EXONERATION OF REAL ESTATE TAX IN PANAMA

By: Maria Cristina Lima

For all of the people interested in acquiring real estate in the Republic of Panama, we would like to inform you that it has been approved on third debate the government bill that modifies article 81 of the Fiscal Law No. 6 from February 2005.

This new law was a proposal of the Minister of Economy and Finances before the Commission of Public Estate, Planning and Economic Politics and was approved in third debate on 22 September, 2005.

In law No. 6 of 2005 was established that for all new constructions to obtain 20 years of exoneration of the real estate tax they should have their construction permit approved before 31 August, 2005.

Since government bill No. 129, recently approved in third debate by the Congress was sanctioned by the President of the Republic, the period for the exoneration of the real estate tax (20 years) will be extended for new constructions whose construction permit are dated before 1st September 2006.

This new extension of the exoneration of the real estate tax will apply whenever these properties are recorded in the Public Registry of Panama before 31August, 2007. This means that said real estates should be built before the date before mentioned.

For the constructions whose occupation permit is approved from September 1, 2006 the exoneration of the real estate tax will be as follows:

1. For the constructions and improvements of residential use:

a. Costs up to USD100,000.00 , 15 years of exoneration.

b. Costs of more than USD100,000.00 and up to USD 250,000.00, 10 years of exoneration.

c. Costs of more than USD250,000.00 5 years of exoneration.

 

2. Other improvements: (buildings for the development of industrial, commercial and agro-industrial activities, among others)

a. Any value, 10 years of exoneration.

You can find the text of Law No. 6 of 2005 in the following link: (only in Spanish) http://www.limayasociados.com/reformafiscal.pdf

The intention of this government bill is to encourage new constructions in the Republic of Panama , and consequently contribute with the increment of the investments in the country.

This new law has been given the No. 34 of 9 November 2005 and you can find it in the Oficial Gazette No. 25,424. You can find its text (only available in spanish) here: http://www.limayasociados.com/exoneraciondeinmueble.pdf

 

 

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