Regulatory Framework for Maritime Finance in Panama

Julio A. Quijano B.Partner, Quijano & Associates

Jorge A. Quijano – LL.M (Cardiff, UK)

As a law firm with six decades of experience in every aspect of the activities and requirements of maritime affairs under the legislation of the Republic of Panama, Quijano & Associates has the pleasure to inform you that the Panamanian Government, by Executive Decree N° 168 of 10th June 2019, has finally established the rules and procedures to obtain accreditation as a maritime financing entity and as a financeable maritime project, as well as other aspects concerning the benefits and responsibilities that these accreditations provide to companies and foreign employees under the immigration and labor permits established by Law 50 of 28th June 2017 (“Maritime Finance Law”).

Any legal entity interested in the tax, labor and immigration benefits established by Law 50th of 28th June 2017 must be duly registered at the Public Registry of Panama as a foreign legal entity or as a corporation organized under Panamanian law.  Once incorporated, the application for accreditation is submitted to the Certifying Council and the Supervisor of Maritime Financing Entities or the General Directorate of the Public Registry of Vessels of the Panama Maritime Authority. The application must include a letter from the interested company and an affidavit stating the desire to carry out maritime finance activities or one or more financeable maritime projects in Panama.

The legal entity applying for accreditation must comply with all of the requirements including the following supporting documentation:

  1. A power of attorney granted to our law offices in Panama;
  2. A copy of its articles of incorporation;
  3. An affidavit of its legal representative declaring that the company will engage in maritime financing or the development of one or more maritime financeable projects;
  1. Financial statements duly audited or certified by an Authorized Public Accountant;
  2. Bank reference letter
  3. Copy of the Notice of Operation, formerly known as “Commercial License”.
  4. An affidavit of its legal representative before a Notary Public, certifying the number of foreign employees that will be working in the maritime finance operations or the development of the maritime financeable project, including an estimate of local employees.
  5. If the legal entity engages in maritime finance, a copy of the bank license granted by the Superintendency of Banks of Panama duly authenticated by Notary Public;
  6. An affidavit of its legal representative before Public Notary describing the activities of any companies or subsidiaries of the same business group. 

Upon accreditation by official resolution, the legal entity will be entitled to:

  • Tax exemption on income arising from the financing of building and/or the purchase of vessels provided that they are registered under Panama flag;
  • Tax exemption on income arising from interests and commissions earned by banks and maritime financing entities;
  • Tax exemption on income of legal entities that begin operations in Panama to create shipyards to build commercial ships, yachts, military ships and other kinds of vessels for transportation of merchandise or passengers and/or legal entities engaged in financeable maritime projects;
  • Tax exemption on profits arising from insurance and reinsurance to guarantee credits granted by maritime financing entities and/or financeable maritime projects;
  • A 3% import tax and fees applicable to the introduction of machinery, maritime equipment, rolling stock, materials, tools and other elements necessary for shipbuilding or the exclusive use of a shipyard;
  • The legal entity may hire foreign employees in trustworthy positions, meaning staff for the management, control or representation of the company within the general scope of their respective activities at executive, operative, technical and expert level. Such staff may include their spouses and dependents up to 25 years of age.

 

For more information about our services, please contact us at quijano@quijano.com