PANAMA: New Incentives for Tourist Activity

The President of the Republic sanctioned Law No. 314 of June 20, 2022, which creates a new tax incentive to promote tourist activities outside the district of Panama, specifically, the development of new tourist public lodging establishments or the expansion of already existent establishments, registered in the National Registry of Tourism.


Said law will enter into force on July 20, 2022, and the tax incentive will be granted until December 31, 2024.


This new incentive consists of the recognition of a tax credit for 60% of the total value of the project, excluding the value of the land and the infrastructure of the master plan, plus 5% of the value to be recognized on the declared infrastructure. To benefit from this incentive, the project must be registered before the Tourist Authority of Panama.

The tax credit will be granted to the investor who is the first purchaser of bonds, shares and other financial instruments issued by the tourist company or real estate investment company and may be used for the payment of income tax, complementary tax and estimated income tax.

The tax credit can be applied annually as of the second year of the investment. To avoid a sudden impact on the state treasury income, the use of said credit is limited to a maximum of 50% of taxes incurred per year, which must not exceed 15% of the initial amount of the tax credit. The tax credit can be used up to a maximum of 15 years, from the date of its granting, until it is consumed in its entirety.

The tax credit can be fully transferred or partially transferred for its unused portion, regardless of whether or not the shares, bonds and other financial instruments have been transferred.

Bonds, shares, and other financial instruments must be registered with the Stock Market Superintendency, be listed on a stock exchange in the Republic of Panama and be issued by companies that are registered in the National Tourism Registry. These bonds, shares and other financial instruments must have a minimum validity period of 5 years, and should not be payable in advance. Tourism companies may not acquire their own bonds, shares, and other financial instruments, nor grant loans to the holder of said titles, nor may they make use of any other method of acquisition or payment during the aforementioned minimum period of 5 years.

This new law makes it clear that, to obtain a resolution of recognition of tax credits by the General Revenue Authority, the tourism project must also have an environmental impact study.


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