Executive Summary LAW No. 41 of 24th August 2007 SPECIAL ...

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The ROMC already operating in Panama and carry out services to related companies outside Panama can be included into this regime by formal request to the Technical Secretariat, in accordance with the established in this Law. The license will be granted for an indefinite period to the applicants and will award a unique registry number so they can make all necessary administrative proceedings to develop their activities in the Republic of Panama. It will be arranged to have expeditious proceedings. If the ROMC, under this regime, wishes to carry out additional or different activities from those for which it was authorized, will have to request for a license modification to the Technical Secretariat by having an extension of the form presented. The new license will have the same unique registry number previously granted. If among the additional activities that the ROMC wishes to perform are non-protected operations under this Law, it will have to incorporate a separated company. It may be done by registering this new company like foreign company in the Public Registry or by incorporating a new Panamanian company so to be able to perform these activities in the national territory. This new company will not be protected by this Law and will have their own personnel not belonging to the company whose activities are indeed protected under this Law. The License for a ROMC could be cancelled by the Technical Secretariat, by itself, by request of interested party or by recommendation of the Commission, if the ROMC incurs in any of the following: 1. To stop performing the activity by which the license was granted. 2. Do not initiate operations within the six months following to the concession of the license; this time could be extended six additional months. 3. The ROMC is being inspected or is declared in bankruptcy by the authorities of its country of origin. 4. Any violation to this Law. 5. Any violation to the laws of the Republic of Panama 6. Other cases contemplated in this Law. The cancellation decision can be appealed before the Commission which can only be able to confirm the cancellation by means of motivated resolution, by affirmative vote of 4
the majority of the Commissioners. The decision of the Commission will terminate the governmental process. Previous verification of the causes for the cancellation of the license for a ROMC, the Technical Secretariat, will personally notify the company the reasons or motives for cancellation. The company will have 10 calendar days, counting as of the date of notification, to expose its reasons for which the license should not be cancelled, accompanied by any evidence it considers conducive. The Technical Secretariat will have 30 day to resolve, by means of motivated resolution; this decision will not admit any reconsideration. Once executed the resolution of cancellation of the license for ROMC, the Commission, through the Technical Secretariat, will proceed to cancel all visas, work permits and other licenses and permissions, granted in compliance to this Law. In the case of visas and work permits will be granted to the interested party a 90 days term so they can legalize their migratory status or leave the country. FISCAL REGIME Companies with license of a ROMC will be exempt for the payment of tax for the net or gross revenues generated within the Republic of Panama. This exemption is only for the ROMC and not for its employees. Because of its export of services, the services offered by a company under this Law will not cause the Tax of Transference of Movable Corporal Goods and Services (ITBMS for its name in Spanish) as long as they are offered to persons outside the national territory and that they do not generate taxable rent within the Republic of Panama. Not withstanding what is established in letter (e), Article 10 of the Executive Decree No. 84 as of 2005, hereby defined as export services those offered from an office established in Panama, but with its effectiveness outside the country. These services do not give right to obtain Certificates with Cancellation Power. Companies with License of a ROMC are not exempted of the payment of the ITBMS for the purchase of goods or services in the Republic of Panama neither for the imports. They will not be exempted of the payment of the ITBMS for the services offered within the national territory as well. In regards to the exemption of the payment of income tax, it will be considered produced within the national territory, the income received for services affecting the rent production from Panamanian source or to preserve the same, and that its value has 5
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Executive Summary LAW No. 41 of 24th August 2007 SPECIAL ...

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