Recently, Panama’s Ministry of Commerce and Industry passed the EMMA law (Regime for Manufacturing Services for Multinational Companies) for multinational companies establishing manufacturing units in Panama.

EMMA supports manufacturing services such as assembly, manufacturing, re-manufacturing, conditioning, maintenance, logistics services, repair and processing of products, development and distribution centers in Panama.

Panama is known for its business-friendly government and its strategic geographical position which ensures unparalleled connectivity from its ports, Canal, airports and economic zones. Boasting 23 Free Trade Agreements, it can be the ultimate destination for multinationals who are looking towards new markets.

EMMA is an opportunity for companies to be part of this logistics hub and take advantage of special incentives to expand their services.

Who can benefit from EMMA?

In order to be eligible, the foreign entity must apply for a license which will be based on evaluation of assets, minimum investment, employees, activities and the place of operation. Companies already registered under Law 41 can apply for EMMA under the same entity and receive ‘fast track’ issuance.

Being in the Special Economic Zone:

Once granted a license, the foreign company can physically establish their operations in existing Special Economic and Free Trade Zones in Panama. They will have access to the already considerable existing infrastructure, labor, living, customs, and administrative benefits.

Fiscal benefits:

Panama has enjoyed a dollarized economy since 1904 so funds can move to and from the country freely. There is no central bank, currency or exchange controls but a territorial tax system where residents and non-residents are taxed only on Panama-sourced income.

Tax Incentives under EMMA:

  • Income Tax is at a reduced 5% rate
  • Exemption of ITBMS (VAT) on services rendered to recipients outside of Panama
  • Exemption of ITBMS (VAT) on acquisition or importation by MSM entity of goods and services
  • Exemption on dividend and complementary tax
  • No fiscal equipment required
  • Price transfer rules apply
  • 2% capital gains tax rate on the transfer of shares of the foreign entity
  • Exemption commercial license tax
  • 2.5% WHT over interests remitted abroad by foreign entity, from loans given by entities established abroad.

Under EMMA, there is exemption on all taxes, fees, charges or importation duties. This includes on all types of merchandise, products, equipment and other goods in general required for manufacturing activities.

Labor Incentives under EMMA:

  • 5-year visas for executives
  • 2-year renewable visas for technicians
  • Flexibility on foreign hires (incentives on salaries importation of personal items)
  • One-Stop-Shop for expedited visas
  • Indefinitive contract
  • Fixed overtime surcharge
  • Contractual weekly rest day
  • Contractual surcharge on weekly rest day
  • May participate in training programs with local universities
  • May jointly establish a training center

ILC helps companies and entrepreneurs begin doing business in Panama. Our team of market entry consultants can assist you with all steps from market research to incorporation, legal assistance and visa services. To find out more and start your new venture within weeks, send an email to