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 Page 217

2. Map of Panama Source: CIA World Factbook Page 218

3. Introduction to Panama Isthmus of Panama Tropical climate Nine provinces and four territories Panama Canal Source: Wikipedia Page 218-221

4. Panama—The Rich Tapestry Source: Wikipedia Page 222

5. Panama—The Rich Tapestry Source: Wikipedia Page 222

6. Panama—The Rich Tapestry Source: Wikipedia Page 223

7. Panama—The Rich Tapestry Source: Autoridad de Turismo Panama Page 223

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 Page 224

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 Page 225

10. Commercial Real Estate Multinational corporations – FDI inflows Tourism Howard Special Economic Area/Panama Pacifico FDI Inflows—2007-2012 Source: The World Bank Group Page 225-228

11. Residential Real Estate Second-home and retiree market Pace of development – Infrastructure – Exercise caution Comparables difficult to obtain Page 228-230

12. Rental Property Pro-landlord – Caseload makes evictions lengthy Law 93 and rental properties Leases Common practices Page 230-231

13. Licensing and Brokerage Practices Law 6 requires licensing – Foreigners must have at least 5 years of residency Listings Transaction process Page 232-234

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 Page 234-235

15. Legal System Civil law system Corporate law based on Delaware, USA Problems with corruption Competent, trustworthy attorneys necessary Page 235

16. Real Estate Taxes and Fees Tax or FeeAmountPaid by Lawyer/Notario Fee2%Buyer Title Transfer Fee2%Seller Registration Fee0.25%Buyer Escrow Fee0.5-1%Buyer Incorporation Fee*US $1,000Buyer Title Insurance0.5-1%Buyer Agent Commission3-5%Seller Property Tax (annual payable to state)†1.75-2.1% of valueOwner (Buyer) *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 Page 236

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 Page 236-237

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 Page 238-240

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 Page 241

20. Beyond the Basics Greetings Attire Appointments Negotiations Business dining Communication challenges Page 241-243

21. Key Contacts ACOBIR AMCHAM USA Embassy Panama Authority of Tourism Panama Ministry of Commerce and Industry Page 243-244

22. Exercise: Matching Page 245