PANAMA Law and Practice Contributed by: Kharla Aizpurúa Olmos, Mónica Moreno and Eduardo Oteiza, Morgan & Morgan
lation in the National Assembly to regulate this area, though none of these bills have been passed. 3.11 Disclosure Requirements Starting on 2 January 2026, disclosure requirements will apply to financial contracts governed by banking regulations in Panama. Pursuant to new regulations issued by the Superintendency of Banks, banks will be required to provide written and transparent infor- mation to clients and potential clients prior to enter- ing into any contractual relationship, including dis- closures of both nominal and effective interest rates, fees, third-party charges, tax payments and certain calculation criteria for the determination of such fees and third-party charges. Payments of principal, interest or other payments made to lenders are not generally subject to withhold- ing taxes (and thus considered regular income of the lender), except in certain cases. Specifically, interest and commissions paid to foreign lenders (i.e., lenders domiciled outside of Panama) will be subject to an amount that results from multiplying 50% of the interest payment by the applicable ordi- nary income tax rate. The ordinary corporate income tax rate in Panama is 25%. Therefore, the withholding tax applicable would be 12.5%. The above withhold- ing tax is not applicable when: (i) the proceeds of the loan are not used or invested in Panama, and (ii) the proceeds do not generate “Panama Source Income”. Article 694 of the Panamanian Tax Code defines “Pan- ama Source Income” as income generated by activi- ties carried out within the Republic of Panama. 4.2 Other Taxes, Duties, Charges or Tax Considerations 4. Tax 4.1 Withholding Tax Except for certain documents (like negotiable instru- ments issued to guarantee a principal document of which stamps have been paid and/or documents requiring registration in the Public Registry of Pana- ma), all documents related to activities under Panama- nian jurisdiction are subject to a stamp tax of USD0.10
per USD100.00 of face value. Therefore, loans used for activities within Panama and generating Panama Source Income are subject to stamp taxes. These taxes are due within the first 15 calendar days of the month following the document’s execution. Documents subject to foreign jurisdiction but used as evidence or for enforcement in Panamanian courts or administrative authorities are also subject to stamp tax. Additional relevant duties include registration fees charged by the Public Registry of Panama, appli- cable to certain security documents like real estate mortgages or guarantee trust agreements involving immovable assets. 4.3 Foreign Lenders or Non-Money Centre Bank Lenders See 4.1 Withholding Tax and 4.2 Other Taxes, Duties, Charges or Tax Considerations regarding withholding taxes, stamp taxes and registration fees. The most common assets available as collateral in Panama are real property, shares or quotas, cash flow, and certain chattel property, depending on the pur- pose of the loan. The most frequently utilised secu- rities over such collateral are (i) trusts; (ii) pledges; (iii) collateral assignment agreements; (iv) real estate mortgages; and/or (v) chattel mortgages. Trusts The trust agreement typically serves as the “umbrella” in favour of which all security interests are created, due to the additional protections provided to trusts pursuant to Law 1 of 1985, as amended by Law 21 of 2017 (hereinafter, the “Trust Law”), and Law 21 of 2017 (hereinafter, the “Trustee Business Law” and together with the Trust Law, the “Trust Laws”). 5. Guarantees and Security 5.1 Assets and Forms of Security
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