What Are Tax Exemptions and Who is Eligible to Benefit from Them?

tax exemptions

Tax exemptions are fiscal benefits granted by the government to reduce or eliminate the payment of certain taxes on imported goods. In Panama, these exemptions play a crucial role in strategic sectors, facilitating the entry of essential products without increasing operational costs for businesses and organizations.

Types of Import Tax Exemptions  

can apply to different types of taxes, including:

• Import Tax: Allows goods to enter the country without paying the established customs duties.
• ITBMS (Transfer Tax on Movable Goods and Services): In some cases, certain products or entities may be exempt from this tax.
• Other Duties and Fees: Depending on the type of product and its intended use, exemptions may also apply to selective taxes or administrative fees.

Eligibility Criteria for Tax Exemption in Panama

Import tax exemptions are designed for specific sectors with regulated guidelines. Some of the most common beneficiaries include:

• Free Trade Zones and Multinational Companies: Businesses operating in free trade zones or under the Multinational Company Headquarters (SEM) regime can import goods without paying taxes.
• Government Entities and NGOs: Nonprofit organizations and government agencies may receive tax exemptions for imports related to social, educational, or healthcare projects.
• Agricultural Sector: Importers of agricultural supplies, machinery, and equipment may qualify for exemptions to promote sector growth.
• Energy and Technology Companies: Certain technology and renewable energy equipment may be exempt to encourage modernization and sustainability.
• Manufacturing Industry: Companies importing raw materials for processing and re-exportation can access tax benefits.

Requirements and Procedures for Requesting Tax Exemption  

To qualify for a tax exemption on imported goods in Panama, applicants must:

1. Submit a formal request to the General Directorate of Customs.
2. Provide supporting legal documentation proving eligibility (e.g., NGO certificates, free trade zone registration, sector-specific permits).
3. Obtain approval from the Ministry of Economy and Finance (MEF) or other regulatory entities, depending on the case.
4. Comply with verification controls to ensure the correct use of the imported goods.

Tax exemptions serve as an important tool to support economic growth and sectoral development in Panama. If your business qualifies, understanding and leveraging these benefits can lead to significant cost savings and operational efficiency. 🚀Could your business be eligible for tax exemptions in Panama?
Get in touch with us today to find out if you qualify and how we can help you navigate the process.