Inland Tourism Tax Credits

The President of the Republic's failure to veto Bill 789 within the prescribed period completes a long cycle of debates on the promotion of tourism infrastructure. Congratulations! 

We write these lines to clarify concepts and promote the understanding and scope of the law. And thus, help the development of tourism in the areas where it is most needed: outside the capital.

Panama, it is well known, leverages much of its development through tax incentives. In its web page, the DGI defines them as "tax incentives".a kind of incentive or stimulus granted in the form of a reduction, exemption and/or subsidy to natural and legal persons liable for a certain tax in order to stimulate production, boost exports or increase the level of investment in certain economic activities and/or region of the country considered to be of public interest for the State".

From the creation of the Colon Free Zone to the promotion of regional headquarters, we have ridden on tax exemption or reduction vehicles. The entire industrial and agribusiness sector has been able to move exports thanks to tax incentives that began in the seventies. The DGI web page has a list, not at all short, of the "Tax Incentives" and "Exonerations" that are granted.

Tax credits, an important subspecies of these incentives, have been widely used in many sectors, not least in banking, as a subsidy mechanism for housing finance.