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Chapter 8: In This Chapter

Chapter 8: In This Chapter. Introduction Foreign ownership Financing Commercial real estate Residential real estate Rental property Licensing and brokerage. Government Legal system Taxes and fees Economy and business What you need to know Beyond the basics. Map of Panama.

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Chapter 8: In This Chapter

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  1. Chapter 8: In This Chapter • Introduction • Foreign ownership • Financing • Commercial real estate • Residential real estate • Rental property • Licensing and brokerage • Government • Legal system • Taxes and fees • Economy and business • What you need to know • Beyond the basics

  2. Map of Panama Source: CIA World Factbook

  3. Introduction to Panama • Isthmus of Panama • Tropical climate • Nine provinces and four territories • Panama Canal Source: Wikipedia

  4. Panama—The Rich Tapestry Source: Wikipedia

  5. Panama—The Rich Tapestry Source: Wikipedia

  6. Panama—The Rich Tapestry Source: Wikipedia

  7. Panama—The Rich Tapestry Source: Autoridad de Turismo Panama

  8. Foreign Ownership of Real Estate • Titled properties • Office of Public Registry • Recommended • Possession rights • National and municipal governments control some properties on beaches and special tourism zones • Not recommended

  9. Financing • Panamanian home mortgages available • Buyers must purchase life insurance • Companies only insure people to age 75 • USA mortgages also available • Commercial mortgages available

  10. Commercial Real Estate • Multinational corporations • FDI inflows • Tourism • Howard Special Economic Area/Panama Pacifico FDI Inflows—2007-2012 Source: The World Bank Group

  11. Residential Real Estate • Second-home and retiree market • Pace of development • Infrastructure • Exercise caution • Comparables difficult to obtain

  12. Rental Property • Pro-landlord • Caseload makes evictions lengthy • Law 93 and rental properties • Leases • Common practices

  13. Licensing and Brokerage Practices • Law 6 requires licensing • Foreigners must have at least 5 years of residency • Listings • Transaction process

  14. What You Should Know About Government • Presidential democratic republic with executive, legislative, and judicial branches • Pro-market policies to seek investment • Track proposed changes • Government struggles with corruption • Improvements made

  15. Legal System • Civil law system • Corporate law based on Delaware, USA • Problems with corruption • Competent, trustworthy attorneys necessary

  16. Real Estate Taxes and Fees *If the buyer chooses to form a Panamanian corporation to purchase and own real estate. †New construction properties may be exempt from property taxes for a certain number of years; however, these laws are in flux and should be researched for current status. Source: Global Property Guide

  17. Business and Income Taxes • Individual income tax • First US $11,000: exempt; US $11,000-$50,000: 15%; over US $50,000: 25% • On Panama-sourced income only • Business income tax • Greater of 25% on net income or 1.17% of gross taxable income • Panama-sourced income only • Withholding tax • Dividends: 5-10% depending on source • Interest: 12.5-13.75% • Branch-remittance tax • 10% on after-tax income • Capital gains • 10% • Advance payment requirements • Other taxes

  18. Economy and Business • Economy structured to attract FDI • Hub of global business and banking • Comparisons to Singapore • Colón Free Zone • Offshore banking • FDI from Venezuela • Panama Canal expansion

  19. What You Need to Know • Panama Canal • Incentives to foreign investment • Titled properties vs. possession rights • Panamanian mortgages and life insurance • Commercial and residential opportunities • Broker licensing • Corruption • Offshore banking

  20. Beyond the Basics • Greetings • Attire • Appointments • Negotiations • Business dining • Communication challenges

  21. Key Contacts • ACOBIR • AMCHAM • USA Embassy Panama • Authority of Tourism Panama • Ministry of Commerce and Industry

  22. Exercise: Matching

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