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Panamadera is now accepting
pre-orders for Playa Hermosa, a spectacular beachfront eco-community and
reforestation project on the Pacific Coast of Panama.
Reforestation
investments may achieve long-term returns exceeding the major stock
indices and help diversify your financial portfolio.
Panama's Law 24 provides tax and residency benefits for qualified investments
in reforestation projects.
Panama is a safe and attractive country
perfect for holiday, vacation home, expat living or retirement.
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The following text is provided as a convenience to Panamadera's prospective clients. Panamadera does not provide legal or tax advice to our clients. We recommend that you consult with a Panamanian attorney to address your specific questions.
LEGISLATIVE ASSEMBLY LAW 24 (November 23, 1992). By which, incentives for reforestation are established and reforestation activities are regulated in the Republic of Panama"
Article 1. The present Law regulates everything concerning reforestation. The following definitions apply to the present law:
1. Reforestation: The action of
planting FOREST SPECIES on land lacking trees, whether for purposes of
commercial, scenic, environmental, tourism, agricultural, forestry, creation
of forested pastureland, energetic pursuits, or for any other purposes. Article 2. The Executive Branch, conscious of its responsibility to all associates and taking into consideration the current growing rate of deforestation and its grave consequences for the country, declares the following as necessary: 1. To increase all forms of reforestation in the Republic of Panamá. 2. To regulate the incentives this Law refers to, through the National Institute of Natural Resources (INRENARE) and the Treasury Ministry, in consultation with related organizations. These aforementioned regulations must be in forced within six (6) months from the enactment of this Law, in order to stimulate and encourage reforestation in all forms. 3. To establish a thirty (30) year period during which private reforestation is given priority and full support.
4. To promote the companies,
associations, community groups and cooperatives involved in reforestation
activities. 6. To study, investigate and promulgate all forms of reforestation and the means to accomplish same. Article
3. Forest plantations are considered to be forest crops, and as such
have the freedom to be utilized and commercialized as forestry products,
nationally and internationally. Article 4. The benefit to persons or companies derived from the commercialization of products obtained from forest plantations, until the final cut of the forest plantation, and whose establishment is carried out within twenty-five (25) years from the enactment of this Law, will be exempt from income tax, as long as the owners of these plantations are registered in the Forest Register of the National Institute of Natural Resources (INRENARE). Article 5. Forest investment or indirect forest investments made by a person or company will be one hundred percent (100%) deductible from income tax, as long as the invested money is destined for the reforestation activity. For indirect forest investments, the benefits established in this article may be used just once; the persons or companies who receive the benefits described in this article for their indirect forest investments, will be obligated to maintain their investments for a minimum of five (5) years. Forest investments and indirect forest investments made in organizations, private institutions or educational institutions, dedicated to the investigation and research of forestry, the forest industry or the promotion of the forest sector, will be considered as expenses which are one-hundred percent (100%) deductible from income tax, as long as the invested money comes from a source other than the reforestation activity. The company that illegally sells bonds, shares and assets which benefit from this Law and does not fulfill the objectives of this Law is committing fiscal fraud. Article 6. The following items are exempt from import duty and other duties when introduced to the country: agricultural, forest, industrial and motorized machinery and equipment, materials, tools, agricultural chemicals, forest research equipment, seeds, cuttings and other forest plants, and any other elements necessary for the exclusive us of reforestation activities, handling and/or use of forest plantations. The Treasury Ministry will dictate the respective regulations. Article 7. The farms that use more than fifty percent (50%) of their land for reforestation or that have a minimum of two hundred (200) hectares reforested are exempt from real estate tax and real estate transfer tax. Article 8. The profits generated by bonds, shares and assets of associations dedicated to reforestation and its derived and related activities, and the gains obtained from the sale of these bonds, shares, and assets, will be exempt from income tax. The owners of these bonds, shares and assets, may use these instruments as a guarantee for banking transactions. Article 9. The Executive Branch will promote the creation of credit lines with preferential interest rates and "Preferential Forest Loans" for reforestation, through official credit institutions and private banks, savings and loan associations, finance companies or any other company previously registered in the Treasury Ministry, whose commercial activity is to give loans. The Executive Branch will offer full support to hasten, develop and strengthen this activity. The "Preferential Forest Loans" will have a "Preferential Bond" of four (4) percentage points lower than the local market interest rate. The persons or companies who make these loans will receive a fiscal credit every year for the first ten (10) years of the loan; this fiscal credit will be applicable to the payment of national taxes, for an amount equivalent to the difference between the revenues the Bank would have obtained if it had charged the local market interest rate, and the revenues received from the interests of each of the "Preferential Forest Loans." The Treasury Ministry will dictate the respective regulations. The interest earned by those referred to in the first paragraph of this article will be exempt from income tax on loans granted to finance forest investments or indirect forest investments. The interest paid for financing reforestation and its derived and related activities are one hundred (100) percent deductible from income tax. Article 10. To encourage investments in reforestation, the Executive Branch will support alternatives to convert forest plantations, either through mortgage guarantee, bank and commercial guarantees, Tax Payment Certificates (Certificados de Abono Tributarios-CAT), bonds, exchanges, transfer of existing plantations, participation in stock exchange, trust funds and others. Article 11. Every foreign investor that makes a forest investment or an indirect forest investment of forty thousand balboas (B/. 40,000) or more, within the Republic of Panamá, will be eligible for an immigrant visa as an investor, through the purchase of shares, bonds, assets or investments of his own. The investor must maintain the forest investment until the final cut of the forest plantation, and the case of indirect forest investment, must maintain the investment for a minimum of ten (10) years. Article 12. The Executive Branch will create all legal mechanisms in the shortest time possible, to conduct and make possible the exchange of external public debt for reforestation, in order to find funds, nationally and internationally, to finance private reforestation through a five (5) year cycle. Article 13. The Ministry of Agricultural Development, through the Agrarian Reform Directorate, will provide the proper protection against squatting in every forest plantation and every area destined by its owners for reforestation. It is a felony to invade reforested land, so that there exists security for the investment and incentives for reforestation. Article 14. Following a technical study between the insurance superintendent, insurance companies and INRENARE, a system of Forest Insurance will be developed to indemnify forest plantations against fires, plagues, diseases and other damages. Article 15. The Executive Branch, for the purposes of this Law, will improve and facilitate, as quickly as possible, the transfer of relevant technologies between national and international organizations, which contribute to the development and optimum use of forest resources. Article 16. All the norms and guidelines of the present Law will also apply to forest plantations created, or to be created, in the deforested areas of the Panamá Canal Water Basin and the protected wild area, as long as the category and norms for handling and development established by INRENARE permit. For these purposes, INRENARE will establish the minimum requirements, which the forest management plan should fulfill for such areas, in order to protect these areas and at the same time, ensure the best possible commercial use of plantations under these conditions. Article 17. All norms and guidelines of the present Law will also apply to the following deforested areas: 1. Areas surrounding water sources that spring within a radius of one hundred (100) meters in hilly areas, and fifty (50) meters if they spring in flat land. 2. In rivers and streams, the width of the riverbed will be taken into consideration; the riverbed width will be left the same of both sides, and be a strip of no less that ten (10) meters. 3. Areas of water accumulation within a radius of fifty (50) meters from the water spring where the water is used for local consumption. 4. Natural or artificial reservoirs up to ten (10) meters from the maximum level of water. In these areas, the necessary procedures for the cutting of mature trees may be carried out, that is, cutting tress that have reached the plantation rotation cycle, and have been previously marked by INRENARE. The owner or investor will be obligated to reforest the latter by the next rainy season. Article 18. Forest plantations existing at the time of the enactment of this Law, as well as all others that will be established while this Law is in force, shall benefit from these incentives. For these purposes, the owners of forest plantations should inscribe in the Forest Register of INRENARE. In the case of forest plantations established before the enactment of this Law, the deadline to register is five (5) years from the time this Law comes into force. Article 19. The owners of plantations who refuse to comply or who repeatedly fail to comply with the guidelines of this Law and its regulations, will be removed from the Forest Register of INRENARE for up to five (5) years and will have the rights to incentives and benefits granted by this Law suspended for the same length of time. Article 20. This Law will come into force at the time of its enactment.
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Panama's Law 24 
