Incentive Law for Casco Viejo
The Decree-Law N° 9, by means of which incentives special rules were established for the restoration and revaluation of the Casco Antiguo of Panama, was issued on August 27, 1997. The due date for this Decree-Law was August 2002. However, in December 2001, the National Assembly of Panama approved a modification proposal to the above mentioned Decree-Law, by which the expiring dates are extended for the majority of the established incentives. A summary of the Decree-Law N° 9 of August 27, 1997 as well as its more relevant aspects follows:
- Former laws in force in Casco Antiguo are modified in order to extend the protection area, so it could include part of the neighborhood of Santa Ana, Salsipuedes, and part of the Terraplén.
- The classification of the protected properties is developed in detail, together with the usage and type of restoration that will be permitted to carry out in such properties, depending on their architectural, historical, and environmental characteristics.
- A system of mortgage loans with preferred interests is established for the restoration of real estate in the area of San Felipe.
- The property owners in Casco Antiguo will be exempt from paying the Real Estate Tax owed at the moment of the transfer (sale) of the property.
- The profits derived from the transfer of real estate will be exempt from paying the Income Tax.
- The land and improvements of restored buildings will be exempt from paying the Real Estate Tax for a period of thirty (30) years counted as from the restoration of the property.
- The first sale or sales that take place after the completion of the building´s restoration will be exempt from the Real Estate Transfer Tax.
- The profits generated by commercial, professional or industrial activities which are carried out and have their effects in the Casco Antiguo, are exempt from the Income Tax for ten (10) years counted from the restoration of the occupied property.
- The equipment and materials used in the construction, restoration, and equipping, will be exempt from the Import Duties.
- The tenants of the properties in Casco Antiguo can deduct from their Income Tax the rates of rental for a period of five (5) years.
- Those buildings destined for public parking will be exempt from the Income Tax for a period of ten (10) years.
- An indemnity payment is established for those tenants of apartments in Casco Antiguo who must vacate the property because of a restoration project. The restoration project developer will receive a transferable fiscal credit with a value equivalent to the payment done.
- In order to benefit from these incentives, the investments must be made during the ten (10) years following the establishment of the Decree-Law, that is, until August 2007.