PANAMA Law and Practice Contributed by: Roy C Durling, Arias, Fábrega & Fábrega
sales price applicable to the Panama operation will be the higher of: • the percentage corresponding to the value of patrimony of the Panamanian operation as part of the total patrimony of the entire foreign structure to be sold; or • the percentage of the value of the assets of the Panamanian operation as part of the value of all of the assets of the entire foreign structure. There are no transfer taxes on the transfer of shares of concession holders. The transfer or sales agreement relating to the transfer of shares may be subject to the payment of stamp taxes (which are calculated at the rate of USD1 per each USD1,000 or fraction thereof of the face value expressed in the agreement – ie, the sales price). Double Taxation Treaties Panama has entered into a number of treaties aimed at preventing double taxation, which, depending on the nationalities/domiciles of the parties involved and the terms of the treaties, may provide for more favourable results than the ones described above. 5. Mining Investment and Finance 5.1 Attracting Investment for Mining The CMR contains the general investment regime applicable to mining companies, which applies equally to foreign and local companies, without differentiating between Panamanian and non-Panamanian nationals. However, the CMR prohibits foreign governments, nations or enti - ties from holding mineral concessions.
The official currency of Panama is the balboa, which exists only in coins. Since 1904, in accord - ance with the laws of Panama and diplomatic agreements with the United States, the US dol - lar is on a par with the balboa and, in practice, has been the currency used for all commercial and financial transactions. The US dollar is legal tender for all transactions, including the pay - ment of obligations owing to the Panamanian government. Since there are no balboa bank - notes, in practice US dollar banknotes and coins circulate freely and are the accepted medium of exchange. Businesses in Panama may keep their financial books and records in US dollars. There are no exchange controls of any kind in Panama. Consequently, funds of any denomina - tion and in any amounts may move freely in and out of the country at any time, may be deposited in local or foreign banks, and may be held by any domestic or foreign natural or legal person. It is also lawful to hold funds in any currencies. There are no export limits on mineral products currently in effect. By law, the government may compel mining companies to deliver a portion of their production for internal use in Panama. The government will have to pay for such prod - uct, with the price to be set at production prices (which are deemed to be the prices that a third party in Panama pays for the mineral). Thus far, the government has not made use of this right. The above investment regime has been in place in Panama for several decades. As explained above, companies wishing to obtain further assurances may seek to register under Law 54 of 1998, which provides for a legal and tax stabil - ity regime for companies investing USD2 million or more in Panama. The stability regime has a ten-year duration.
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