A new tax law has been recently approved and it has been put in force. Many changes have been made to the tax law that still need to be reviewed, but here we list the most important ones concerning real estate properties.

The main changes are the following:

1. Capital Gains Taxes: In the past, the capital gains tax was 10% of the gain. Now it is either 10% of the gain, or 3% of the sale value, which ever is the higher value. The transfer tax of 2% remains in effect also.
2. Property Taxes for Apartments: In the past, the first $30,000 of the LAND VALUE (not the improvements value) that applied to apartments in Horizontal Property (apartment buildings) was exonerated for all apartments regardless of their value. Now, for apartments with values of over $80,000 (this is the maximum value of social interest properties), they will pay a progressive combined property tax on the land value as follows: 1.4% of the first $20,000, plus 1.75% from $20,000 to $50,000, plus 1.95% from $50,000 to $75,000, plus 2.1% from $75,000 and up.
3. Property Taxes for Land & Houses (not Apartments): The new progressive combined property tax for land and improvements (together) is as follows: 1.75% from $30,000 to $50,000, plus 1.95% from $50,000 to $75,000, plus 2.1% from $75,000 and up. The first $30,000 continues to be exonerated from property tax.

By Yolanda Sandoval - Prensa

The infrastructure projects make a dent in the initial budget for 2010. All are focused on transportation systems.

In the first General State Budget under the management of Ricardo Martinelli, there are extraordinary investments in infrastructure such as the emblematic metro and the continuation of the project inherited from the government of Martín Torrijos: the Costal Beltway.

For 2010, it has decided to allocate $30 million dollars to the new urban transportation system, another $25.2 million to the design and construction of the second phase of the Coastal Beltway, and $40 million to a program that includes the remodeling of four airports.

Th extension of the Costal Beltway is viable as a result of an addendum to the contract maintained by the government with the Brazilian company, Norberto Odebrecht S.A., which is in force.

The company that actually maintains the thoroughfare constructed the first phase for $189.1 million. Now the State is studying what kind of construction can be built from the Fisherman’s Market to the Municipal Warf that will not compromise the architecture of the area of Casco Antiguo.

The airports are indispensable for the development of the rest of the country, said the Minister of Economy, Alberto Vallarino.

For this, $40 million has been allocation for construction and refurbishing the installations of David, Colón and Bocas del Toro, including the North Port at Tocumen.

Probate is the legal process of settling the estate of a deceased person, specifically resolving all claims and distributing the decedent's property.

In some countries, after a person residing in that state has died without a valid will or trust, his or her property immediately becomes the property of the spouse, if any, without the need for probate. This is NOT the case for Panama. Under Panamanian law, probate has to be done in the form of a succession process. A succession process in Panama has to be filed in the Courts of Law.

There are two types of Succession Processes in the Republic of Panama.

• A. Intestate Succession Process: This is process that has to be filed to a Panamanian Court of Law, without the existence of a Will. The heirs will be the persons designated by the Panamanian Civil Code.
• B. Testamentary Succession Process: This is process that has to be filed to a Panamanian Court of Law, with the existence of a Will. The heirs will be the persons designated by the Will.

Succession processes have to be filed through a Lawyer, and their fees will depend on the totality of the value of the assets of the deceased. During the process, private appraisers have to determine the value of the assets. It is much better, in our professional opinion, to file a Testamentary Succession Process, than an Intestate Succession Process; nevertheless, these complicated and not necessary processes can be avoided by using Panamanian Estate Planning Instruments, specifically recommended by my law firm are corporations and Private Interest Foundation.

Horror Stories: During our years of practice we have heard several horror stories of Expats who after their spouse passes away, have to wait over a year in order to sell the property that is owned by the deceased.

Avoiding probate: This situation could have easily been avoided by purchasing the property in the name of the Foundation or Corporation:

• A. With the Foundation: At the moment the person passes away, the secondary beneficiary will immediately become the new primary beneficiary with rights of disposal of the assets.
• B. With the Corporation: By informing your heirs where the bearer shares certificates of the corporation that you own are kept, you can immediately transfer ownership, as Panamanian law establishes that Whomever possesses the bearer share certificate controls ownership of the company.

Estate Planning: The best time to do estate planning is prior to moving or doing any investment in Panama. Clients come to our offices all the time, and ask us to help us transfer properties which are owned personally by them, to Corporations or Foundation. At that specific moment they realized the big mistake they made by not investing in their estate planning prior to having made the investment. The reason is simple - now they will have to pay pay all taxes and legal fees related to the transfer of the property in order to ensure they are protected.

Panama Relocation Attorneys: Our law firm provides 30 minute introductory meetings to potential clients and investors in Panama. We will be more than happy to answer any questions you might have with regards to moving to or investing in Panama, including your Estate Planning necessities.

For more information about Panama Relocation Attorneys, please send an email to info@panamarealtor.com.

By Roberto Gonzalez Jimenez - Prensa

The citizens of any nationality that possesses a visa from the United States, Australia, Canada, the United Kingdom or any European Community nation that has traveled to the country in question, will be allowed to enter Panama without the requirement of obtaining a visa.

“The fact that these countries comply with a system of vigilance with rigorous immigration controls with higher standards of security and reliability, allow for these people to enter with total and complete confidence into Panama.”, assured the Panama Tourism Authority (ATP) in a communication issued yesterday.

In place of a visa, citizens of these countries need only buy a tourist card for $30 dollars before entering the country, confirmed Ernesto Orillac, advisor of the ATP Administration, who added that within the plans of the organization is the elimination of physical cards altogether and simply have the charge added to the price of tickets.

By Tom Brymer - Panama Advisory International Group

PANAMA. With the investment climate continuing to deteriorate back in the US, more of my friends are asking me how I am doing here in Panama. To that I answer a simple fact that speaks to the fundamentals of investing anywhere – Growth. Panama’s GDP reached rates of 6.4%, 8.1% and 8 % during 2006, 2007 and 2008 respectively. While we will not experience the same growth in 2009, expectations are that we will see somewhere between 4 and 5%. That is huge when compared with the rest of the world. The Panama Canal expansion, continuing Hydro Electric plant expansion and growth in the resort development and commercial real estate market will insure that Panama continues on a forward motion of productivity for the foreseeable future. 20 Major Corporation relocating or opening new offices include Dell, Caterpillar, Singapore Airlines, and the Colon Free Trade Zone (“CFZ”) is the largest free zone in the Americas and the second largest in the world. Relating to the stability of investing in Panama, Panamanian Law provides 10 year stability as of the registration of the investment that all legal, tax, customs, municipal and labor rules will remain identical to those in force at the time of registration. This is an important guarantee to secure no-changes will affect the amortization of investments.

Another important fact about Panama and the investment climate is the existence of Law Number 8 (Enacted in 1994) is the most comprehensive law for the promotion of tourism investment in Latin America. The incentives and benefits under this law are available to natural persons or companies engaged in tourist activities registered at the National Registry of Tourism (Registro Nacional de Turismo) and certified by the Panama Government Tourism Bureau (Instituto Panameсo de Turismo - IPAT). These include public lodgings, tour agencies, tourist transport services, tourist restaurants, discotheques, nightclubs, recreational or theme parks, zoos, convention centers, and marinas.

The incentives for tourism investments include:

• 20-year exoneration from real property taxes (including land)
• 20-year exoneration of import duties of all materials, vessels, vehicles, and equipment used to build and furnish public lodging establishments.
• Exoneration from any tax or assessment on its capital.
• Exoneration of all fees for using piers, airports or heliports.
• Income tax exemption on interest earned by creditors of public lodgings.
• 10% annual real property depreciation (not including the cost of the land).
• Twenty (20) years full exoneration from the payment of real property tax on the land or any improvements owned and being used for tourist development activities.
• Fifteen (15) years full exoneration from the payment of income tax.
• Twenty (20) years full exoneration on import duties and sales tax on imported materials, equipment, furniture, accessories and spare parts used to construct, renovate and furnish their establishments.
• Twenty (20) years exoneration from duties, contributions, taxes or fees on the use of piers or airports built by the company. The Government of Panama may use these facilities free of charges, according to the appropriate regulations.
• Twenty (20) years exoneration from the payment of income tax on interest earned by its creditors from tourist activity operations.

As more investors continue to come in from the US and Europe, I am continually asked about title to real property in Panama. Panama has an excellent Public Registry, recording title for each property. It is easily researched and Title insurance is also available. At the time of this writing we have entered into a commercial partnership with Latin American Title Company or LATCO. LATCO is the exclusive representative in Panama for Chicago Title Insurance Co, the biggest Title Insurance Company in the world who re insures all of their policies and also provides escrow services as well, this is the first insurance company in Panama specialized on Title Insurance, they choose us for our reputation and suite of services to work in a very exclusive network.

In Summary, there are a wide range of investment opportunities in Panama including land banking, residential development from affordable housing to retirement communities. With the growth of tourism in Panama, more resort development including oceanfront resort communities will offer excellent opportunities for investment. The office market sector continues to grow as demand outstrips supply and retail development in Panama is now on the radar of most international developers and institutional investment funds. Panama will continue to grow and investors will continue to prosper here.

The economy and the global financial system were pushed to the brink a year ago. The world entered in what has been called as "the worst crisis of the past 70 years". The major industrial economies contracted, production and international trade fell to record levels. But despite all this, Panama kept growing.

Although, the economy growth did fall from 9.2% in 2008 to a 2.5% in the first quarter of 2009 which undermined the public finances, the gross domestic product did not experience any drops in the September 2008 - March 2009 period, and unemployment did not increase either. The economy minister, Alberto Vallarino, described as "positive" the economic growth of 2.5% in Panama during the first half of 2009 considering the global economic crisis.

According to the projections from the International Monetary Fund (IMF) and the Economic Commission for Latin America (ECLAC), Panama will be once again the Latin American country with the most growth this year, a rate of about 3%. In the view of leading economists, "Panama dodged this crisis much better than most countries in the world".

Additionally, Panama moved up 6 spots in Doing Business 2010, a report released by the World Bank and IFC for six straight years. Panama had been ranked 77 among 183 economies around the world.

In 2008, Panama had occupied the position number 71. Report co-author, Frederick Bustelo, said that "Panama is heading in the right direction." The rise in the scale of assessment is the result of reforms in the management of building permits and property registration.