the manufacturing and agro-industries. The VUI will:
- Facilitate and expedite the paperwork regarding the industrial sectors;
- Answer requests for information and counsel;
- Implement incentives;
- Compile industry statistics;
- Develop an electronic platform that facilitates the exchange of information between businesses.
The VUI will accommodate personnel from the Ministry of Commerce and Industries, the Ministry of Agricultural Development, the Ministry of Health, the Ministry of the Environment, the National Customs Authority and the Panamanian Food Safety Authority.
