Come On In – New Permanent Resident Visa has few requirements

Ricardo Martinelli, the President of Panama, has been touting the country’s dedication to free trade and increased freedom in the movement of people into Panama. In this spirit, Executive Decree 343 of May 16, 2012, declares that there will be a new immigration option for people from at least 23 countries. The option allow newcomers to show that they just have some basic economic means (a bank account or other proof of income in the four figures, meaning even less than $10,000) with the intention (and possibly the requirement) that they work in (or theoretically start a business) in Panama. The countries included are:

The United States, Canada, Argentina, Austria, Australia, Brazil, Belgium, Spain, Slovakia, France, Germany, Finland, the “Low Countries” (according to Wikipedia – includes The Netherlands/Holland and Luxembourg), Ireland, Japan, Norway, The Czech Republic, Switzerland, Singapore, Uruguay, Sweden and Chile.

Since this is a recent Presidential decree, there are specifics to work out, but it will surely encourage an additional wave of immigration into the country.

Why do this now? With such enormous economic growth rates, Panama is experiencing a skilled labor shortage. By encouraging immigration from mostly wealthy nations, the country hopes to bring educated workers who can fill the current and projected job openings. Of course, many of those workers will be people of means who will bring resources to Panama and contribute to continued economic expansion. This visa will also make it easier for the many new international companies establishing operations and headquarters in Panama to bring in staff.

The popular Pensionado Visa program with its numerous discounts (hotels, restaurants, airfare, electricity and many services) will most likely remain the residency option of choice for retirees.

Panama renews a limited 20 year tax exemption for new construction

This is welcome news for developers and those with building lots. The 20 year tax exemption law had been allowed to expire leaving those with plans to build with the preexisting graduated property tax exemption scale of between 5 – 15 years.

The renewal allows a 20 year tax exemption on the improvements for construction values up to $120,000. This means that if you have or buy a lot and then spend up to $120,000 on building or improving a home (or for other residential use), that any improvements you have made and any house you build will have no property taxes guaranteed for 20 years. If the property is sold, the tax exemption continues for any remaining years left with any new owner (full exemption coverage sometimes requires filing some paperwork to update information).

Homes or other improvements with construction costs over $120,000 to $300,000 will have a 10 year tax exemption. The $300,000 limit is an increase from $250,000 for the 10 year exemption which is more welcome news. If the construction cost is over $300,000 the exemption will be good for 5 years. Also, if you happen to already have a construction permit that was issued prior to June 1, 2009, once the home is completed, you will now receive a 20 year tax exemption even if you have not yet received the occupancy permit. That is a new development and incentive to finish homes that were for some reason not completed. Previously, homes without occupancy permits issued by the end of 2011 would not have qualified.

For those who already have a 20 year tax exemption: Don’t worry. All those who already have an approved exemption are “grandfathered in” and still have whatever years are left in the 20 year exemption they were originally granted.

Clarification on the Tax Exemption: People sometimes believe that the tax exemption on a property covers the land as well as the house. As a clarification, it is possible that a parcel of land carries some property taxes even though a house on it enjoys a tax exemption. The tax exemption is on the construction value of the house or other newly constructed areas. Please note that any land under a home with a registered value up to $30,000 is also tax exempt. So, if you have a house with a 20 year tax exemption and the land it sits on is below $30,000 in registered value, then there are no property taxes. If the “catastral” or registered value of the land is over $30,000, then the property does accrue some property tax even if there is a tax exemption on the improvements. For Horizontal Properties (think condominiums where multiple owners reside on one piece of land), there is a shared property tax on the land if it has a registered value over $20,000.

Disclaimer: Casa Solution does not offer legal services or advice and is not responsible for any errors or inaccuracies in the information provided. Please consult a Panama attorney to confirm any information about current laws that may affect you.

Panama expands preferential interest rates for construction on homes up to $120,000

More Momentum for the Construction Boom: There has been an extension of government backed preferential interest rates from the previous $80,000 in construction value to $120,000. Law 28, May 8, 2012 includes this purchase incentive. This means that loans granted for construction of homes up to that value will receive very low interest rates. This will further encourage the growing middle class of Panamanians toward home ownership and incentivize builders to continue building economical housing options – already a robust market.

Free Trade Agreement Between Panama and U.S. Signed and Soon to Take Effect

President Obama has signed a long anticipated free trade agreement between Panama and the United States. The implementation of the agreement is being finalized and according to Panamanian senior officials will encourage the entry of American companies into the Panama Market. It is expected to add further momentum to Panama’s impressive growth rate, reduce tariffs, and to lower barriers to US companies seeking to do business in Panama or import goods into or out of Panama. The agreement will take effect October of this year.

Panama’s incredible 10% GDP growth rate and Major Infrastructure Projects

Panama is currently enjoying an annual GDP growth rate of 7% - 10.6% (depending on which organization has conducted the research) after years of sustained expansion even through the worst of the recent world-wide recession. 10.6% is the government’s current estimate.

This incredible pace is expected to continue due to a variety of factors such as:

New major infrastructure projects such as:
• Panama Canal $5 billion Expansion with projected completion in 2014 resulting in a surge of income for the country

• International airport expansions in multiple areas of the country including David, Chiriqui near Boquete, Rio Hato at the Pacific Beaches and Tocumen in Panama City.

• Major highway and road projects throughout the country creating improved transit and connectivity including new roads in Panama City, a $117 million road project linking David and Boquete, a recently completed highway linking Colon and Panama City and major highway improvements near the Pacific in Los Santos and Herrera.

• New Large Hospital Project and other health center/hospital construction

• Prison construction and big upgrades to Panama City’s Sanitation and Water Main systems

• Port construction expansion projects

• The new Panama City Metro subway system (about $1 billion)

Key contributors such as:

• continuing double digit annual increase of foreign direct investment (2011 estimated at 2.8 billion) According to the Panamanian government Foreign Minister, each of the last 2 years has seen an increase of 25% in foreign direct investment in the country and according to the Commerce Minister, in 2012, Panama has become the largest recipient of foreign direct investment in Latin America.

• rapidly increasing tourism and visitor numbers and accessibility such as more flights to international destinations (a recent example is a new direct flight to Chicago), the expansion of the Tocumen airport in Panama City, and increased cruise ship visits.

• the many multinational companies establishing regional headquarters in Panama City.

• new free trade agreements recently signed with the United States and other countries.

• banking center activities (Panama is a leading Latin America banking center with recently upgraded investment grades).

• increasing use of the free trade zones.

• mining activities (including a $5-6 billion mining project in Colon Province/Inmet Cobre mine) – a huge investment in the country.

• continued residential development partially from the large number of expatriates pouring into the country (including wealthy newcomers escaping Venezuela).

• the possibility of oil resource development especially in Darien province is being investigated. Initial studies show there may be substantial oil in the country.

• expanding hydro energy plant development well underway with wind power projects in the works

• continued high-rise construction, hotel building (thousands of new rooms already in construction) with tax incentives for hotel development and general construction activities

• agricultural development

•medical tourism including visits to the John Hopkins affiliated hospital at Punta Pacifica

Panama has tremendous further economic development potential. For a country with a population of just 3.5 million (smaller population than the Philadelphia metro area), the transformation underway and current economic development is astounding.

New David Airport Terminal Now Open

It’s an impressive change to the region. The new massive terminal building and administrative offices have opened at the David Airport (about 40 minutes from Boquete). The facility was built with the expectation that international flights would soon follow though none are yet scheduled. At least three international airlines have recently sent representatives to continue the evaluation process for international flights into David including flights from the United States.

$117 million David to Boquete Road Four Lane Expansion Project Making Progress

It is now the second year of construction under a $117.6 million contract to expand the road that links David (Panama’s third largest city) with Boquete. The current road is two lanes (one each way) and the expanded road will be four (two each way). The project is expected to take three years and appears to be on schedule.

Sections of the new road are already in use though many people are unaware of the 4 lane highway nearly completed a short distance from the current two lane road in the section of the highway close to David. It will become the new larger access to the Boquete road starting at the Kentucky Fried Chicken intersection on the Pan American Highway. The current two lane parallel road a couple of blocks away will remain providing a total of six lanes in the area near David. When completed, the new road will provide a big boost to Boquete making Panama’s third largest city a short and dependable 25-35 minute ride from downtown Boquete.

New additions to Boquete

Boquete continues to grow with new restaurants, hotels, commercial buildings and amenities. A major new addition is the completion of an incredible contribution to the community:

The New Boquete Library
What an impressive accomplishment! The New Boquete Library has opened its doors. The three story, handicap accessible facility with elevator, boasts a lending library open to the public along with amenities such as 15 public use computers, a community room for special events, art exhibits, special events and social areas. It is a wonderful gift to the community. The facility was privately funded through the Lion's Club of Boquete which provided the land and other support, and major donors (Motta and Peterson families) along with many other benefactors including support from the Boquete Mayor's office.

Some other recent additions include the new Amigos restaurant, the Dona Mirta commercial building near the center of downtown, Casona del Cuzco restaurant and La Casa de la Abuela hotel (18 rooms).

A new large Social Security administrative building is under construction about one block southwest from Plaza Los Establos downtown.

At Residential Developments:

Valle Escondido – Completing a new 9 unit (3 bedrooms each) condo building. The building sold out well before completion.

Hacienda Los Molinos – New Spa and Gym facility (next to the existing hotel, La Casa de Risco) as well as other improvements well underway.

Montanas de Caldera – New pool and recreational area well underway next to the large sales office building.

Boquete Country Club – New pool now open. Gym and spa facility recently completed.

Volcancito Village – First homes and townhouses just completed in this relatively new development. Infrastructure improvements in recent months.

Was Cielo Paraiso – Now it's Lucero Golf and Country Club – the name has been changed, there have been management changes and other improvements are afoot. The new tennis courts are now open.

Canyon View Lot in Santa Lucia, Volcancito.
• with full year stream.
• Property Size: 2,005 m² / 0.50 Acre
• Price: 129,000

1.9 Hectares with Panoramic View
• Located in Alto Jaramillo
• Property Size: 1.9 Hectares /4.78 Acres.
• Price: 135,429

9.9 Hectares in San Vicente - Close to Volcan
• currently used for milk production.
• Property Size: 9.9 hectares / 24.48 Acres (Aprox.);
• Price: $220,000

3.3 Hectares in Caldera
• close to the Hot Springs.
• Property Size: 33,981 m² / 8.25 Acres
• Price:$110,000

6500 Sqmt. Property in La Tranca
• with magnificent Volcan and Pacific view.
• Property Size: 6,500 m² / 1.6 Acres
• Price:$100,000

For Sale Large Properties in La India, Boquete.
• 7 lots already segregated and ready to build.
• Property Sizes from: 1.2 Hectares / 3.1 Acres
• Prices from: $72,680