WT/TPR/S/421 /Rev.1  
13 June 2022 
(22-4572) Page: 1/152 
Trade Policy Review Body   
 
  
TRADE POLICY REVIEW  
REPORT BY THE SECRETARIAT  
PANAMA  
Revision  
This report, prepared for the third Trade Policy Review of Panama, has been drawn up by the 
WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement 
establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing 
the World Trade Organization), sought clarification from Panama on its trade policies and practices.  
 
Any technical questions arising from this report  may be addressed to Mr. Angelo  Silvy 
(tel. 022 739 5249), to Ms. Eugenia Lizano (tel. 022 739 6578) or to Ms. Stephanie  Dorange -Patoret  
(tel. 022 739 5497). 
 
Document WT/TPR/G/421 /Rev.1  contains the policy statement submitted by Panama.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: This report was drafted in Spanish . 
  WT/TPR/S/421 /Rev.1  • Panama  
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  CONTENTS  
 
SUMMARY  ................................ ................................ ................................ ........................  8 
1   ECONOMIC ENVIRONMENT  ................................ ................................ ........................  13 
1.1   Main Features of the Economy  ................................ ................................ ..................... 13 
1.2   Recent Economic Developments  ................................ ................................ ................... 17 
1.2.1    Growth and structure of the economy  ................................ ................................ ........ 17 
1.2.2    Fiscal policy  ................................ ................................ ................................ ............ 20 
1.2.3    Mone tary policy  ................................ ................................ ................................ .......23 
1.2.4    Balance of payments  ................................ ................................ ................................ 25 
1.3   Developments in Trade and Investment  ................................ ................................ ........ 28 
1.3.1    Trends and patterns in merchandise and services trade  ................................ ................ 28 
1.3.1.1    Developments in m erchandise trade  ................................ ................................ ........ 28 
1.3.1.2    Composition of merchandise trade  ................................ ................................ .......... 28 
1.3.1.3    Direction of merchandise trade  ................................ ................................ ............... 31 
1.3.2    Trade in services  ................................ ................................ ................................ .....31 
1.3.3    Trends and patterns in FDI  ................................ ................................ ....................... 32 
2   TRADE AND INVESTMENT REGIMES ................................ ................................ ...........  35 
2.1   General Framework  ................................ ................................ ................................ ....35 
2.2   Trade Policy Formulation and Objectives  ................................ ................................ ........ 36 
2.3   Trade Agreements and Arrangements  ................................ ................................ ........... 38 
2.3.1    WTO ................................ ................................ ................................ ...................... 38 
2.3.2    Regional and preferential agreements  ................................ ................................ ........ 39 
2.3.3    Other agreements and arrangements  ................................ ................................ ......... 41 
2.4   Investment Regime  ................................ ................................ ................................ ....41 
3   TRADE POLICIES AND PRACTICES BY MEASURE  ................................ ........................  47 
3.1   Measures Directly Affecting Imports  ................................ ................................ .............. 47 
3.1.1    Customs procedures ................................ ................................ ................................ .47 
3.1.2    Customs valuation  ................................ ................................ ................................ ...51 
3.1.3    Rules of origin  ................................ ................................ ................................ ......... 52 
3.1.4    Tariffs ................................ ................................ ................................ .................... 52 
3.1.4.1    Structure and levels  ................................ ................................ .............................. 52 
3.1.4.2    Tariff bindings  ................................ ................................ ................................ ......53 
3.1.4.3    Tariff rate quotas  ................................ ................................ ................................ ..54 
3.1.4.4    Preferential tariffs  ................................ ................................ ................................ .55 
3.1.4.5    Tariff concessions  ................................ ................................ ................................ .56 
3.1.5    Other charges and taxes affecting imports  ................................ ................................ ..57 
3.1.6    Import prohibitions, restrictions and licensing  ................................ ............................. 59 
3.1.6.1    Prohibitions and restrictions  ................................ ................................ ................... 59 
3.1.6.2    Import licensing  ................................ ................................ ................................ ....60 WT/TPR/S/421 /Rev.1  • Panama  
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  3.1.7    Contingency measures  ................................ ................................ ............................. 61 
3.1.7.1    Anti-dumping and countervailing measures  ................................ .............................. 62 
3.1.7.2    Safeguard measures  ................................ ................................ ............................. 63 
3.2   Measures Directly Affecting Exports  ................................ ................................ .............. 64 
3.2.1    Export procedures and requirements  ................................ ................................ .......... 64 
3.2.2    Export taxes, charges and levies  ................................ ................................ ................ 64 
3.2.3    Export prohibitions, restrictions and licensing  ................................ .............................. 65 
3.2.4    Export incentives  ................................ ................................ ................................ .....65 
3.2.4.1    Customs regimes by industrial operation (drawback, duty -free replacement of goods  
and temporary admission regimes)  ................................ ................................ ...................... 66 
3.2.4.2    Free zones and special investment regimes  ................................ .............................. 66 
3.2.4.2.1    Free zone regime  ................................ ................................ ............................... 67 
3.2.4.2.2    Other free zones  ................................ ................................ ................................ 68 
3.2.4.2.3    Colón Free Zone  ................................ ................................ ................................ .69 
3.2.4.3    ROIN/RIN  ................................ ................................ ................................ ............ 71 
3.2.4.4    CEFA ................................ ................................ ................................ ................... 72 
3.2.4.5    Agricult ural and Agro -Industrial Promotion and Modernization Programme  
(PROMAGRO)  ................................ ................................ ................................ .................... 73 
3.2.4.6    Payment Certificate (CPC)  ................................ ................................ ...................... 74 
3.2.5    Export financing, insurance and guarantees  ................................ ................................ 74 
3.2.6    Export promotion  ................................ ................................ ................................ .....74 
3.3   Measures Affecting Production and Trade  ................................ ................................ .......75 
3.3.1    Incentives  ................................ ................................ ................................ ............... 75 
3.3.1.1    Credit and financial incentives  ................................ ................................ ................ 75 
3.3.2    Standards and technical regulations  ................................ ................................ ........... 76 
3.3.3    Sanitary and phytosanitary measures  ................................ ................................ ......... 78 
3.3.4    Competition policy and price controls  ................................ ................................ ......... 82 
3.3.4.1    Competition policy  ................................ ................................ ................................ 82 
3.3.4.2    Price controls ................................ ................................ ................................ ........ 83 
3.3.5    State trading, state -owned enterprises and privatization  ................................ .............. 85 
3.3.6    Government procurement  ................................ ................................ ......................... 86 
3.3.7    Intellectual property rights  ................................ ................................ ........................ 90 
4   TRADE POLICY BY SECTOR  ................................ ................................ ........................  94 
4.1   Agriculture, Forestry and Fisheries  ................................ ................................ ................ 94 
4.1.1    Characteristics, objectives and institutional framework  ................................ ................. 94 
4.1.2    Policy instruments  ................................ ................................ ................................ ...96 
4.1.2.1    Measures affecting imports  ................................ ................................ .................... 96 
4.1.2.2    Measures affecting exports  ................................ ................................ ..................... 97 
4.1.3    Domestic support measures  ................................ ................................ ...................... 98 
4.2   Mining and Energy  ................................ ................................ ................................ .... 102 
4.2.1    Electricity  ................................ ................................ ................................ .............  102 WT/TPR/S/421 /Rev.1  • Panama  
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  4.3   Manufacturing  ................................ ................................ ................................ ..........  106 
4.4   Services  ................................ ................................ ................................ ..................  108 
4.4.1    Financial services  ................................ ................................ ................................ ... 108 
4.4.1.1    General features  ................................ ................................ ................................ . 108 
4.4.1.2    Banks and other financial institutions  ................................ ................................ .... 108 
4.4.1.2.1    Features of the market  ................................ ................................ .....................  108 
4.4.1.2.2    Legal framework  ................................ ................................ ..............................  110 
4.4.1.3    Insurance  ................................ ................................ ................................ ..........  117 
4.4.1.3.1    Features of the market  ................................ ................................ .....................  117 
4.4.1.3.2    Legal framework  ................................ ................................ ..............................  117 
4.4.1.4    Securities market  ................................ ................................ ................................  120 
4.4.2   Telecommunications  ................................ ................................ ...............................  122 
4.4.3    Transport  ................................ ................................ ................................ ..............  125 
4.4.3.1    Air transport  ................................ ................................ ................................ ....... 126 
4.4.3.2    Maritime transport  ................................ ................................ ..............................  128 
4.4.4    Tourism  ................................ ................................ ................................ ................  134 
5   APPENDIX TABLES  ................................ ................................ ................................ .. 138  
 
CHARTS  
 
Chart 1.1 Merchandise trade by main products, 2013 and 2020  ................................ .............  29 
Chart 1.2 Merchandise trade by trading partner, 2013 and 2020  ................................ ............  30 
Chart 2.1 Legislative procedure  ................................ ................................ .........................  35 
Chart 2.2 Panama, current trade agreements, 2021  ................................ .............................  39 
Chart 3.1 Frequency distribution of MFN tariff lines, 2021  ................................ .....................  53 
Chart 3.2 Procedure for the adoption of anti -dumping and countervailing measures, 2021  ........  62 
Chart 3.3 Safeguard investigation procedure, 2021  ................................ ..............................  63 
Chart 3.4 The process for developi ng standards and technical regulations  ...............................  77 
Chart 3.5 Industrial property data, 2014 -20 ................................ ................................ ........  92 
Chart 4.1 Power generation by source, 2014 -21 ................................ ................................  105 
Chart 4.2 Air services agreements  ................................ ................................ ....................  127 
Chart 4.3 Port operations by type of cargo, 2014 –21 ................................ ..........................  132 
 
TABLES  
 
Table 1.1 Basic economic indicators, 2013 -21Q2  ................................ ................................ .. 13 
Table 1.2 GDP by type of expenditure, 2013 -20 ................................ ................................ ... 18 
Table 1.3 Non -financial public sector (NFPS) finances, 2013 -20 ................................ .............  21 
Table 1.4 Main monetary indicators, 2013 -21Q2  ................................ ................................ .. 23 
Table 1.5 Balance of payments, 2013 -21Q1  ................................ ................................ ........  25 
Table 1.6 Trade in services, 2013 -20 and first quarter of 2021  ................................ ..............  31 WT/TPR/S/421 /Rev.1  • Panama  
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  Table 1.7 Foreign direct investment (FDI) position and flo ws, by sector (2013 -20 and first  
quarter of 2021)  ................................ ................................ ................................ ..............  32 
Table 1.8 Foreign direct investment (FDI) by sector (cumulative volume), 2013 -20 .................  33 
Table 1.9 FDI in the Republic of Panama, by origin, 2013 -20 ................................ .................  34 
Table  2.1 Free zones/ZLC and risks identified by the authorities  ................................ ............  38 
Table  2.2 Panama CACM tariff reduction programme  ................................ ............................  40 
Table  2.3 Tariff reduction programmes negotiated  by Panama  ................................ ...............  41 
Table  2.4 FDI cap, 2014 -21 ................................ ................................ ...............................  42 
Table  2.5 City of Knowledge incentives  ................................ ................................ ...............  43 
Table  2.6 SEM company indicators, 2014 -21 ................................ ................................ ....... 44 
Table  2.7 Tax benefits and tariff exemptions for SEM and EMMA companies  ............................  44 
Table  2.8 Steps to form a business  ................................ ................................ .....................  45 
Table 3.1 Goods detained at customs, 2014 -21 ................................ ................................ ... 49 
Table 3.2 Import requirements according to customs reg ime, 2020  ................................ ........  50 
Table 3.3 Structure of MFN tariffs, 2013 and 2021  ................................ ...............................  52 
Table 3.4 Tariff lines for which MFN tariffs are higher than bound tariffs, 2021  ........................  54 
Table 3.5 Analysis of the tariff applied under Panama's trade agreements with other countries, 
2021 ................................ ................................ ................................ ..............................  55 
Table 3.6 Other charges and taxes affecting imports, 2021  ................................ ...................  57 
Table 3.7 Tax collection, 2014 -20 ................................ ................................ ......................  58 
Table 3.8 Restricted or prohibited imports, 2021  ................................ ................................ .. 59 
Table 3.9 Import prohibitions for plant and animal health reasons, 2014 -21 ............................  60 
Table 3.10 Exports subject to special control or procedure by the Panamanian Aquatic  
Resources Authority (ARAP)  ................................ ................................ ..............................  65 
Table 3.11 Tax benefits, 2021  ................................ ................................ ...........................  67 
Table 3.12 ZLC foreign trade, 2014 -20 ................................ ................................ ...............  69 
Table 3.13 Tax incentives granted under ROINa ................................ ................................ ... 71 
Table 3.14Type of enterprise, 2021  ................................ ................................ ....................  76 
Table  3.15 Legislation governing the national quality system, 2021  ................................ ........  76 
Table  3.16 Competition statistics, 2014 -21 ................................ ................................ ..........  83 
Table  3.17 Public and semi -public enterprises, 2014 and 2021  ................................ ..............  85 
Table  3.18 Government procurement methods used between 2014 and 2021  ..........................  87 
Table  3.19 Government procurement indicators, 2014 -20 ................................ .....................  88 
Table  3.20 Government procurement methods used by the ACP in 2021  ................................ . 89 
Table  3.21 ACP government procurement indica tors, 2014 -21 ................................ ...............  89 
Table  3.22 Main features of the protection of intellectual property rights, 2021  ........................  90 
Table  3.23 Value of goods seized for infringement of intellectual property rights, 2014 -20 ...........  93 
Table 4.1 Main indicators for the agricultural sector, 2014 -20 ................................ ................  94 
Table 4.2 Domestic support for agriculture, 2014 -20 ................................ ............................  98 
Table 4.3 State -owned and joint ventures in the electric ity sector, 2021  ...............................  103 
Table  4.4 Limits on combinations of activities in the electricity sector  ................................ ... 104 WT/TPR/S/421 /Rev.1  • Panama  
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  Table  4.5 State support for electricity distribution and marketing companies, 2014 -21 ...........  104 
Table  4.6 Incentives for clean or renewable power generation, 2014 and 2020  ......................  106 
Table  4.7 Main indicat ors in the manufacturing subsector, 2014 -20 ................................ ...... 106 
Table 4.8 Structure of the Panamanian financial system, 2020  ................................ ............  108 
Table 4.9 Panama's domestic banking system and International Banking Centre: liquidity,  
capital adequacy and profitability indi cators, 2014 –21 ................................ ........................  110 
Table 4.10 Telecommunications sector indicators, 2014 –20 ................................ .................  122 
Table 4.11 Classification of telecommunications services, 2014 –21 ................................ ...... 124 
Table 4.12 International air traffic at Tocumen, 2014 -20................................ .....................  128 
Table 4.13 Panamanian merchant shipping re gisters  ................................ ..........................  129 
Table 4.14 Shipping registration, 2014 –20 ................................ ................................ ........  130 
Table 4.15 Panama Canal indicators, 2014 –20 ................................ ................................ ... 133 
Table 4.16 The pandemic and its impact on Panama Canal operations, April –June 2019 and  
April–June 2020  ................................ ................................ ................................ .............  133 
Table 4.17 Contribution of the ACP to the National Treasury and other state institutions,  
2014–20 ................................ ................................ ................................ .......................  134 
Table 4.18 International tourism indicators, 2014 –20 ................................ .........................  134 
Table 4.19 Main incentives granted to tourism enterprises, 2014 –20 ................................ .... 136 
 
BOXES  
 
Box 1.1 Economic measures taken by Panama in response to the COVID -19 pandemic  
(March 2020 - August 2021)  ................................ ................................ ............................... 15 
Box 3.1 Functions and powers of ANA, 2020  ................................ ................................ .......... 47 
Box 3.2 Types of declaration  ................................ ................................ ............................... 48 
Box 3.3 Admission regimes  ................................ ................................ ................................ .50 
Box 3.4 Conventions to which Panama is a signatory, 2021  ................................ ..................... 59 
Box 3.5 Customs regimes by industrial operations  ................................ ................................ .66 
Box 3.6 Main features of ZLPs, 2021  ................................ ................................ .................... 69 
Box 3.7 Tax benefits granted under RIN, 2021  ................................ ................................ ......72 
Box 3.8 Institutions responsible for developing sanitary and phytosanitary measures, 2021  ............. 79 
Box 4.1 Support arrangements by product  ................................ ................................ ............ 99 
Box 4.2 Laws on prevention of money laundering, financing of terrorism and financing of the 
proliferation of weapons of mass destruction  ................................ ................................ ....... 111 
Box 4.3 Banking agreements concluded between 2013 and 2021  ................................ ...........  112 
Box 4.4 Loan modification agreements concluded by banks to mitigate the effects of the COVID -19 
pandemic  ................................ ................................ ................................ ........................  115 WT/TPR/S/421 /Rev.1  • Panama  
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  APPENDIX TABLES  
 
Table A1.1 Merchandise exports by HS section, 2013 -20 ................................ .....................  138 
Table A1.2 Total merchandise imports by HS section, 2013 -20 ................................ ............  140 
Table A1.3 Merchandise exports by trading partner, 2013 -20 ................................ ..............  143 
Table A1.4 Merchandise imports by trading partner, 2013 -20 ................................ ..............  144 
 
Table A2.1 Trade measures notified to the WTO, 1 January 2014 -30 September 2021  ............  146 
 
Table A3.1 Summary analysis of the MFN tariff, 2021  ................................ .........................  148 
Table A3.2 Imports subject to tariff quotas, 2019 and 2020  ................................ ................  150 
Table A3.3 Goods and services exempt from ITBMS, 2021  ................................ ..................  152 
  WT/TPR/S/421 /Rev.1  • Panama  
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  SUMMARY  
1. Panama has a small, relatively open economy that is highly dependent on services, especially 
those related to foreign trade. The Panama Canal and the development of free zones make the 
country one of the world's most important distribution and re -export centres, which is why in 2019, 
the sum total of Panama's expo rts and imports of goods and services was equivalent to 82% of GDP. 
Services accounted for 70% of GDP during the review period; in 2020, the most important services 
were wholesale and retail trade; transport, storage and communications; financial intermedi ation; 
and real estate, business and rental activities. All of these services are related in some way to 
international trade. The structure of Panama's merchandise trade is of particular importance: a 
distinction must be drawn between trade from the Panama nian customs territory per se and trade 
through the Colón Free Zone, where three quarters of the value of the country's total merchandise 
trade is processed. During the review period, there was a significant change in the type of 
merchandise exported by Pa nama: until 2018, agricultural and food products dominated, whereas 
in 2019, exports of mining products, specifically copper, which were previously non -existent, 
commenced following the opening of a copper mine that year, accounting for 56% of all goods 
exported in 2020.  
2. The Panamanian economy grew rapidly between 2013 and 2017, but in 2018 entered a period 
of lesser growth as a result of the drop in the momentum generated by the works to widen the 
Panama Canal. This economic expansion was followed in 20 20 by a sharp contraction of 17.9% 
caused by the effects of the COVID -19 pandemic. Economic activity continued to be affected by the 
pandemic in the early months of 2021 when real GDP shrank by 8.5%. For most of the review period, 
the primary driver of eco nomic growth was domestic demand, especially gross fixed capital 
formation. In 2020 and 2021, the authorities implemented a series of measures in fiscal, income, 
monetary and financial matters to mitigate the effects of the pandemic.  
3. Panama uses the Uni ted States dollar as its currency of legal tender and thus does not have 
its own monetary policy instruments. Nor does it have a central bank that performs functions such 
as currency issuance, the management of bank reserves, credit regulation or lender of  last resort. 
The nominal exchange rate between the dollar and the national currency, the balboa, is fixed at 
parity. Local interest rates and the money supply are determined by market forces and influenced 
by international interest rates and the monetary policy adopted by the United States Federal 
Reserve. There are no mechanisms for controlling interest rates, no legal reserve requirements on 
bank deposits, and no restrictions on the flow of funds out of or into the banking system. During the 
review perio d, interest rates remained relatively stable, owing primarily to the liquidity derived from 
international capital flows by way of foreign direct investment (FDI) in the early years of the period 
and loans in the aftermath of the health crisis.  
4. In the ab sence of a monetary policy as such, fiscal policy plays a key role as a tool for 
macroeconomic management: any variation in the real exchange rate must be offset through fiscal 
or other policies that affect prices. Since 2008, Panama has applied a fiscal r ule that the net debt to 
GDP ratio should not exceed 40%. This target was reinforced in 2018; however, targets have been 
reformulated in light of the pandemic so as to allow higher fiscal deficits until 2025. Despite the 
fiscal rule, the rise in (primarily  capital) expenditure has resulted in the public finances recording 
deficits throughout the review period that, almost every year, exceeded the legal limits. In 2020, 
the deficit widened considerably owing to the lower revenue and greater expenditure occas ioned by 
the pandemic. The main fiscal policy challenge is still to increase revenues. The public debt to 
GDP ratio grew during the review period, reaching over 69% in 2020. However, as there is no 
foreign  exchange risk, Panamanian debt can be placed on th e international markets at relatively low 
rates, a factor that has been instrumental in implementing the measures taken to counter the 
negative effects of the pandemic.  
5. Panama's current account balance of payments was in deficit during the period 2013 -19, 
primarily reflecting the imbalance in the balance of trade in goods; it was financed by the surplus in 
the capital and financial accounts resulting mainly from FDI flows. Owing to the slump in imports of 
goods and services caused by the pandemic, which surpassed even the fall in exports, the current 
account posted a surplus of more than USD  1,200 million in 2020. The deteriorating fiscal and 
balance of payment conditions led Panama to request and obtain financial support from the IMF, 
initially to addres s the immediate balance of payments needs and then in 2021 as insurance against 
extreme external shocks.  WT/TPR/S/421 /Rev.1  • Panama  
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  6. The objective of trade policy in Panama is to improve performance in exports of goods and 
services and to attract foreign investment. The aim of the  export promotion strategy is to improve 
the quality of exports, take advantage of trade agreements and access new markets. Two new 
special regimes were created in 2020 and 2021 to attract more foreign investment in both 
agricultural activities and support  services for manufacturing (EMMA special regime). Moreover, 
investment continues to be promoted in its traditional target sectors by offering new incentives, 
making it easier to obtain permanent residency and maintaining legal stability. Free zone and lik e 
regimes are central elements of Panama's external trade and investment policy; these regimes are 
regarded as helping to diversify the economy and consolidate the country's integration into 
international value chains.  
7. Panama has been a Member of the WTO since 1997 and grants at least most favoured nation 
(MFN) treatment to all its trade partners. The multilateral system is of great importance to Panama 
as an economy that is heavily reliant on international trade -related activities, and the country 
therefore advocates a rules -based, inclusive multilateral trading system. In 2015, Panama ratified 
the Trade Facilitation Agreement and since 2017 has granted preferential treatment to services and 
service providers from least developed countries (LDCs). Pana ma supports the negotiations on 
services and initiatives to eliminate distortions in agriculture and fisheries; it also participates in 
discussions on new trade -related topics. Since the previous review in 2014, Panama has regularly 
notified its trade and related measures. As to dispute settlement, since 2014, Panama has not been 
involved in any dispute as a complainant; however, one complaint was filed against Panama.  
8. Panama participates in a number of trade agreements, including the Central American 
Common Market (CACM) and the Latin American Integration Association (LAIA). Six trade 
agreements entered into force in Panama during the review period: with the European Free Trade 
Association (EFTA) in 2014; with Mexico in 2015; with Trinidad  and Tobago in 2016; with Israel in 
2020; and with the Republic  of Korea and the United  Kingdom in 2021.  
9. Panama affords national treatment to foreign investment without the need for authorization 
or registration. It places no restrictions on the repatriation of invest ment capital or on remittances 
of dividends, interest or other profits to other countries. However, apart from repatriated dividends, 
remittances are generally subject to a withholding tax.  Panama promotes the employment of its 
nationals in companies estab lished in Panama.  
10. Although Panama's investment regime is essentially open, there are some restrictions. Both 
domestic and foreign investment is prohibited in electricity transmission and mail services: two 
activities where a state monopoly exists. Priv ate investment is also prohibited in mineral deposits 
and salt pans, as they are the property of the State and a concession is required for their exploitation. 
Foreign investment continues to be prohibited in communications media, retail activities, and 
tourism (with a few exceptions), and foreigners may not purchase land in certain areas of the 
country. Moreover, there are restrictions on FDI in air and road transport as well as free -to-air radio 
and television services.  
11. Import and export procedures di d not change substantially during the review period. A 
customs broker is still required for imports, but is optional for exports or re -exports. The Single 
Window for Foreign Trade, an office that deals with various formalities, can be used only for export 
(and re -export) procedures. The goods valuation procedure did not change during the review period. 
Panama mainly uses the transaction value.  
12. Since 2018, Panama has, with certain exceptions, used the Central American Import Tariff, 
which is based on the  Harmonized System (HS) 2017. Panama uses ad valorem  tariffs for 99.7% of 
the tariff universe. During the period 2013 -21, the simple average applied MFN tariff fell from 7.6% 
to 6.9%, due to the increase in tariff lines that are duty -free, from 34.5% to 45 .5%. This was the 
most significant change in the Tariff Schedule during the review period. The average tariff for 
agricultural products (WTO definition), which rose from 13.7% in 2013 to 15.2% in 2021, is still 
much higher than the average applied tariff f or non -agricultural products (5.3%). Panama bound its 
entire Tariff Schedule at rates ranging from 0% to 260%. In addition to tariffs, imported and 
domestic products alike are subject to indirect taxes and the Administrative Charge for Customs 
Services (TA SA). WT/TPR/S/421 /Rev.1  • Panama  
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  13. As in 2014, Panama continues to offer tariff concessions to promote various sectors of the 
economy, as well as special customs regimes such as free zones and other export support 
programmes, investment and duty -free shops. In addition, the Cabinet  Council may provide for other 
reductions or exemptions from payment of customs duty. Thus in 2020, in light of the pandemic, 
Panama temporarily lowered or eliminated tariffs on certain disinfectants, protective materials and 
oxygen.  
14. Panama may impose prohibitions, controls or restrictions on imports or exports when 
necessary in order, inter alia,  to protect the environment, human, animal or plant health, or security, 
or in respect of staple goods in short supply, or in respect of such goods as may be d etermined by 
the Executive in accordance with Panama's economic interests. With the exception of the prohibition 
on the export of a tropical wood, Cocobolo, there have been no changes to the goods subject to 
these measures since the previous review.  
15. Panama does not make frequent use of anti -dumping and/or countervailing measures. During 
the review period, it did not initiate any anti -dumping or countervailing duty investigations and nor 
did it impose any anti -dumping or countervailing measures. In the c ontext of this review, the 
authorities indicated that the legislation governing such measures has not been amended 
since 2014. Where safeguards are concerned, Panama initiated an investigation in 2019 that was 
subsequently dropped. Panama is also able to i mpose bilateral and special safeguard measures 
negotiated under trade agreements. In that connection, Panama opened several investigations that 
led to the imposition of safeguard measures on some agricultural products (beef, other cheese, 
yoghurt, whole mi lk powder and butter). Over the period 2014 -20, Panama did not use the WTO 
special agricultural safeguard. In 2018, Panama adopted temporary measures to control the 
marketing of beef imports from Nicaragua and Costa  Rica. 
16. Export promotion continues to be one of the mainstays of Panamanian trade policy. Panama 
applied to the WTO for an extension to the time limit for eliminating the export subsidies granted 
under the export processing zones (ZPE) and Official National Industry Register (ROIN) programmes.  
Panama maintained the subsidies until 31  December 2015 and notified the measures it had taken 
to dismantle them. Panama also maintains a number of export support programmes, comprising 
different customs regimes (duty drawback, duty -free replacement of goo ds, and temporary 
admission regimes), various types of special economic zones (free zones, Colón Free Zone and 
Panama -Pacific Special Economic Area) and other tax incentive schemes. In general, Panama does 
not impose export taxes, charges or levies, except  on processed wood from natural forests, which 
is subject to a levy of 1% of the f.o.b. value. As in 2014, there are currently no official export finance, 
insurance and guarantee programmes in Panama.  
17. In addition to incentives to promote exports, Panam a offers horizontal incentives in the form 
of special schemes, such as the special zones, business headquarters (SEM) and EMMA regimes and 
the City of Knowledge initiative, that are intended to drive investment, stimulate production and to 
promote employme nt and the transfer of technology and knowledge. There are also incentives that 
target particular sectors and/or specific provinces. Most sectoral incentives have not changed 
substantially since the previous review in 2014 and are still intended, inter ali a, to promote banana 
production, reforestation, mining, renewable energy, the film and audiovisual industry, call centres, 
tourism, construction and the shipbuilding industry.  
18. The aim of standardization policy in Panama is to develop technical specific ations that can be 
used on a voluntary basis as a benchmark to improve the quality and safety of any technological, 
scientific, or industrial activity or services. The procedures for drafting technical regulations have 
not changed significantly since 2014.  They are usually reviewed at five -year intervals or upon 
request. Only one of the technical regulations notified by Panama was the subject of a specific trade 
concern that was raised with the WTO Committee on Technical Barriers to Trade.  
19. During the re view period, Panama adopted the Central American Regulations on Sanitary and 
Phytosanitary Measures and Procedures. As a result, and in order to harmonize its measures with 
those in place regionally, Panama made some changes to its system of sanitary and p hytosanitary 
measures (SPS). Panama maintains strict controls at its borders so that it can protect animal and 
plant health and therefore continue to develop its agricultural sector. During the review period, 
Members questioned five plant and animal health  measures notified by Panama. One of these 
resulted in a complaint against Panama under the dispute settlement system.  WT/TPR/S/421 /Rev.1  • Panama  
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  20. There has been no substantial change in Panama's competition regime since 2014. The regime 
applies to all transactions conducted in P anama and abroad, provided that they affect competition 
on the Panamanian market. The activities excluded from the competition regime are those carried 
out by the State, namely those that are the subject of a state monopoly (power transmission and 
mail ser vices) or are not subject to concessions, such as the Panama Canal and gambling activities. 
The sectoral regulations for the electricity and telecommunications markets also include provisions 
on competition. During the review period, Panama maintained regu lation of petrol and diesel prices, 
and from 2014 began to regulate the price of liquid petroleum gas cylinders and the price of products 
in the basic basket. In 2020, the selling price of essential goods was also regulated in the midst of 
the pandemic.  
21. The government procurement regime is used in all public entities and companies in public 
ownership, except the Panama Canal Authority (ACP) and the Social Security Fund, which have their 
own procurement regimes. Foreigners are able to participate in gove rnment procurement processes 
in Panama and are afforded national treatment unless they are from a State that imposes 
discriminatory restrictions on Panama. Since 2014, the government procurement system has 
undergone several changes, including the adoption of new procurement methods, thresholds and 
preferences; a streamlining of bureaucracy in the procurement process; and the promotion of 
socially and environmentally responsible procurement. Government procurement is decentralized. 
The ACP's procurement syst em was also amended during the review period, particularly where 
procurement methods and thresholds are concerned. Panama has observer status on the Committee 
on Government Procurement.  
22. Between 2014 and 2021, the requirements and conditions for the pro tection of intellectual 
property rights in Panama have not undergone substantial change. During that time, only a few 
patents were granted to residents, potentially implying that inventiveness is low despite the 
incentives Panama employs to promote R&D, su ch as the City of Knowledge. By contrast, the 
registration of trademarks by residents is high, showing that trade is a very important activity in the 
country.  
23. The agricultural sector, despite its limited contribution to GDP (2.4% in 2020), is very 
important for socioeconomic development because it employs over 14% of the workforce in rural 
areas. For that reason, Panama uses trade measures in addition to the Tariff Schedule to protect or 
promote agriculture and stock -farming, such as plant and animal he alth controls, safeguard 
measures, transfer pricing, export promotion programmes, marketing support measures and other 
programmes and projects implemented by the responsible entities in the sector. The average tariff 
applied to agricultural products (WTO d efinition) was 15.2% in 2021 and continues to be much 
higher than the average tariffs applied to non -agricultural products (5.3% in 2021). Panama uses 
tariff quotas for various agricultural products (rice, pig meat, poultry meat, potatoes, dairy products, 
beans and tomatoes) and they are distributed using non -automatic licensing. Quota use varies 
substantially depending on the product:, take -up is almost 100% for some (pig meat and tomatoes), 
while they are not used for others  (beans). During the period 201 4-20, Panama did not grant any 
export subsidies for agricultural products. Nonetheless, a series of incentive programmes was 
implemented, including the Agricultural Exports Promotion Certificate (CEFA) and the Agricultural 
and Agro Industrial Promotion and  Modernization Programme (PROMAGRO) to promote agricultural 
exports; the programmes have been restricted to just a few products so their impact has not been 
significant. Through the Agricultural Development Bank (BDA), a state development bank, the 
agricul tural sector has access to credit at preferential rates; additionally, developing the agricultural 
sector is one of the primary objectives of the National Bank of Panama (BNP).  
24. Since the previous review in 2014, Panama has diversified its energy basket , offering 
incentives for using clean, renewable sources so as to reduce the effects of climate change and the 
country's dependence on imported fossil fuels. Private domestic and foreign investment in power 
generation, distribution and marketing is permitt ed. Foreigners may hold a controlling stake in any 
of these activities. Control over transmission remains in the hands of the State, which also 
participates in the other activities in the electricity sector. Panama continued to subsidize consumer 
electrici ty tariffs and to maintain cross subsidies to finance subsistence consumption; additionally, 
some customers obtained further discounts in light of the pandemic.  
25. Services are Panama's most important sector, especially financial and trade -related servic es. 
Financial intermediation activities accounted for about 7.5% of GDP and 2.5% of employment 
in 2020. As of 31 July 2021, the banking sector comprised 68  banks (compared to 92 in 2013): two WT/TPR/S/421 /Rev.1  • Panama  
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  were official banks, 40 held a general licence, 16 had an intern ational licence and 10 an agency 
licence. Most of these banks were in foreign ownership. The banking sector continued to show 
resilience and high levels of capitalization and liquidity during the review period, despite the adverse 
effects of the COVID -19 pandemic. This is the result of the strict application of prudential regulations. 
In June 2021, the capital adequacy ratio in the banking sector was 16.2%, well above the regulatory 
minimum of 8%. The authorities consider that the strict prudential requirem ents are particularly 
important given the absence of a central bank and deposit insurance. To counter the adverse effects 
of the pandemic, as of 1  March 2020, a moratorium was established on the payment of loans granted 
by banks, cooperatives and finance c ompanies, whether public or private, until 31  December  2020. 
The moratorium was subsequently extended until 31  December 2021.  
26. As in transport services, Panama has become much more important in the telecommunications 
sector regionally because it is the hub for the regional and international fibre -optic network. During 
the review period, the principal change in the telecommunications market was an increase in 
concentration: two companies were taken over by a new company that became the main service 
provider. Panama continues to restrict access to the mobile telephony market by limiting the number 
of operators.  
27. Panama is an important hub for air and port transhipment and has become a logistics hub for 
trade at regional and global levels. The state -run Tocumen International Airport is a transfer hub for 
flights in the region and the regional centre for one of the world's leading delivery services. 
Transhipments dominate in the ports sector as a result of the Panama Canal: in 2020, nine out of 
10 conta iners passing through Panama were transhipments. Around 2.3% of world maritime trade 
transits through the Panama Canal. As a result, the sale of maritime fuel has become an important 
activity for Panama. Canal revenue is a significant proportion of total n on-tax revenues received by 
Panama ( 75.1% in 2020). In 2020, the Canal's direct contribution to GDP was 3.5%, and when 
indirect contributions are taken into account, it was 5.2%.  
28. As to maritime transport, in 2017, the Maritime Single Window of Panama c ame into use to 
improve the efficiency of port operations. Although Panama removed the restriction on participation 
by foreigners in lighterage and provisioning services in 2015, since 2017 it has been possible to 
restrict the number of licences issued for  the provision of port services, including maritime lighterage 
and provisioning. Panama has the largest shipping register in the world, a product of the flexible 
registration procedures and credits it provides.  Panama also offers incentives to shipyards, a s well 
as marine insurance and finance.  
29. In 2019, prior to the pandemic, tourism accounted for 51% of Panama's services exports. 
Foreigners may provide certain services in the sector. In 2020, various support measures were put 
in place to mitigate the e ffects of the pandemic and promote tourism; local tourism was also 
promoted as a driver of recovery.  
 WT/TPR/S/421 /Rev.1  • Panama  
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  1  ECONOMIC ENVIRONMENT  
1.1  Main Features of the Economy  
1.1.  The sectoral structure of the Panamanian economy continues to be dominated by services, 
which accounted for 70% of GDP during the review period (Table 1.1). Chief among them, by share 
of GDP in 2020, were w holesale and retail trade (18.3%), transport, storage and communications 
(13.9%), financial intermediation (7.5%) and real estate, business and rental activities (5.9%). 
Among "primary and industrial sector" activities, those accounting for significant sha res of GDP 
included construction (10.9% in 2020), manufacturing (5.7%), mining and quarrying (3.6%), 
agriculture (2.4%), electricity, gas and water supply (2.3%), and fisheries (0.4%).  
Table  1.1 Basic economic indicators, 2013 -21Q2  
 
2013  2014  2015  2016  2017  2018a 2019b 2020b 2021Q2b 
Gross Domestic Product 
(GDP)           
Current GDP at purchaser's 
prices (PAB million)  44,856  49,166  54,092  57,908  62,203  64,928  66,788  52,938  28,489  
Current GDP (USD million)  44,856  49,166  54,092  57,908  62,203  64,928  66,788  37,943  28,489  
Real GDP growth rate (%)  6.9 5.1 5.7 5.0 5.6 3.6 3.0 -17.9 .. 
GDP per capita (current 
USD)c 11,842  12,757  13,607  14,344  15,178  15,612  15,831  12,373  .. 
Structure of GDP by branch of economic activity (% of GDP at current prices)  
Market output  81.5 81.3 81.2 80.6 80.3 80.2 80.0 76.0 76.8 
 Agriculture, livestock, 
hunting and forestry  2.4 2.2 2.1 2.1 1.9 1.9 1.9 2.4 2.1 
 Fisheries  0.6 0.8 0.6 0.5 0.5 0.4 0.3 0.4 0.3 
 Mining and quarrying  2.0 2.2 2.0 2.0 2.0 1.9 2.4 3.6 6.0 
 Manufacturing  6.2 5.9 6.4 6.2 6.1 5.9 5.7 5.7 5.9 
 Electricity, gas and water 
supply  2.3 2.2 1.6 1.7 1.7 1.7 1.9 2.3 2.1 
 Construction  13.3 14.6 16.1 16.9 17.9 18.3 17.9 10.9 13.4 
 Wholesale and retail trade  21.8 20.8 19.5 19.0 18.4 18.7 18.4 18.3 15.9 
 Hotels and restaurants  3.7 3.6 4.0 4.1 4.0 3.7 3.6 2.1 1.7 
 Transport, storage and 
communications  13.2 12.6 11.8 11.3 11.4 11.3 11.8 13.9 13.5 
 Financial intermediation  6.7 6.6 6.3 6.3 6.4 6.3 6.1 7.5 7.1 
 Real estate, business and 
rental activities 
(accounting, legal and 
real estate services)  8.0 8.3 7.5 7.3 7.0 6.9 6.8 5.9 5.6 
 Private education services  0.9 0.9 0.9 0.9 0.9 1.0 1.0 1.0 0.9 
 Social services and private 
healthcare  1.0 1.0 1.0 1.0 1.0 1.0 1.1 1.4 1.3 
 Other community, social 
and personal services 
(casinos, lotteries and 
other)  1.7 1.7 1.3 1.3 1.2 1.2 1.1 0.8 0.7 
 Minus:  Financial 
intermediation services 
indirectly measured 
(FISIM)  2.2 2.1 .. .. .. .. .. .. .. 
Production for own final use  6.8 7.1 7.8 7.7 7.8 7.8 7.9 9.0 8.8 
Construction  1.1 1.2 1.5 1.6 1.7 1.7 1.7 1.0 1.2 
 Real estate, business and 
rental activities  5.2 5.4 5.8 5.7 5.7 5.7 5.7 7.5 7.2 
 Private homes with 
domestic service  0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.5 0.4 
Non-market output  7.6 7.4 7.2 7.7 8.2 8.6 8.9 12.3 11.7 
 Public administration and 
defence; compulsory 
social security schemes  .. .. 3.4 3.7 4.0 4.2 4.6 6.6 .. 
 Education  .. .. 2.1 2.1 2.2 2.2 2.2 2.3 .. 
 Social services and public 
healthcare  .. .. 1.5 1.7 1.9 2.0 2.0 3.2 .. 
 Other community, social 
and personal services  .. .. 0.1 0.1 0.1 0.1 0.1 0.2 .. 
Gross value added at basic 
prices  95.9 95.8 96.2 96.0 96.3 96.6 96.8 97.3 97.3 
 Plus: Taxes net of 
subsidies on products  4.1 4.2 3.8 4.0 3.7 3.4 3.2 2.7 2.7 
Employment  
Economically active 
population (EAP) (thousand 
persons)d 1,744  1,781  1,826  1,874  1,902  1,987  2,067  2,003  .. WT/TPR/S/421 /Rev.1  • Panama  
- 14 - 
   
2013  2014  2015  2016  2017  2018a 2019b 2020b 2021Q2b 
Activity rate (%, as of 
August each year)d 64.1 64.0 64.2 64.4 64.0 65.4 66.5 63.0 .. 
Unemployment rate (%, as 
of August each year)d 4.1 4.8 5.1 5.5 6.1 6.0 7.1 18.5 .. 
Open unemployment rate 
(%, as of August each year)d 3.1 3.5 3.8 4.4 4.8 4.9 5.8 .. .. 
Employed population by economic activity (% of total employed population)d 
Primary sector  16.4 15.7 14.7 15.4 14.5 14.2 14.4 14.1 .. 
 Agriculture, livestock, 
hunting, forestry, 
fisheries, and related 
service activities  16.4 15.7 14.7 15.4 14.5 14.2 14.4 14.1 .. 
Secondary sector  20.1 20.1 18.7 18.4 18.6 18.8 17.7 18.4 .. 
 Mining and quarrying  0.3 0.2 0.2 0.2 0.2 0.4 0.4 0.2 .. 
 Manufacturing  7.7 7.4 7.7 7.3 7.3 7.6 7.5 9.0 .. 
 Electricity, gas, steam and 
air conditioning supply  0.3 0.4 0.3 0.3 0.3 0.2 0.3 0.2 .. 
 Water supply; sewerage; 
waste management and 
sanitation activities  0.7 0.6 0.5 0.5 0.6 0.4 0.5 0.5 .. 
 Construction  11.2 11.6 10.0 10.0 10.1 10.2 9.0 8.5 .. 
Tertiary sector  63.5 64.2 66.6 66.2 67.0 67.0 67.9 67.5 .. 
 Wholesale and retail 
trade and repair of motor 
vehicles and motorcycles  17.6 18.2 18.4 17.8 17.6 18.3 18.2 16.9 .. 
 Transport, storage and 
postal services  7.3 7.0 7.4 7.5 8.0 7.4 7.5 7.2 .. 
 Hotels and restaurants  5.1 4.7 5.1 5.6 5.9 5.5 5.3 4.3 .. 
 Information and 
communication  1.2 0.8 1.2 1.3 1.3 1.5 1.4 1.5 .. 
 Financial and insurance 
activities  2.5 2.3 2.6 2.5 2.5 2.3 2.4 2.4 .. 
 Real estate activities  0.7 0.9 0.8 1.1 1.0 0.9 0.7 0.8 .. 
 Professional, scientific, 
and technical activities  2.0 3.0 2.5 2.4 2.4 2.1 2.3 2.3 .. 
 Administrative activities 
and support services  3.5 3.3 3.5 3.3 3.4 3.4 3.7 4.2 .. 
 Public administration and 
defence; compulsory 
social security schemes  6.4 6.1 6.4 6.4 6.7 6.4 6.1 7.1 .. 
 Education  5.4 5.4 5.5 5.7 5.5 5.5 5.5 7.7 .. 
 Social and health -related 
services  3.5 4.0 4.6 4.6 4.4 5.1 4.8 4.4 .. 
 Arts, entertainment and 
creativity  1.0 0.9 1.0 0.9 0.9 0.9 1.0 0.4 .. 
 Other service activities  2.9 2.9 3.1 3.1 3.4 3.9 4.1 3.9 .. 
 Activities of households as 
employers; 
undifferentiated goods - 
and services -producing 
activities of households 
for own use  4.4 4.5 4.3 4.0 3.9 4.0 4.6 4.4 .. 
 Activities of 
extraterritorial 
organizations and bodies 
and undeclared activities  0.1 0.0 0.0 0.2 0.1 0.0 0.1 0.1 .. 
Memorandum  
Population (million persons)  3.9 3.9 4.0 4.0 4.1 4.2 4.2 4.3 .. 
.. Not available.  
a Preliminary figures.  
b Estimates.  
c Based on estimates of total population at 1 July of each year using the results of the 2010 National 
Population Census.  
d Data for the third quarter of 2019.  
e The figures refer to a weekly average per month. Permanent residents living in collective housing 
are excluded.  
Source:  National Institute of Statistics and Censuses (INEC), Office of the  Comptroller -General of the 
Republic of Panama.  
1.2.  Panama has a very open economy and is a major centre for the distribution and re -exportation 
of merchandise. US dollars are used as legal tender, alongside balboas, which are pegged at par to 
the dollar. This  means that Panama has neither a central bank as such nor monetary policy 
instruments at its disposal. Having a small very open economy with income depending on trade and 
capital flows, generally expressed in US dollars, has enabled the country to avoid ex change risks WT/TPR/S/421 /Rev.1  • Panama  
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  and speculative attacks against its currency, while also positioning itself as an international financial 
centre.  
1.3.  In the absence of a monetary policy as such, fiscal policy is a key instrument of macroeconomic 
management. There being no exchan ge risk, Panamanian debt can be placed on international 
markets at relatively low rates, an advantage in responding to the negative effects of the COVID -19 
pandemic. In further support of that response, the authorities implemented a series of fiscal, 
monet ary, financial and revenue -generating measures in 2020 and 2021 (Box 1.1).  
Box 1.1 Economic measures taken by Panama in response to the COVID -19 pandemic 
(March 2020 - August 2021)  
Panama introduced a series of fiscal, monetary, labour and revenue -generating measures to address the 
negative effects of the COVID -19 pandemic.  
I. Fiscal and tax policy  
The package of fiscal measures included:  
I.1. Revenue:  
• extension of the deadline for payment of income tax from July 2020 to 31  December  2020;  
• suspension of public service payments for four months at no interest for taxpayers with income below 
USD 2,000 per month, or who have retired or been displaced from the labour market;  
• approval of a new fisca l amnesty law in March 2020 benefiting an estimated 35,000 taxpayers and 
reducing payments for interest, fees and fines by approximately USD  29 million.  
I.2. Expenditure and transfers:  
• USD 133.7 million in medical supplies were purchased in July 2020;  
• government transfers of USD  50, introduced in August 2020, were made to each of the 
250,000  workers with suspended contracts, totalling USD  12.5 million;  
• payments consisting of cash transfers ("digital vouchers") of USD  120 per month (initially USD  100) 
were made under the Panama Solidarity Plan to affected workers and owners of small businesses; 
1.3 million individuals benefited. To receive the digital voucher, beneficiaries had to complete 
24 hours of community social service per month or receive 10 hours of training from the National 
Institute of Vocational Training for Human Development (INADEH);  
• the new Panama  Solidarity Plan , starting 1 July 2021, allows voucher recipients to continue receiving 
USD 120 until December 2021;1 
• various social in itiatives, including the distribution of basic food supplies, and programmes such as 
the Opportunities Bank, the Guarantee Fund and the Soft Loan Programme, which form part of the 
Panama Solidarity Plan,  have been valued by the IMF at USD  235 million;  
• public utility payments (electricity, landline telephone, mobile telephone and Internet) were 
suspended between March and June 2020;  
• electricity consumption was subsidized until 31 March 2021 by 50%, if up to 300 kWh per month, or 
30% if between 301 kWh and 1,000 kWh per month;  
• the Housing Solidarity Fund programme, which provides USD  10,000 to families in need of housing 
for an initial payment toward homes up to USD  70,000 in value, was extended using USD  80 million 
in resources from the Panama Savings Fund ; 
• tariff reductions for hygiene products and medical supplies were extended for six months in 
March  2021;  
• a USD  12.1 billion public investment and infrastructure programme was announced in April  2021 to 
revitalize the economy.  
II. Monetary and financial measures  
The Banking Supervisory Authority of Panama (SBP) has taken a number of measures to facilitate access to 
credit and help banks absorb losses:  
 
1 Information from the Government of Panama. Viewed at: 
https://www.panamadigital.gob.pa/Noticia/inicia -nuevo -plan-panama -solidario . WT/TPR/S/421 /Rev.1  • Panama  
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  • to reduce the pressure on banks and help improve their position and willingness to issue loan s (and 
thus their balance sheets), the SBP permitted banks to dynamically accumulate provisions as a 
"countercyclical buffer", forming part of their assets. The buffer is built up during times of strong 
economic growth for use when growth is slower, as it is now. The purpose is to absorb the impact of 
loan losses. The IMF estimates the impact of this measure at roughly USD 1.3 billion, or 2% of GDP 
for 2019;  
• banks were authorized to perform voluntary restructuring of loans to problem borrowers and to make 
lending conditions and terms more flexible, for instance by allowing grace periods, reducing interest 
rates and eliminating certain fees;  
• banks were requested not to charge interest on unpaid interest;  
• Law No. 156 of 30 June 2020 instituted a formal mora torium on loans issued by banks, cooperatives 
and finance companies to all natural and legal persons economically affected by the national 
emergency arising from the pandemic. Borrowers are required to continue paying interest, but banks 
will not apply lat e payment charges, charge interest on unpaid interest or report late payments as 
part of their borrowers' credit histories. To benefit from the moratorium, borrowers are required to 
produce documents showing the impact of the pandemic on their labour or bu siness activities. 
Adjustments are made according to the individual circumstances of debtors affected by COVID -19 
and in arrears for up to 90 days in their debt payments;  
• in the same vein, a "modified loans" modality was established enabling clients to ad just their debt 
payments and mitigate any harm to their credit ratings. Such adjustments can be made at the client's 
request or on the bank's own initiative. Banks have an initial period of 120 days to evaluate their 
clients' circumstances. Such loan adjus tments will not generate additional costs and will thus be 
exempt from fees or new appraisals;  
• in response, the banks agreed to extend grace periods for loan repayments – initially until 
31 December  2020 and subsequently until 30 June 2021. The moratorium  on loan service payments 
ended as scheduled on 30 June 2021. The loans so modified will be restructured by the banks and 
the affected borrowers between 1 July and 30 September 2021.  
Source:  Prepared by the WTO Secretariat based on information from MEF an d the IMF.  
1.4.  Since 2008, Panama has been applying a fiscal rule to prevent net debt from exceeding 40% 
of GDP. Deficit targets were strengthened in 2018, but had to be reformulated following the onset 
of COVID -19, to permit larger fiscal deficits until 2025.  Expenditure then rose (largely for capital 
investments) and government balances remained negative throughout the review period, with 
deficits exceeding the legal limits (revised upwards on three occasions) nearly every year. Since lost 
revenue and pandemi c-related expenditure sent the deficit soaring in 2020, the country's central 
and continuing fiscal policy challenge has been to increase revenue and reach a more comfortable 
fiscal position. The public debt/GDP ratio rose considerably during the review pe riod to above 69% 
in 2020.  
1.5.  The current account of Panama's balance of payments registered deficits for the period 
2013-19, largely reflecting merchandise trade imbalances. The deficits were financed by surpluses 
in the capital and financial accounts, resul ting mainly from foreign direct investment (FDI) flows. 
The collapse of goods and services imports in 2020, owing to the pandemic, exceeded the decline in 
exports, generating a current account surplus of more than USD 1.2 billion. In the first quarter 
of 2021, the current account deficit stood at USD  225.2 million, reflecting a negative trade balance 
of USD  861.1  million (goods), and was financed by a surplus of USD 1,029.2 million in the income 
account. The balance of trade in services had a surplus of USD  1,597.1 million. The value of current 
transfers rose to USD  68 million, but remained lower than for the same period in 2020. The capital 
and financial account balance was positive, at USD 1,487.1 million, which exceeded by 
USD 875.8  million the figure for  the same quarter of the previous year , thanks largely to the portfolio 
investment balance.  
1.6.  With its fiscal and balance -of-payments situations deteriorating, Panama requested financial 
support through the IMF's Rapid Financing Instrument (RFI) equivalent to USD  500 million 
(SDR 400 million), or 100% of its quota, to address immediate balance -of-payments needs. The 
IMF Executive Board approved that request on 15 April 2020. Panama then requested a two -year 
agreement under the Precautionary and Li quidity Line (PLL) for USD 2.7  billion equivalent WT/TPR/S/421 /Rev.1  • Panama  
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  (SDR 1.9 billion, amounting to 500% of its quota) as a cushion against extreme external shocks. 
The IMF Executive Board approved that request on 19 January 2021.2 
1.2  Recent Economic Developments  
1.2.1   Growth and st ructure of the economy  
1.7.  The years from 2013 to 2017 saw an acceleration in the growth already being experienced by 
the Panamanian economy. That prolonged growth began to slow in 2018 – as works to expand the 
Panama Canal wound down – and then abruptly rever sed in 2020 due to the impact of the 
COVID -19 pandemic.  
1.8.  Panama's economic slowdown during the review period contrasts with the vigorous growth 
seen in the period covered by the previous review. Real GDP growth for the 2013 -20 period overall 
averaged 1.8% p er annum (Table  1.2). Even without the COVID -19 pandemic – taking the years 
between 2013 and 2019 – average annual growth in the country's real GDP was only 3.7%, less 
than half that reported in the previous review (8% between 2007 and 2013). Highly relian t on its 
services sector, the Panamanian economy was severely impacted by COVID -19, with real GDP 
contracting by 17.9% in 2020.3 The effects on economic activity persisted into the first few months 
of 2021, when real GDP contracted by 8.5%.  
1.9.  Domestic deman d was the main driver of economic growth during the review period. Net 
exports, on the other hand, had a negative impact on GDP for several of those years. Gross fixed 
capital formation, particularly for works associated with the Panama Canal expansion and  other 
large-scale infrastructure projects, helped to sustain growth between 2013 and 2017. But in 2018 
and 2019 the contribution of investment to GDP declined, and its rate of growth fell below that of 
GDP. On average, gross capital formation increased by  6.5% a year between 2013 and 2019, but 
contracted by 2.6% if 2020 is included (when it dropped by 47.8%). Average GDP growth, however, 
was only 4.6% – or 1.8% if 2020 ( -17.9%) is included.  
1.10.   The sharp increase in general government expenditure for final con sumption helped to bolster 
GDP during the review period. Government expenditure rose at an average annual rate of 5.9% 
between 2013 and 2019 – 6.9% if 2020 is included. Strong government intervention during the 
COVID -19 pandemic, as reflected in a 14.1% in crease in government expenditure in 2020, prevented 
an even greater decline in GDP. Private consumption proved to be very dynamic between 2013 and 
2019, growing at an average annual rate of 4.7% (Table 1.2). Household consumption, on the other 
hand, was si gnificantly affected by the pandemic, contracting by about 17% and lowering growth 
for 2013 -20 to only 1.7%.  
1.11.   The contribution made to GDP growth by net exports of goods and services was negative 
between 2013 and 2017 but became positive in 2018, and increa singly so in 2020, owing to a sharp 
decline in imports. Growth in imports during much of the review period reflected a surge in domestic 
demand, particularly for goods.  
 
2 IMF (2021), IMF Country Report No. 21/173. Panama. 2021 Article  IV Consultation —Press Release; 
Staff Report; and Statement by the Executive Director for Panama . July 2021. Viewed at: 
https: //www.imf.org/ -/media/Files/Publications/CR/2021/English/1PANEA2021004.ashx . 
3 Online information from the National Institute of Statistics and Censuses (INEC), Office of the 
Comptroller -General of the Republic. Viewed at: http://www.contraloria.gob.pa . WT/TPR/S/421 /Rev.1  • Panama  
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  Table 1.2 GDP by type of expenditure, 20 13-20 
(Real annual growth rate at 2007 prices)   
2013  2014  2015  2016  2017  2018a 2019b 2020b 
Total consumption  6.9 6.5 3.6 7.6 3.3 4.0 3.6 -11.3 
 General government 
expenditure for final 
consumption  3.6 1.7 7.6 10.1 6.4 7.7 4.5 14.1 
 Household and ISFLH 
expenditure for final 
consumption  7.6 7.4 2.8 7.1 2.7 3.2 3.4 -17.0 
Gross fixed capital formation  21.1 8.7 6.5 2.1 7.6 0.7 -2.6 -47.8 
Variation in stocks  -35.1 -15.4 5.8 -31.2 18.6 22.9 -30.0 -37.8 
Exports of goods and services  -3.7 -7.1 0.9 -4.3 5.0 5.1 -0.1 -21.9 
Minus:  Imports of goods and 
services  -0.8 -3.9 -0.1 -4.8 4.3 4.1 -3.3 -32.1 
Real GDP growth rate (%)  6.9 5.1 5.7 5.0 5.6 3.6 3.0 -17.9 
ISFLH  Non-profit institutions serving households.  
a Preliminary figures.  
b Estimates.  
Source:  National Institute of Statistics and Censuses (INEC), Office of the Comptroller -General of the 
Republic of Panama, and data provided by the authorities.  
1.12.   In 2020, real GDP declined by 17.9% in relation to 2019 (at constant 2007 prices), l argely as 
a result of business interruption with the onset of COVID -19 in March. The public health emergency 
measures taken to combat it included restrictions on mobility. The result was economic contraction 
in various sectors as operations dwindled or came to a halt in some cases.4 Those most affected 
were personal services, construction, trade, hotels and restaurants, business services, industry, 
education and financial intermediation. Activities conducted in the Colon Free Zone (ZLC), as well as 
air transport, showed declines. On the other hand, certain activities related to the domestic 
economy, such as healthcare, government services, rice and corn cultivation, appeared to benefit 
during this period.  
1.13.   The economic contraction continued in  the second half of 2020 and first half of 2021. In the 
fourth quarter of 2020, real GDP fell by 10.9%. General government expenditure on consumption, 
including purchases of goods and services used by the Government, was the only item to show an 
increase ( 18.8%), attributable to pay rises in State institutions.5 Private expenditure on final 
consumption (households and non -profit institutions) fell by 11.2% in relation to the same period 
the previous year, reflecting the reduced consumption of non -durable g oods and services such as 
restaurants and hotels, transport, and cultural activities and leisure, among others. Gross fixed 
capital formation declined by 42.9%, a slight improvement on the previous quarter owing to the 
gradual reopening of economic activit y. Exports of goods and services dropped by 23%; the items 
affected include pineapples, shrimp and other seafood, beef and re -exports from the ZLC. Services 
provided by the Panama Canal and the port system performed well, which helped to slow the decline, 
whereas air transport services suffered from reductions in passenger travel in and out of the country. 
Imports of goods and services fell by 25.6%, largely attributable to declining purchases of non -
durable consumer goods, including food, fuel, semi -durabl e goods and domestic appliances, 
construction materials, agricultural raw materials and capital goods.  
1.14.   In 2019, nominal GDP per capita was taken to a peak of USD  15,831 by the accelerated 
growth seen in prior years, before then falling to USD  12,373 in 202 0. The country's Gross National 
Income (GNI), as calculated by the World Bank using the Atlas method, was USD  11,880 in 2020.6 
Panama's poverty indicators continued to improve during the review period but remain high, 
 
4 Office of the Comptroller -General of the Republic, National Institute of Statistics and Censuses (2021), 
Cifras Estimadas del Producto Interno Bruto de la República, a Precios Corrientes y en Medidas de Volumen  
Encadenadas con Año de Referencia 2007, Anual y Trimestral: Año 2020 . Viewed at: 
https://www.inec.gob.pa/archivos/P0705547520210301110152COMENTARIO.pdf . 
5 Office of the  Comptroller -General of the Republic, National Institute of Statistics and Censuses, 
Comentarios sobre el Producto Interno Bruto Trimestral, enfoque del gasto: Cuarto trimestre de 2020 . 
Viewed  at: https://www.inec.gob.pa/archivos/P0705547520210723110916COMENTARIO_G.pdf . 
6 Information from the World Bank. Viewed at: https://data.worldbank.org/country/panama . WT/TPR/S/421 /Rev.1  • Panama  
- 19 - 
  especially in rural communities. Acco rding to the World Bank, 22% of the country's population lived 
under general conditions of poverty in 2016 (most recent data available), while 1.2% lived in 
extreme poverty in 2020.7 In 2019, Panama's Gini coefficient was 0.498, indicating a high 
concentr ation of income, and ranked among the region's highest.8 Regional inequalities continue to 
exist.  
1.15.   Real GDP for the first quarter of 2021 decreased by 8.5% in relation to the same period in 
2020, amounting to PAB 9,739.2 million if calculated at 2007 price s (chained volume measurement), 
a decrease of PAB 910.3 million.  
1.16.   In the first quarter of 2021, economic activities were affected by full lockdown measures 
adopted in response to a second wave of COVID -19; such measures included the complete or partial 
shutdown of production activities. As a result, manufacturing, construction, retail trade, hotels and 
restaurants, financial intermediation, real estate and business activities, and other community, 
personal and service activities, all suffered losses during t he quarter. Activities connected with the 
domestic economy (government and health services) continued to perform well during this period, 
as did those connected to mining and quarrying, the Panama Canal, port services, fisheries and the 
ZLC. 
1.17.   In the first q uarter of 2021, agricultural GDP declined by 2.8% in relation to the previous 
year. Among the products contributing to that result were bananas and pineapples. Value -added in 
the mining sector increased by 71.2% on the strength of exports of copper ores an d concentrates. 
Manufacturing contracted by 2.4%, while construction was down by 35.1%, owing to a slowdown in 
residential and non -residential building and the suspension of private infrastructure projects. 
Trade -related activities fell by 3.4% owing to pr evention measures such as the full lockdown, but 
wholesale activities in the ZLC saw an increase in re -exports, mainly of chemical and pharmaceutical 
products, machines and appliances and electrical equipment and parts. Financial intermediation 
declined by  4.3%, reflecting poor performance by the financial services of the Centro Bancario 
Internacional , while real estate, business and rental activities contracted by 9%. For private 
healthcare providers, on the other hand, business was up by 4.6% from the sam e quarter of the 
previous year.9 
1.18.   Despite the economy's dynamic performance between 2013 and 2019, the unemployment 
rate, measured as a percentage of the economically active population, trended upward during the 
review period, owing possibly to faster grow th in some of the less labour -intensive sectors, such as 
mining and certain services, as well as strong growth in the labour force and number of job seekers. 
Accordingly, the unemployment rate rose from 4.1% in 2013 (3.1% in the case of open 
unemployment) to 7.1% in 2019 (5.8% for open unemployment). With GDP collapsing in 2020, after 
the COVID -19 pandemic and restrictions paralyzed the economy, the unemployment rate has risen 
again this year, to 18.5%. The labour force participation rate in 2020 was 63%, w ith services 
(tertiary sector) accounting for 67.5% of those jobs (compared to 63.5% in 2013). Within that 
sector, employment levels were highest in the trade subsector, accounting for 16.9% of the 
employed population (compared to 17.6% in 2013), followed by transport, storage and 
communications (7.2%, down from 8.5% in 2013). Among other sectors, construction accounted for 
8.5% of employment in 2020 (11.2% in 2013); agriculture and fisheries for 14.1% (16.4% in 2013) 
and manufacturing for 9.0% (7.7% in 201 3) (Table 1.1).  
1.19.   Panama does not have an unemployment insurance system. To mitigate the effects of the 
COVID -19 pandemic, the authorities introduced measures to make employment practices more 
flexible, including the suspension of labour contracts and employ ee transfers. Compensated through 
transfers under the Panama Solidarity  Programme, those steps were found by the IMF to act as an 
automatic stabilizer in 2020. According to IMF estimates, government expenditure under this 
programme in 2020, to support popu lations in need during the pandemic, amounted to 
approximately USD 1.1 billion (around 2% of GDP). Roughly a third of that amount went to support 
 
7 Information from the World Bank. Viewed at: 
https://databank.worldbank.org/views/reports/reportwidget.aspx?Report_Name=CountryProfile&Id=b450fd57
&tbar=y&dd=y&inf=n&zm=n&country=PAN . 
8 Information from the World Bank. Viewed at: 
https://data.worldbank.org/indicator/SI.POV.GINI?locations=PA . 
9 Office of the Comptroller -General of the Republic, National Institute of Statistics and Censuses. 
Producto Interno Bruto Trimestral a precios de 2007: Primer trimestre de 2021 . Viewed a t: 
https://www.inec.gob.pa/archivos/P0705547520210719122433COMENTARIO.pdf . WT/TPR/S/421 /Rev.1  • Panama  
- 20 - 
  for unemployed workers with suspended contracts by way of the digital voucher programme, 
benefiting almost 300 ,000 households, or more than a million people.10 To receive this support, 
employers have to register and justify the suspension measures via a digital portal and obtain a 
digital coupon from the Ministry of Labour and Work Development  (MITRADEL). Only tho se 
businesses remaining closed by order of the health authorities are allowed to keep all workers 
suspended. The moratorium on bank reserve loans provides some degree of support to businesses 
by helping them to maintain liquidity, enabling them to pay thei r employees as they re -enter the 
labour force.  
1.20.    The Labour Code of Panama permits the brief suspension of labour contracts in emergency 
situations, in which case the employee's obligation to work and the employer's obligation to pay 
wages are temporarily w aived, for up to four months. In response to the pandemic, Law No.  157 
of 3 August  202011 extended this deadline to 31 December 2020, and it was later re -extended by 
several Executive Decrees. This permitted the gradual reincorporation of employees into th e 
economic sectors concerned, prioritized according to employee status. Law No.  2013 of 
25 February  2021 amended Law No. 157 to preserve employment and business stability. The 
gradual return of workers with suspended contracts was organized by economic sec tor. 
Three  months (until May 2021) were given to primary sector businesses (such as mining); 
six months (until  August 2021) to secondary sector businesses (manufacturing); and eight months 
(until  October 2021) to tertiary sector firms (services) and busine sses with 10 employees or less.  
1.2.2   Fiscal policy  
1.21.   The Ministry of the Economy and Finance (MEF) is in charge of formulating and executing 
fiscal policy in Panama. Panama continued to apply fiscal moderation policies during most of the 
review period. That was u ntil COVID -19 forced an abrupt change, though likely temporary, in the 
orientation of fiscal policy.  
1.22.   Since 2008, Panama has applied a fiscal rule to prevent net debt from exceeding 40% of 
GDP. Law No.  34 of 5 June 2008, the Fiscal Social Responsibility Law  (LRSF), defined rules for 
consolidating fiscal discipline and limited deficit for the non -financial public sector  (NFPS) and for 
public borrowing12. A limit of 1% of GDP was established for the deficit, subject to upward adjustment 
in cases of national em ergency or slow real GDP growth (2% or less). The LSRF also called for a 
reduction in net total public debt to 40% of GDP within seven years as of fiscal year 2008.  
1.23.   Law No. 38 of 5 June 2012, which created the Panama Savings Fund, changed the NFPS fiscal 
deficit ceilings as follows: 2.9% for 2012; 2.8% for 2013; 2.7%  for 2014; 2% for 2015; 1.5% 
for 2016; 1% for 2017; and 0.5% from 2018 onwards. The Law allows higher ceilings in two 
situations: a national emergency , such as the COVID -19 pandemic, or where  real GDP growth is 
2% or less. In  the first situation, a ceiling of 1.5% of GDP is allowed in the year of the emergency. 
In the second (slow GDP growth), the ceiling was graduated: a 1% ceiling for real GDP growth 
between 1.1% and 2%; a 1.5% ceiling for grow th between 0% and 1%; and a 2% ceiling for 
negative growth. Deficit increases then had to be cut by one third in the following year, by another 
third in the second year, and by a third again in the third year, thereby restoring the limit defined 
in the LSR F. In April  2013, the National Assembly approved a  waiver allowing the fiscal deficit ceiling 
to be raised to 3.1%  of GDP for 2013 . The limits were also modified in subsequent years, as 
continuing deficits accounted for 1.9% of GDP or more.  
1.24.   Law No. 51 of 2 018 set the financial ceiling to 2% for 2018 and 2019; 1.75% for 2020 
and 2021; and 1.5% for 2022 onwards. After the targets were exceeded in 2018, the Government 
adopted a new law, Law No. 102 of 2019, which readjusted NFPS deficit ceilings as follows: 3. 5% 
for 2019; 2.75% for 2020; 2.5% for 2021; and 2% from 2022 onwards. However, while the 2019 
deficit target was met and remained below that year's ceiling, the onset of COVID -19 forced a 
 
10 IMF (2021), IMF Country Report No.  21/173. Panama. 2021 Article  IV Consultation —Press Releas e; 
Staff Report; and Statement by the Executive Director for Panama . July 2021. Viewed at: 
https://www.imf.org/ -/media/Files/Publications/CR/2021/English/1PAN EA2021004.ashx . 
11 This law incorporated provisions from two Executive Decrees: No. 81 of 20 March 2020 (which 
authorized the suspension of labour contracts for businesses that closed under the state of emergency declared 
by Panama in response to the COVID -19 pandemic); and No. 101 of 13 July 2020 (prohibiting reductions of 
more than 50% in total working hours per month).  
12 Law No. 34 of 5 June 2008 replaced the Fiscal Responsibility Law of 2002.  WT/TPR/S/421 /Rev.1  • Panama  
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  reformulation, allowing larger fiscal deficits until 2025. Draft Law  No. 474 of 2020, approved during 
the National Assembly's third debate in October 2020, set new limits for the NFPS deficit, better 
adapted to the new realities of the pandemic: between 9% and 10.5% of GDP for 2020; between  7% 
and 7.5% for 2021; 4% for 2022; 2% for 2023 and 2024; and 1.5% for 2025 and subsequent years.  
1.25.   In view of the pandemic's economic and social effects, the Government's spending priorities 
changed, with the top priority being to protect the lives and health of all citizens by ensuring  the 
resources needed to contain the pandemic and maintain public services. Priority was also given to 
providing resources for the Panama Solidarity  Programme mentioned earlier, which was created to 
alleviate the needs of the poor and those having lost emp loyment in the formal as well as informal 
sectors. Accordingly, the budget was restructured to shift additional resources to health and social 
security with a view to implementing the Panama Solidarity Plan .13 When the pandemic reached 
Panama, the Government introduced a new financial strategy to ensure adequate funding for the 
General State Budget. The sum of PAB 2,213.7 million was needed to cover the 2020 fiscal deficit, 
as well as PAB 1,730.0 million to cov er the Central Government's outstanding amortization 
payments. When those amounts proved insufficient, with costs having risen and revenues fallen, the 
Government resorted to more external borrowing to make up the difference. Negotiations were 
undertaken o n two fronts simultaneously: with the multilateral financial organizations, to finance 
the budget deficit resulting from reduced current income; and with financial markets, to obtain 
resources to fund MSME support programmes and programmes to reopen the ec onomy, and to help 
strengthen the lending capacity of Panama's banks. By October 2020, the Government had 
committed new resources amounting to some 11% of GDP .14 
1.26.   The loans obtained to contend with deteriorating fiscal and balance -of-payments conditions 
included financial support requested from the IMF under the RFI for an amount equivalent to 
USD 500 million (SDR 400 million), or 100% of Panama's quota, to meet immediate balance -of-
payments requirements. This request was approved by the IMF Executive Board on 15  April 2020. 
Panama subsequently requested a two -year PLL agreement for 500% of its quota, equivalent to 
USD 2.7 billion (SDR 1.9 billion), as insurance against extreme external shocks. This agreement was 
approved by the IMF Executive Board on 19 Janu ary 2021.  
1.27.   The fiscal accounts of the NFPS (excluding the Panama Canal Authority) posted a deficit every 
year during the review period (Table 1.3). After peaking in 2014 at 3.4% of GDP, the deficit for 
subsequent years fell to below 2% before starting to ri se again. As mentioned earlier, Panama did 
not meet the fiscal deficit target for any year between 2013 and 2018, and did so in 2019 and 2020, 
but at much higher levels, only after the targets were adjusted. Thus, while rising to 10.2% of GDP 
in 2020, the NFPS deficit still lay within the new target range of 9% -10.5% set for that year 
(albeit  near the upper limit).  
Table 1.3 Non-financial public sector (NFPS) finances, 2013 -20 
(% of GDP)   
2013  2014  2015  2016  2017 2018  2019a 2020a 
Total revenues  22.2 20.8 19.8 20.1 20.0 19.6 18.5 18.4 
  Current revenues, general 
government  21.3 20.1 19.1 19.2 19.8 19.6 18.5 18.4 
   Central Government  14.9 14.1 13.1 13.1 13.7 13.6 12.5 12.3 
   Social Security Fund  6.0 5.7 5.6 5.8 5.7 5.6 5.6 5.8 
   Consolidated agencies  0.4 0.4 0.4 0.3 0.4 0.4 0.4 0.3 
  Operating balance of public 
enterprises  0.3 0.2 0.2 0.1 0.0 -0.1 0.0 -0.2 
  Non-consolidated agencies 
and others  0.2 0.3 0.4 0.7 0.2 0.1 0.1 0.3 
  Capital revenue  0.4 0.2 0.1 0.1 0.1 0.1 0.0 0.0 
 Net lending  0.0 0.0 0.0 0.0 -0.1 0.0 0.0 -0.1 
 Grants  0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 
Total expenditure  25.9 24.0 22.0 21.9 21.9 22.5 21.4 28.5 
 
13 Draft Law No.  474 of 20 October 2020. Viewed at: 
https://asamblea.gob.pa/APPS/SEG_LEGIS/PDF_SEG/PDF_SEG_2020/PDF_SEG_2020/2020_P_474.pdf . 
14 Draft Law No . 474 of 20 October 2020. Viewed at: 
https://asamblea.gob.pa/APPS/SEG_LEGIS/PDF_SEG/PDF_SEG_2020/PDF_SEG_2020/2020_P_474.pdf . 
 WT/TPR/S/421 /Rev.1  • Panama  
- 22 - 
   
2013  2014  2015  2016  2017 2018  2019a 2020a 
 Current expenditure, 
general governmentc 17.4 16.2 15.3 15.2 15.4 15.9 15.9 21.4 
 Current expenditure, 
general government  
(excl. interest 
payments)  15.5 14.5 13.6 13.5 13.6 14.1 14.1 18.8 
 Central Government  9.3 8.9 8.1 7.6 8.0 8.3 8.2 11.1 
 Social Security Fund  5.7 5.2 5.0 4.7 5.2 5.3 5.4 7.0 
 Consolidated 
agencies  0.5 0.4 0.4 0.4 0.4 0.4 0.4 0.6 
 Total interest  1.9 1.7 1.7 1.7 1.7 1.8 1.9 2.7 
 External interest  .. 1.4 1.4 .. 1.4 1.4 1.5 2.1 
 Domestic interest  .. 0.4 0.4 .. 0.4 0.3 0.4 0.5 
 Capital expenditure  8.5 7.8 6.7 6.7 6.5 6.6 5.5 7.1 
Current saving, NFPS  6.2 4.4 4.3 4.9 4.6 3.8 2.5 -3.1 
Primary balance  -1.8 -1.5 -0.5 -0.1 -0.1 -1.1 -1.0 -7.4 
Surplus or deficit  -2.3 -3.2 -2.2 -1.8 -1.9 -2.9 -2.9 -10.1 
Total public sector contract 
debt 35.0 37.1 37.4 37.3 37.6 39.6 46.4 69.8 
 External debt  27.3 29.2 28.9 29.2 29.6 31.7 36.3 56.3 
 Domestic debt  7.7 7.9 8.5 8.1 8.0 7.9 10.2 13.5 
Total public sector contract 
debt (PAB million)  15,684  18,231  20,222  21,602  23,374  25,687  31,018  36,960  
External debt  12,231  14,352  15,648  16,902  18,390  20,575  24,223  29,817  
Domestic debt  3,452  3,879  4,573  4,700  4,984  5,112  6,795  7,143  
Total public sector contract 
debt (% of GDP)  36.8 39.4 38.8 39.1 37.5 39.4 46.4 69.8 
GDP 42,648  46,213  52,133  55,188  62,284  65,128  66,801  52,938  
.. Not available.  
a Preliminary figures.  
b Includes loans issued by institutions such as IFARHU, the BHN and the BDA.  
c Excludes the interest payments of public enterprises.  
Source:  Ministry of the Economy and Finance of Panama.  
1.28.   The NFPS fiscal account deficits recorded in the early years of the review period were mainly 
caused by capital expenditure increasing at a faster pace than fiscal revenues. Accordingly, while 
expenditure increased nominally by 30.2% between 2013 a nd 2019, revenues rose by only 24.5%. 
The growth of capital expenditure reflected the implementation of an ambitious public investment 
programme, including infrastructure works such as the Panama Bay clean -up, coastal belt 
expansion, and the construction o f motorways and the Panama City metro. Despite rapid economic 
growth between 2013 and 2019, revenues as a percentage of GDP declined during those years, 
from 23.3% to 18.5%. The Central Government's tax revenues amounted to 9.7% of GDP in 2016 
but only 8.2 % in 2019. In 2020, owing to the pandemic, revenues fell while expenditure increased, 
a difficulty aggravated by USD 1.7 billion in amortization payments falling due that year.  
1.29.   In light of the pandemic, the authorities adopted a budget action plan with med ium-term 
targets and drafted an Organic Budget Law. The IMF has recommended that Panama improve the 
presentation of its quarterly fiscal reports and the disclosure of information on pandemic -related 
public expenditure. It has also recognized the progress m ade by Panama in introducing Law No.  153 
of 2020 on government procurement, which provides for the online submission of tenders, limits 
discretion in the contracting process, promotes greater competition by eliminating the indicative 
bands around the refer ence price, and raises the contract value threshold above which offer bails 
are required  (section 3). The IMF also recommended the introduction of tax policy measures to raise 
revenues, improve tax collection efficiency and increase progressivity. In parti cular, it suggested 
reducing fiscal expenditure (closing tax breaks and other concessions).15 
 
15 IMF (2021), IMF Country  Report No.  21/173. Panama. 2021, Article  IV Consultation —Press Release; 
Staff Report; and Statement by the Executive Director for Panama . July 2021. Viewed at: 
https://www.imf.org/ -/media/Files/Publications/CR/2021/English/1PANEA2021004.ashx . WT/TPR/S/421 /Rev.1  • Panama  
- 23 - 
  1.30.   Executive Decree No. 553 of 2019 established implementing regulations for Law No.  99 of 
11 October  2019, which provides for amnesty until 29 February 2020 for tax es administered by the 
Directorate -General of Revenue (DGI).16 The amnesty covered all tax payments, including property 
taxes, special fees, contributions and any other amounts owed to the DGI. Its beneficiaries were 
natural and legal persons (the taxpayer s themselves as well as their withholding agents and other 
responsible parties), including those with current payment plan agreements and even prosecution 
pending. It specifies 100% exoneration for interest and penalties on the amounts owed if paid in 
October-November 2019; 95% if paid in December; 90% if paid in January 2020; and 85% if paid 
in February 2020.  The amnesty was later extended until December 2021.  
1.31.    Total public debt increased between 2013 and 2019 from USD  15,684 million to 
USD 31,018  million,  reflecting the public -sector demand for financing during that period. In 2020, 
revenues having fallen and expenditure risen with the onset of the pandemic, it reached 
USD 36,960  million, an increase of 19.2%. As a percentage of GDP it rose from 39.4% in 2 013 
to 46.4% in 2019 and to 69.8% in 2020. Contributing to the steep rise in 2020 were the sharp 
decline in GDP and increase in debt reported that year (Table 1.3).  
1.32.   The Panama Savings Fund (FAP), established by Law No. 38 of 5 June 2012, is a long -term 
savings mechanism for the Panamanian State based on conservative investment strategies. The FAP 
was designed to provide emergency coverage in the event of natural disasters or economic 
stagnation while protecting the interests of future generations.17 The FAP  was constituted with funds 
from the Trust Fund for Development and funded since 2015 with contributions made by the Panama 
Canal Authority to the National Treasury in excess of 3.5% of GDP. As of the second quarter of 2021, 
FAP held assets worth PAB  1,472 .87 million, with gross income of PAB 20.94 million, total net worth 
of PAB  1,398.98 million and cumulative gross profit of 1.27% per annum.18 
1.2.3   Monetary policy  
1.33.   In using the US dollar as currency of legal tender, Panama does not have monetary policy 
instrume nts of its own. Nor does it have a central bank as such to issue currency, manage bank 
reserves, regulate credit or serve as lender of last resort. The state -owned National Bank of Panama 
serves as depository for the State's financial resources, but is not  a central bank. The banking sector 
is regulated and supervised by the Banking Supervisory Authority of Panama (section 4. 4.1). 
1.34.   The nominal exchange rate between the dollar and the national currency, the balboa, has 
been maintained at 1:1. Local interest r ates and the money supply are determined by market forces 
and influenced by international interest rates and by the monetary policies of the US Federal 
Reserve. There are no mechanisms for controlling interest rates, no legal reserve requirements on 
bank d eposits, and no restrictions on the flow of funds out of or into  the banking system. Any 
variation in the real exchange rate must be offset by means of fiscal or other policies affecting price 
levels.  
1.35.   Interest rates in the Panamanian banking system remaine d relatively stable during the review 
period, mainly as a result of the additional liquidity provided by international capital flows – as FDI 
at first but later as loans to help recipients cope with the COVID -19 crisis (Table 1.4). The spread 
between depos it and lending rates held relatively steady throughout the review period, despite the 
pandemic.  
Table 1.4 Main monetary indicators, 2013 -21Q2  
 
2013  2014  2015  2016  2017  2018  2019  2020  2021Q2  
Monetary variables           
Broad money (growth rate)a 7.2 8.2 5.5 4.1 5.2 2.8 3.1 5.4 .. 
Average interest rates (%)           
3-month time deposits  1.3 1.3 1.2 1.2 1.2 1.3 1.6 1.5 1.2 
6-month time deposits  1.8 1.9 1.8 1.7 1.8 1.8 2.2 2.0 1.9 
 
16 Deloitte, Panama Tax News.  November 2019. Viewed at: 
https://www2.deloitte.com/pa/es/pages/tax/articles/tax -news-panama -2019.html . 
17 Information from FAP. Viewed at: https://www.fondoahorropanama.com/ . 
18 Information from FAP. Viewed at: https://www.fondoahorropanama.com/3 -ago-2021-informe -de-
resultados -preliminares -no-auditados -para-el-segundo -trimestre -2021. 
 WT/TPR/S/421 /Rev.1  • Panama  
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2013  2014  2015  2016  2017  2018  2019  2020  2021Q2  
12-month time deposits  2.7 2.7 2.7 2.7 2.7 2.9 3.2 2.9 2.6 
Interbank reference rate for 
the local market (6 months)  0.9 0.7 0.8 0.7 1.0 1.4 1.6 1.8 .. 
Interbank reference rate for 
the local mortgage market  5.9 5.7 5.5 5.3 5.3 5.4 5.7 5.8 5.8 
Inflation  
National urban consumer price 
index (growth rate)  4.0 2.6 0.2 0.7 0.9 0.8 -0.4 -1.6 0.6 
Wholesale price index (IPCM) 
(growth rate)  n.a. n.a. n.a. n.a. 2.2 2.6 0.7 -1.2 1.3 
Exchange rate  
Real nominal exchange rate 
index (PAB per USD)  1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 
.. Not available.  
Source:  National Institute of Statistics and Censuses (INEC) and IMF (2021), IMF Country Report 
No. 21/173. Panama. 2021 Article IV Consultation —Press Release; Staff Report; and Statement by 
the Executive Director for Panama . July 2021. Viewed at:  
https://www.imf.org/ -/media/Files/Publications/CR/2021/English/1PANEA2021004.ashx . 
1.36.   Following rapid growth between 2013 and 2019, domestic credit contracted in 2020. 
By December 2020, lending to domestic borrowers amounted to USD  54,293 million, a decrease of 
USD 919 million ( -1.7%) from year end 2019. In 2020, disbursements of new loans were down 
by 40.4% in relation to the previous year, bringing the cumulative total for the banking sector to 
USD 15,668 million by December 2020, a decrease of USD  10,462 million on the same period of the 
previous year.  Only loans to the public sector and mortgage loans recorde d positive year -on-year 
growth – 202.3% and 1.1%, respectively. Loans to all other sectors were down from the previous 
year,19 and loan delinquency remained prevalent in the early months of 2021. By May 2021, lending 
to domestic borrowers amounted to USD  54,208 million, a decrease of USD 1,301 million in relation 
to May 2020. Lending activity declined in the industrial and construction sectors, but more slowly in 
some areas than in previous months. It even increased in some sectors, such as agriculture, 
livestock, mining and trade.20 
1.37.   A possible risk identified by the IMF is the considerable share of net claims (mostly deposits) 
by external creditors on Panama's banks, their otherwise solid situation notwithstanding. The IMF 
considers that any large -scale wit hdrawals could exacerbate liquidity risks in the banking sector and 
potentially lead to a liquidity squeeze.21 One of the first of several government measures to mitigate 
this risk was Law  No. 156 of 30 June 2020 ("Moratorium Law"), instituting economic an d financial 
measures to counteract the impact of COVID -19. With retroactive effect from 1 March 2020, the Law 
established a moratorium until 31 December 2020 on loans issued by banks, cooperatives and public 
as well as private financial institutions. The m oratorium was later extended to 30 June 2021 and 
again to 31 December 2021. The Law prohibits banks from raising interest rates and applying fees 
or any other form of interest for default or payment arrears on loans as restructured by the Law. 
Upon expirat ion of the moratorium, banks must agree with their debtors on the mechanisms 
necessary to revise their commitments. By 31 December 2020, the National Bank of Panama (BNP) 
had restructured 13,627 loans in amounts totalling PAB 627.5 million, representing 12 .6% of BNP's 
loan portfolio and 2.6% of the total volume of loans restructured within the national banking 
system.22 
1.38.   In August 2020, MEF and the BNP established two trust funds as part of an economic recovery 
strategy. The first, called "Global Credit Prog ram for the Defence of the Productive Fabric and 
 
19 SBP, Informe de Actividad Bancaria.  December 2020. Viewed at: 
https://www.superbancos.gob.pa/superbancos/documentos/financ iera_y_estadistica/reportes_estadisticos/202
0/12/IAB_12.pdf?v=1.02 . 
20 SBP, Informe de Actividad Bancaria . May 2021. Viewed at: 
https://www.superbancos.gob.pa/superbancos/documentos/financiera_y_estadistica/reportes_estadisticos/202
0/12/IAB_12.pdf?v=1.02 . 
21 IMF (2021), IMF Country Report No.  21/173. Panama. 2021 Article  IV Consultation —Press Release; 
Staff Report; and  Statement by the Executive Director for Panama . July 2021. Viewed at: 
https://www.imf.org/ -/media/Files/Publications/CR/2021/English/1PANEA2021004.ashx . 
22 Banco Nacional de Panamá , Resumen Financiero . December 2020. Viewed at: 
https://www.banconal.com.pa/images/pdf/Banconal_ -_Resumen_Financiero_Q4_2020 _ESPA%C3%91OL.pdf . WT/TPR/S/421 /Rev.1  • Panama  
- 25 - 
  Employment", helped SMEs cope with the pandemic. It was funded with a loan of USD  150 million 
from the Inter -American Development Bank (IDB), authorized by Cabinet Decree No.  19 
of 9 June 2020. Additional fu nding of USD  150 million was planned for 2021 to strengthen the 
programme.23 The second trust fund, called "Special Banking Stimulus Fund", was authorized by 
Cabinet Decree No. 23 of 19 August 2020. It aimed to revitalize the banking system, meet the 
tempo rary liquidity needs of private general licence banks and offer credit facilities for the productive 
sector to stimulate economic growth and mitigate the adverse effects of the pandemic.24 This trust 
fund was initially constituted with USD  500 million equi valent in RFI financing from the IMF, as 
authorized by Cabinet Decree No. 14 of April 2020, with subsequent funding of USD  500 million 
administered by the BNP and the Multilateral Investment Guarantee Agency (MIGA), part of the 
World Bank Group. Now totall ing PAB 1 billion,  this fund provides loans of three to five years as 
additional liquidity for banks requiring it. The BNP, in consultation with the SBP, administers the 
fund's resources as a second -tier bank, offering credit facilities for general licence  banks in Panama 
for on -lending to support economic recovery in the productive sectors .25 
1.39.   The Special Banking Stimulus Fund offers programmes first to expand credit to bolster the 
economy in difficult times, and second to provide emergency liquidity to sol vent banks in the event 
of market dislocations. The BNP operates the first programme (stimulus programme) as a revolving 
medium -term credit facility (one to three years) and an extension of the current USD  800 million 
line of credit for commercial banks. A ccording to the IMF, by June 2021, the BNP had disbursed 
USD 600 million through this facility to 23 banks at interest higher than the interbank rate, given its 
longer tenure.26 The second (liquidity) programme, operated jointly by the SBP and the BNP, is 
structured as a revolving, short -term repo facility (up to six months), and is collateralized.  The 
interest rate is 3.25% per annum. Commercial banks wishing to access this programme must send 
an online request to the SBP for a solvency assessment. This pr ogramme has yet to be used.  
1.40.   Panama saw inflation subside during the review period, with the consumer price index (CPI) 
falling below 1% in 2018 and entering negative territory in 2019 (Table  1.3). This deflationary trend 
accelerated in 2020, despite reduct ions in the supply of some products and services, to -1.6%. The 
CPI returned to positive ground in 2021, gaining 2.4% by September in relation to December 2020.27 
1.2.4   Balance of payments  
1.41.   The balance -of-payments current account was in deficit throughout the 2013 -19 period 
(Table  1.5). During the previous review period, the high import levels associated with strong 
GDP growth exerted continuous upward pressure on the current account deficit, which fluctuated 
between  5% of GDP (in 2019) and 13.6%  (in 2014). In 2020, the current account showed a surplus 
equivalent to 2.3% of GDP, the decline in imports of goods and services (40%) having amply 
outpaced that in exports (30%). During the period 2013 -19, the current account deficit was mostly 
financed by a surplus on the capital and financial accounts, resulting particularly from burgeoning 
investment flows. During the first three months of 2021, Panama's external current account recorded 
a deficit of USD  225.2 million, influenced by declines in the goo ds and income accounts.  
Table 1.5 Balance of payments, 2013 -21Q1  
(USD million)   
2013  2014  2015  2016  2017  2018  2019  2020  2021Q1  
Current account  -4,151  -6,679  -4,848  -4,634  -3,692  -4,967  -3,333  1,233  -225 
Exports of goods, services 
and income  31,945  30,884  28,381  27,667  28,860  30,365  30,322  21,225  6,229  
 
23 Information from MEF. Viewed at: https://www.mef.gob.pa/2020/08/contratos -para-proteger -
empleos -y-fortal ecer-sectores -productivos -firman -bnp-y-mef/. 
24 Circular No. SBP -DR-0260-2020 of 19 August 2020. Viewed at: 
https://superbancos.gob.pa/superbancos/documentos/leyes_y_regulaciones/circulares/2020/circular_260 -
2020.pdf?v=1.02 . 
25 Banco N acional de Panamá, Memoria Anual 2020 . Viewed at: 
https://www.banconal.com.pa/images/nuestro -banco/memorias/Memoria_Anual_2020.pdf . 
26 IMF (2021), IMF Country R eport No.  21/173. Panama. 2021 Article  IV Consultation —Press Release; 
Staff Report; and Statement by the Executive Director for Panama . July 2021. Viewed at: 
https://www.imf.org/ -/media/Files/Publications/CR/2021/English/1PANEA2021004.ashx . 
27 Information from the INEC. Viewed at: 
https://www.inec.gob.pa/archivos/A0533424202110 15175701Cuadro%203.pdf . 
 WT/TPR/S/421 /Rev.1  • Panama  
- 26 - 
   
2013  2014  2015  2016  2017  2018  2019  2020  2021Q1  
Imports of goods, services 
and income  -36,154  -37,563  -33,230  -32,301  -32,427  -35,262  -33,623  -20,123  -6,522  
Exports of goods and 
services  29,773  29,856  27,460  600 26,370  27,814  27,877  19,617  5,882  
Imports of goods and 
services  -31,585  -36,657  -32,202  -31,291  -26,895  -28,874  -27,374  -17,327  -5,146  
 Goods (net)  -9,446  -10,823  -9,786  -9,012  -9,822  -10,614  -9,047  -4,107  -861 
 Goods (credit)  17,059  14,972  12,764  11,687  12,470  13,353  13,214  10,240  3,394  
 General merchandise  14,509  12,771  11,343  10,463  10,537  10,945  10,718  9,350  2,985  
 Goods repairs  15 17 17 15 16 16 16 15 4 
 Goods procured in 
ports by carriers  2,535  2,184  1,404  1,210  1,917  2,391  2,480  875 405 
 Goods (debit)  -26,505  -25,795  -22,550  -20,699  -22,291  -23,966  -22,261  -7,006  -4,255  
 General merchandise  -23,778  -23,105  -20,871  -19,061  -19,935  -20,985  -19,302  -13,407  -3,866  
 Goods repairs  -11 -11 -9 -6 -5 -5 -7 -4 -1 
 Goods procured in 
ports by carriers  -2,715  -2,678  -1,671  -1,633  -2,351  -2,976  -2,952  -936 -388 
 Services (net)  7,634  7,847  7,858  8,057  9,297  9,553  9,551  6,396  1,597  
 Income (net)  -2,397  -3,826  -2,813  -3,559  -3,043  -3,836  -3,804  -1,187  -1,029  
 Income (credit)  2,172  2,167  2,081  2,265  2,490  2,552  2,445  1,608  346 
 Employee 
compensation  28 105 82 76 90 81 88 57 19 
 Investment income  2,144  2,062  2,000  2,189  2,400  2,470  2,357  1,551  327 
 Direct investment  497 432 324 425 536 543 236 139 69 
 Portfolio 
investment  246 254 220 247 348 282 424 304 43 
 Other investment  1,402  1,376  1,455  1,518  1,516  1,646  1,698  1,108  216 
 Income (debit)  -4,569  -5,993  -4,894  -5,825  -5,533  -6,388  -6,249  -2,796  -1,376  
 Employee 
compensation  0 -2 -3 -3 -5 -3 -3 -3 0 
 Investment income  -4,569  -5,990  -4,892  -5,822  -5,528  -6,385  -6,246  -2,793  -1,375  
Direct investment  -2,720  -4,178  -3,015  -3,840  -3,343  -3,935  -3,645  -423 -656 
Portfolio 
investment  -748 -749 -673 -680 -775 -849 -913 -1,040  -446 
Other investment  -1,101  -1,063  -1,205  -1,302  -1,410  -1,601  -1,688  -1,330  -273 
 Current transfers (net)  58 122 -106 -119 -124 -70 -31 131 68 
 Current transfers 
(credit)  844 1,028  921 891 903 919 976 749 225 
 Current transfers 
(debit)  -785 -906 -1,027  -1,010  -1,028  -989 -1,007  -618 -157 
 General government  142 157 168 141 155 157 199 137 52 
 Other sectors  -84 -35 -274 -260 -280 -227 -230 -5 16 
Capital and financial 
accounts  4,913  5,020  6,507  6,827  5,823  6,152  4,736  -690 1,487  
Capital account  26 24 27 24 25 23 22 11 1 
Financial account  4,886  4,996  6,480  6,803  5,798  6,129  4,714  -701 1,486  
 Direct investment  3,236  4,130  3,972  4,652  4,314  4,917  3,686  627 429 
 Foreign  -331 -329 -584 -214 138 -163 -634 39 -24 
 Shares and capital 
participation  -331 -329 -584 -214 138 -163 -634 39 -24 
 Domestic  3,567  4,459  4,556  4,866  4,177  5,080  4,320  589 454 
 Shares and capital 
participation  1,402  687 78 923 -24 31 131 -433 -20 
 Reinvested earnings  1,436  3,429  2,084  2,404  1,790  1,900  2,274  -457 450 
 Other capital  730 343 2,394  1,539  2,411  3,150  1,916  1,478  23 
 Portfolio investment  367 1,008  401 138 670 339 3,055  2,633  615 
 Assets  -759 -1,198  -1,365  -208 -669 -1,231  621 -864 -1,250  
 Liabilities  1,126  2,206  1,765  346 1,339  1,570  2,434  3,496  1,865  
 Other investment  1,684  1,080  2,030  2,622  -157 241 -800 1,589  -347 
 Assets  -1,932  -5,128  -2,748  643 3,591  -987 -230 1,403  446 
 Commercial credits  -203 -321 -341 -93 -657 -498 -537 -72 69 
 Loans  -663 -1,953  -1,797  993 2,299  361 2,051  2,405  317 
 Currency and 
deposits  -994 -2,841  -759 -174 2,972  -583 -1,559  -1,103  175 
 Other assets  -71 -14 150 -84 -1,024  -268 -186 172 -115 
 Liabilities  3,615  6,208  4,777  1,979  -3,748  1,228  -570 186 -794 
 Commercial credits  233 142 201 225 194 -99 72 166 67 
 Loans  2,065  1,874  1,758  1,296  -690 2,277  -2,447  141 -1,113  
 Currency and 
deposits  1,297  4,242  2,796  400 -3,412  -1,020  1,428  25 293 
 Other assets  21 -50 23 60 159 70 378 -147 -40 
 Reserve assets  -401 -1,222  77 -609 971 632 -1,227  -5,550  789 
Net errors and omissions  -762 1,660  -1,658  -2,193  -2,131  -1,185  -1,404  -543 -1,262  
Note:  Discrepancies between constituent figures and totals are due to rounding . 
Source:  National Institute of Statistics and Censuses (INEC), Office of the Comptroller -General of the 
Republic of Panama.  WT/TPR/S/421 /Rev.1  • Panama  
- 27 - 
  1.42.   The balance of trade in goods (including the ZLC) was negative during the period 2013 -20, a 
trend that continued during the first three months of 2021. This is characteristic of the Panamanian 
economy, which i s predominantly geared towards service exports. Until 2019, however, it was also 
a reflection of the rapid growth in imports, led by capital goods. After peaking in 2014, the trade 
deficit for goods diminished in subsequent years before reaching a new peak  in 2018, as growth in 
imports outstripped growth in exports from the ZLC and other sectors. The deficit for merchandise 
trade declined notably in 2020, as imports plummeted under the effect of the COVID -19 pandemic, 
by nearly USD 8 billion. That more than  offset the much smaller contraction in exports 
(USD  3 billion). The deficit in merchandise trade was reduced in the first quarter of 2021, with 
general merchandise registering imports of USD 3,866 million and exports of USD 2,985 million. The 
balance of t rade in services registered a growing surplus between 2013 and 2019 – thanks to 
Panama Canal and port, transport and business services – which quickly shrank when the pandemic 
hit in 2020 and continued downward into the first quarter of 2021 (section 1.3.2 ). 
1.43.   The balance on the income account also posted a deficit between 2013 and 2020, and during 
the first quarter of 2021. This resulted mainly from the repatriation of profits and dividends being 
held in foreign countries, particularly by firms established i n the ZLC and by mining companies. 
Interest payments on the external debt were also a factor. This deficit fell substantially in 2020, to 
slightly more than USD 1 billion, mainly as a consequence of smaller debits amounting to 
USD 3.5 billion, particularly  for investment income. For January -March 2021, the income account 
balance was USD 1,029.2 million, less than for the first quarter of 2020, essentially because of 
reduced income on FDI. The balances for dividends and distributions registered improvements while 
those for reinvested and retained earnings were down from the same period in 2020. The capital 
and financial accounts were in surplus between 2013 and 2019, thanks to increasing FDI flows, 
portfolio investments and reinvested profits. They registered  deficits, however, in 2020, totalling 
USD 897 million, as FDI inflows contracted and capital outflows, including remittance of profits, 
increased.  
1.44.   As a dollarized economy, Panama cannot resort to exchange -rate measures to mitigate the 
COVID -19 pandemic's impact on the balance of payments. Those effects are expected to continue 
over the short - and medium -term, mainly because of reduced inflows from tourism, the Panama 
Canal and FDI.  
1.45.   To contend with the pandemic's adverse balance -of-payments impact, Panama h as turned for 
financing to multilateral agencies, including the IMF, World Bank and IDB. It has also resorted to 
debt issuance and fundraising from private sources.  
1.46.   In August 2020, MIGA, part of the World Bank Group, provided a guarantee for 
USD 400 millio n in loans obtained by the  Savings Bank ( Caja de Ahorros ) of Panama to finance 
accessible housing and loans to SMEs.  
1.47.   In April 2020, as indicated above, Panama received initial support equivalent to 
USD 500 million (SDR 400 million) from the IMF, under the RFI. It also obtained USD  300 million 
from the IDB, including USD  150 million to finance MSMEs, as well as USD  150 million from the 
World Bank to expand the COVID -19 support network. In July 2020, the IDB approved another loan, 
in the amount of USD  400 mil lion, to help finance measures to contain the pandemic and mitigate 
its impact. Panama also received a USD  1 million grant from the Central American Bank for Economic 
Integration to finance pandemic -prevention activities, and an additional USD  400,000 from  the IDB 
for the purchase of ventilators.  
1.48.   In addition to these loans, access to financial resources was facilitated by legislation 
permitting government use of FAP liquidity (assets amounting to USD 1.3 billion). On 4  August  2020, 
the BNP issued a 10 -year USD 1 billion bond on international markets, with a yield rate of 2.5%. On 
23 September 2020, the Government raised another USD 2,575  million through global bonds. These 
included a new bond (for USD 1,250 million, maturing in 2032 and yielding 2.252%); the  reopening 
of a bond maturing in 2060 (USD 1 billion; 3.28% yield); and the reopening of a local bond maturing 
in 2026 (USD  325 million; 2.77% yield). The Government withdrew another USD  20 million from 
FAP to purchase COVID -19 vaccines, bringing total wit hdrawals to USD 105 million since the 
pandemic emergency was declared.  WT/TPR/S/421 /Rev.1  • Panama  
- 28 - 
  1.49.   In November 2020, the Central American Bank for Economic Integration approved 
USD 250 million to support economic recovery in Panama as part of its Development Policy 
Operations Program me. It then approved an additional USD  150 million to strengthen pandemic 
prevention and containment efforts. On 19 January 2021, the IMF approved Panama's request for a 
two-year agreement under the Precautionary and Liquidity Line (PLL), in the amount of 
USD 2.7 billion equivalent (SDR 1,884 million, equalling 500% of its quota). The PLL is intended to 
insure against extreme external shocks stemming from the COVID -19 pandemic. Panama also 
resorted to financing from international markets. On 20 January 2021 , the Government raised 
USD 2,450  million by reopening Global Bond 2032 (USD 1,250 million, yielding 2.198%) and 
Global  Bond 2060 (USD 1.2 billion, yielding 3.384%), as part of MEF's financing for the fiscal year 
2021 budget. This global bond issuance was over-subscribed by 2.4 times .28 On 23  June 2021, to 
finance the 2021 budget and liability management operations,  the Government raised USD  2 billion 
by issuing a new treasury bond maturing in 2031 (USD 1,250 million at a yield of 3.362%) and 
reopening a Gl obal Bond maturing in 2050 (USD 750 million at a yield of 3.774%) . 
1.3  Developments in Trade and Investment  
1.3.1   Trends and patterns in merchandise and services trade  
1.3.1.1   Developments in m erchandise trade  
1.50.   International trade is very important to Panama's economy. The sum total of its exports and 
imports of goods and services amounted to 82% of GDP in 2019. The structure of Panama's 
merchandise trade is particular: the trade of the Panamanian customs territo ry as such must be 
distinguished from trade channelled through the ZLC, given the latter's preponderance in Panama's 
total trade figures. In fact, the ZLC accounts for some 75% of the country's total merchandise trade. 
The statistics (Tables A1.1 to A1.4) and the analysis presented in this section do not include imports 
from the rest of the world to the ZLC, or exports and re -exports from the ZLC to the rest of the 
world. Nonetheless, Table A1.3 includes sales (exports) from the Panamanian customs territory  to 
the ZLC and other Panamanian free zones, and Table A1.4 includes purchases (imports) from the 
ZLC and other Panamanian free zones entering the Panamanian customs territory.  
1.51.   Merchandise trade flows suffered tremendously from the effects of the COVID -19 pandemic, 
with steep declines in non -mining imports as well as exports. This climaxed a period in which the 
value of merchandise imports fell slightly at first, from USD  13,031 million in 2013 to 
USD 12,836  million in 2019, before then plummeting by 36% in  2020, to USD 8,179 million. Export 
value declined steadily between 2013 and 2018 and then rebounded in 2019 and 2020, with copper 
exports rising substantially to become the country's leading export product.  
1.3.1.2   Composition of merchandise trade  
1.52.   The composition  of Panama's merchandise exports changed significantly during the review 
period, with the focus shifting from agricultural and food products to mineral products (copper), 
which rose from zero before 2019 to a dominant 56% of total exports in 2020 (Table A1 .1 and 
(Chart  1.1). Exports of animal products fell from 19% to 7% between 2013 and 2020, and vegetable 
products from 17.9% to 10.4%. Export levels dropped significantly for such items as fruit (from 
15.6% in 2013 to 9.0% in 2020) and fish and crustaceans (from 13.8% in 2013 to 3.9% of the total 
in 2020), followed by vegetables (down to 2.7%), meat (2.1%) and sugars (1.5%). The contribution 
of manufactured products (HS Chapters 25 to 97) was approximately 20%.  
1.53.   Panama's imports consist primarily of manufactu red goods (including agro -industry products), 
which accounted for around 78% of the total in 2020 (Table A1.2 and Chart 1.2). These were led by 
machinery and mechanical equipment, transport equipment (motor vehicles), products of the 
chemical and allied in dustries (mainly pharmaceuticals) and mineral fuels.  
 
28 IMF (2021), Policy Responses to COVID -19. Viewed at: https://www.imf.org/en/Topics/imf -and-
covid19/Policy -Responses -to-COVID‑19. WT/TPR/S/421 /Rev.1  • Panama  
- 29 - 
  Chart 1.1 Merchandise trade by main products, 2013 and 2020  
 
Source:  WTO Secretariat estimates, based on data provided by the authorities.  
  
WT/TPR/S/421 /Rev.1  • Panama  
- 30 - 
  Chart 1.2 Merchandise trade by trading partner, 2013 and 2020  
 
 
Source:  WTO Secretariat calculations, based on information from the UN Comtrade database.   
WT/TPR/S/421 /Rev.1  • Panama  
- 31 - 
  1.3.1.3   Direction of merchandise trade  
1.54.   European Union countries are t he leading market for Panamanian exports, accounting for 
25.5% of the total in 2020 compared to 18.4% in 2013. Exports to the United States declined 
considerably, from 18.4% of the total in 2013 to 7% in 2020 (Table A1.3 and Chart 1.2). The share 
going to other countries in the Americas – including those in the Central American Common Market 
(CACM), Costa Rica in particular – also fell significantly, from 24.8% to 7.9% of total exports. The 
share going to Asia, on the other hand, rose substantially – from 1 8% in 2013 to 42% in 2020 – led 
by China (19.5% of total exports in 2020) and Japan (6.5%).  
1.55.   The sources of Panamanian imports continue to be led by the United States (25.5% of the 
total in 2020). Those from the CACM countries, mainly Costa Rica, have remai ned stable, while those 
from Mexico and Colombia gained ground in the 2013 -20 period. Imports from the EU (27) countries 
rose slightly, from 10.3% in 2013 to 10.7% in 2020. Asia's relative share rose from 16.1% in 2013 
to 17.7% in 2020, owing mainly to inc reased imports from China (from 7.9% to 10.4% of total 
imports).  
1.3.2   Trade in services  
1.56.   Panama's services trade balance has traditionally been in surplus, and remained so during 
the period 2013 -20 and first quarter of 2021 (Table 1.6). The surplus peaked in 2018 and 2019 
(USD  9,553 million and USD 9,551 million, respectively), before contract ing in 2020 
(USD  6,396  million), when services flows were severely disrupted by COVID -19. Travel and 
transport were particularly impacted by the pandemic, while financial flows were not substantially 
affected.  
1.57.   In 2019, service exports accounted for 52.7% o f total exports and 22.9% of GDP. In the same 
year, their value rose to USD  14,633 million, a 122% increase in relation to the amount recorded 
for 2007. In 2020, service exports were severely affected by COVID -19 restrictions, falling by 36% 
to USD  9,377  million. Those most affected were travel and transport. Exports in practically all service 
sectors grew during the period 2013 -19, the exception being financial services. That sector's export 
flows declined, in part because of stricter precautionary measure s for international capital flows. 
Based on invoicing, service exports continued to be led by transport and storage services (including 
those provided by the Panama Canal Authority and firms in the ZLC, as well as air services), 
accounting for 47.5% in 201 9 and 57.6% in 2020. Ranking next were travel services (tourism), 
which accounted for 30.8% in 2019 (11.9% in 2020, owing to the pandemic), and financial services, 
which accounted for 2.6% (5.2% in 2020). Turning to service sector imports, transport took t he 
largest share in 2019 (37.9%) and 2020 (40.9%), followed by travel, other business services and 
financial services. Looking at the first quarter of 2021, income from service exports dropped by 
30.1% from the first quarter of 2020 , under the effects of t he pandemic; suffering most were 
royalties and licence fees , followed by travel and government services. First quarter 2021 
expenditure on service imports fell by 23.3%, with travel, other business services and government 
services falling farthest.  
Table 1.6 Trade in services, 2013 -20 and first quarter of 2021  
(USD million)   
2013  2014  2015  2016  2017  2018  2019  2020  2021Q1  
Balance of trade in 
services  7,634  7,847  7,858  8,057  9,297  9,553  9,551  6,396  1,597  
Services income  12,714  12,718  12,615  12,824  13,900  14,461  14,663  9,377  2,488  
 Transport  5,102  5,376  5,356  5,516  6,370  6,725  6,966  5,401  1,333  
 Travel  3,475  3,729  3,948  4,223  4,422  4,617  4,521  1,117  373 
 Communication 
services  325 339 338 358 347 354 360 344 88 
 Construction  0 0 0 0 0 0 0 0 0 
 Insurance  138 120 226 227 263 230 265 205 44 
 Financial services  504 400 549 508 449 392 380 484 152 
 Information 
technology and 
information  66 57 32 31 36 35 34 41 10 
 Royalties and licence 
fees 5 8 6 4 4 35 13 3 1 WT/TPR/S/421 /Rev.1  • Panama  
- 32 - 
   
2013  2014  2015  2016  2017  2018  2019  2020  2021Q1  
 Other business 
services  2,936  2,550  2,008  776 1,879  1,949  2,001  1,725  473 
 Cultural, personal and 
recreational services  41 36 45  68 7 6 7 4 1 
 Government services 
not elsewhere 
specified  122 102 108 113 124 118 116 53 13 
Services expenditure  -5,081  -4,870  -4,758  -4,767  -4,604  -4,908  -5,113  -2,980  -891 
 Transport  -2,425  -2,144  -1,958  -1,867  -1,996  -2,041  -1,940  -1,218  -410 
 Travel  -862 -942 -1,055  -1,165  -921 -1,184  -1,412  -465 -147 
 Communication 
services  -32 -49 -38 -25 -28 -34 -33 -35 -9 
 Construction  0 0 0 0 0 0 0 0 0 
 Insurance  -276 -211 -239 -232 -238 -227 -233 -146 -53 
 Financial services  -537 -392 -505 -460 -441 -457 -366 -457 -109 
 Information 
technology and 
information  -51 -55 -52 -49 -48 -52 -51 -63 -16 
 Royalties and licence 
fees -81 -99 -57 -47 -46 -39 -71 -18 -12 
 Other business 
services  -718 -853 -742 -785 -765 -728 -852 -493 -114 
 Cultural, personal and 
recreational services  -34 -37 -28 -35 -32 -32 -32 -24 -6 
 Government services 
not elsewhere 
specified  -65 -90 -85 -103 -89 -113 -122 -61 -15 
Source:  National Institute of Statistics and Censuses (INEC), Office of the Comptroller -General of the 
Republic of Panama.  
1.3.3   Trends and patterns in FDI  
1.58.  The figure for Panama's net foreign investment position nearly doubled between 2013 and 2020, 
to USD  58,603 million. Net FDI flows into Panama continued at an accelerated pace during the review 
period, peaking at USD 5,030  million in 2018 before plummeting to USD  589 million as COVID -19 
disrupted international economic activity (Table 1.7). As a percentage of GDP, FDI flows peaked at 
9.1% in 2014, falling to 6.5% in 2019 and to only 1.1% in 2020, reflecting the drastic reduction in 
flows that year. By the end of the first quarter of 2021, the  country's net FDI position stood at 
USD 453.6 million, 57.8% less than the year before. Contributing to that result were "other business" 
activities, with investment in wholesale and retail trade having been heavily impacted by the pandemic.  
1.59.   ZLC firms con tinued to capture significant volumes of FDI (some 10% of total flows during 
the period), but only until 2020, when the flow turned negative. Flows into the banking sector 
(general and international licence banks) continued to fluctuate during the period – rising sharply 
between 2014 and 2016 but falling thereafter. Investments in "other companies" rose rapidly, in 
step with GDP, for much of the review period, amounting to USD  23,369 million between 2013 
and 2019 and accounting for 76% of total flows.  
Table 1.7 Foreign direct investment (FDI) position and flows, by sector (2013 -20 and 
first quarter of 2021)  
(USD million)   
2013  2014  2015  2016  2017  2018  2019  2020  2021Q1  
Net FDI position  
(31 Dec.)  30,677  35,136  39,692  44,437  48,614  53,697  58,023  58,603  59,056  
FDI flows  3,567  4,459  4,556  4,745  4,177  5,081  4,320  589 454 
General licence banks  123 870 607 376 443 186 298 201 38 
International licence banks  258 308 100 467 -157 234 307 122 51 
ZLC firms 613 481 269 344 355 588 467 -47 -17 
Other companies  2,573  2,800  3,580  3,559  3,535  4,073  3,249  313 382 
FDI flows/GDP (%)  8.0 9.1 8.4 8.2 6.7 7.8 6.5 1.1 .. 
.. Not available.  
Note:  Discrepancies between constituent figures and totals are due to rounding.  
Source:  National Institute of Statistics and Censuses (INEC), Office of the Comptroller -General of the 
Republic of Panama, and data provided by the authorities.  WT/TPR/S/421 /Rev.1  • Panama  
- 33 - 
  1.60.   By economic activity, trade absorbed the largest proportion of FDI inflows, accountin g for 
28.8% of cumulative FDI volume by 2019, followed by financial and insurance activities (21.3%). 
FDI absorbed by Panama's increased mining activity, especially for copper, also rose, accounting for 
16.1% of the total in 2019, compared to only 5.1% in 2013. Transport, storage and postal services 
accounted for 7.7%, followed by information and communication (6.6%), and manufacturing (5.7%) 
(Table 1.8).  
Table 1.8 Foreign direct investment (FDI) by sector (cum ulative volume), 2013 -20 
(USD million)  
 2013  2014  2015  2016  2017  2018  2019  2020  
Total  30,67
7 35,13
6 39,69
2 44,43
7 48,61
4 53,69
7 58,02
3 58,60
3 
Agriculture, livestock, 
hunting, 
forestry and 
fisheries  138 137 142 71 53 55 60 " 
Mining and quarrying  1,554  1,592  3,255  4,066  6,128  7,738  9,364  " 
Manufacturing  1,889  2,110  2,113  2,315  2,630  2,749  3,306  " 
Electricity, gas and water 
supply  1,331  1,312  1,422  1,620  1,643  1,506  1,626  " 
Construction  1,128  1,183  1,423  1,698  1,978  1,920  2,119  " 
Wholesale and retail 
trade 9,071  10,064  12,016  11,913  13,035  14,969  16,689  " 
Transport, storage and 
postal services  2,445  4,424  4,357  5,144  4,680  4,451  4,450  " 
Hotels and restaurants  892 939 1,029  1,278  1,323  1,316  1,345  " 
Information and 
communicatio
n 3,049  2,625  2,390  3,294  3,428  3,580  3,833  " 
Financial and insurance 
activities  7,597  9,003  9,649  10,760  11,140  11,627  12,367  " 
Real estate activities  857 959 881 1,029  978 1,120  1,131  " 
Professional, scientific, 
and technical 
activities  157 190 274 303 325 601 646 " 
Administrative activities 
and support 
services  324 328 412 402 490 1,355  376 " 
Education  37 47 66 115 163 160 221 " 
Social and health -related 
services  42 48 50 61 85 61 69 " 
Arts, entertainment and 
creativity  97 104 151 171 221 285 219 " 
Other services  68 72 61 195 314 204 202 " 
.. Not available  
Note:  Discrepancies between constituent figures and totals are due to rounding . 
Source:  National Institute of Statistics and Censuses (INEC), Office of the Comptroller -General of the 
Republic of Panama.  
1.61.   Colombia and the United States remained the largest sources of FDI, amounting in 2019 to 
USD 9,609 million from the former (16.6% of the cumulative total) and USD 9,132 million from the 
latter (15.7%) (Tab le 1.9). The Colombian investments centred on trade and distribution. Ranking 
third was Canada (15%), having sharply increased its FDI between 2013 and 2019, flowing mainly 
to the mining sector. Other significant sources of FDI included Switzerland, the Un ited Kingdom and 
Spain. Net FDI flows from the European Union as a whole rose during the review period, to account 
for 15.1% of cumulative volume by 2019. Important sources within the EU, apart from Spain, were 
the Netherlands, Germany and Italy.  WT/TPR/S/421 /Rev.1  • Panama  
- 34 - 
  Table 1.9 FDI in the Republic of Panama, by origin, 2013 -20 
(USD million)   
2013  2014  2015  2016  2017  2018  2019  2020  
Total  30,677  35,136  39,692  44,437  48,614  53,697  58,023  58,603  
Europe  8,375  9,019  9,850  10,313  9,909  11,766  12,598  .. 
European Union  5,769  6,129  6,793  7,012  6,075  7,931  8,780  .. 
Germany  444 490 505 500 543 592 767 .. 
Belgium  16 -70 -78 -74 -73 -66 -69 .. 
Denmark  -6 6 30 40 40 42 43 .. 
Spain  1,817  2,065  2,164  2,250  2,470  2,419  2,358  .. 
France  107 158 156 120 129 125 145 .. 
Italy 326 360 400 459 512 631 701 .. 
Netherlands  647 763 1,083  931 906 1,196  1,632  .. 
United Kingdom  2,245  2,312  2,472  2,735  1,478  2,831  3,007  .. 
Sweden  56 24 34 37 41 30 36 .. 
Other countries a 117 20 27 13 30 131 161 .. 
Other Europe  2,605  2,890  3,057  3,301  3,833  3,835  3,818  .. 
Andorra  16 20 24 29 32 33 33 .. 
Norway  5 3 3 2 2 1 1 .. 
Switzerland  2,549  2,810  2,971  3,203  3,751  3,736  3,695  .. 
Other countries a 35 56 59 67 49 65 88 .. 
America  17,195  21,775  25,252  28,828  32,985  35,237  38,293  .. 
North America  7,781  9,960  12,153  13,838  16,991  18,574  19,442  .. 
Canada  1,361  1,387  2,774  3,411  5,553  7,077  8,681  .. 
United States  5,060  7,197  7,909  8,966  9,754  9,775  9,132  .. 
Mexico  1,360  1,376  1,470  1,460  1,684  1,721  1,630  .. 
Central America and Caribbean  2,721  3,130  3,516  3,777  4,230  4,663  5,222  .. 
Aruba  16 24 20 15 13 4 4 .. 
Bahamas  118 157 199 228 314 365 410 .. 
Barbados  10 12 11 10 8 9 10 .. 
Costa Rica  578 635 713 721 825 986 1,121  .. 
Cuba 4 5 3 -3 -1 -7 -7 .. 
El Salvador  138 146 162 186 221 254 277 .. 
Guatemala  157 178 208 257 273 307 289 .. 
Honduras  50 63 76 24 25 23 117 .. 
Virgin Islands of the United 
States  18 25 49 58 68 78 81 .. 
Jamaica  291 335 402 417 449 490 640 .. 
Nicaragua  103 130 142 171 194 240 265 .. 
Puerto Rico  109 112 110 105 125 144 151 .. 
Dominican Republic  205 237 270 320 350 382 410 .. 
Other countries a 923 1,071  1,151  1,269  1,367  1,387  1,455  .. 
South America  6,693  8,684  9,583  11,213  11,763  12,000  13,629  .. 
Argentina  143 143 144 185 177 103 194 .. 
Bolivia  1 1 1 1 0 0 4 .. 
Brazil  371 409 563 626 576 406 428 .. 
Chile 64 65 66 85 100 49 55 .. 
Colombia  4,894  6,042  6,702  7,610  8,056  8,533  9,609  .. 
Ecuador  161 800 828 1,128  1,157  1,175  1,406  .. 
Peru 337 373 400 418 442 441 468 .. 
Venezuela  721 850 881 1,161  1,255  1,293  1,464  .. 
Asia 3,307  2,349  2,873  3,565  3,865  4,437  4,527  .. 
Near and Middle East  29 6 4 3 3 3 5 .. 
Israel  26 3 3 1 3 4 5 .. 
Lebanon  3 3 1 2 0 -1 -1 .. 
Central and South Asia and other 
Persian Gulf countries  158 200 285 298 294 505 560 .. 
India 5 4 2 5 5 1 -1 .. 
Singapore  151 189 266 286 282 456 516 .. 
Other countries a 2 7 16 7 7 48 46 .. 
East Asia  3,120  2,143  2,585  3,263  3,568  3,930  3,962  .. 
Hong Kong, China  28 31 30 40 12 11 10 .. 
China  38 78 111 236 288 324 369 .. 
Korea, Republic of  1,278  764 1,078  1,337  1,288  1,382  1,482  .. 
Japan  271 250 246 305 263 299 350 .. 
Chinese Taipei  1,506  1,019  1,120  1,345  1,717  1,913  1,752  .. 
Other countries a 1,785  1,994  1,718  1,732  1,855  2,257  2,606  .. 
.. Not available.  
a For reasons of statistical confidentiality, this category includes countries having registered up to two 
direct investment firms.  
Note:  Discrepancies between constituent figures and totals are due to rounding . 
Source:  National Institute of Statistics and Censuses (INEC), Office of the Comptroller -General of the 
Republic of Panama.  
 WT/TPR/S/421 /Rev.1  • Panama  
- 35 - 
  2  TRADE AND INVESTMENT REGIMES  
2.1  General Framework  
2.1.  The Political Constitution of Panama, which was enacted in 1972, has not been reformed since 
its most recent review in 2014.1 The Constitution establishes the separation of powers of the State. 
Legislative power is vested in the National Assembly, composed of  71 members. Executive power is 
exercised by the president (or vice president) and the government ministers (19 in 2021).2 The 
president and the members of the National Assembly are elected for five years and may be 
re-elected; at least 10 years must elap se between two terms of office of the same president. Judicial 
power is exercised by the Supreme Court of Justice, tribunals and courts.  
2.2.  The territory of Panama is divided into provinces, districts and municipalities ( corregimientos ). 
There are also five i ndigenous regions, of which three are provinces and two are municipalities. Each 
province has a governor and a provincial council; each district has a mayor and a municipal council. 
According to the Constitution, municipal councils must ensure the provisio n of public utility services 
and, where appropriate, oversee concessions for the provision of such services.3  
2.3.  The Political Constitution is the supreme law, followed by international treaties, laws and 
decree -laws, executive decrees, cabinet decrees and legislative decrees. International human rights 
treaties have the same rank as the Constitution.  
2.4.  Two types of legislation exist in Panama: common legislation, which is passed through organic 
laws; and ordinary laws, which are issued to declare war, grant p ardons, initiate peace negotiations 
and issue the rules of procedure of the National Assembly. The legislative procedure has not changed 
since 2014 (chart  2.1). It is not possible for Panamanian citizens to present draft legislation; they 
may, however, pre sent proposals to the National Assembly, which then prepares a draft law if it 
deems the proposals to be technically and legally viable. The technical and legal requirements for 
proposals by private citizens were simplified in 2015.4 
Chart 2.1 Legislative procedure  
Introduction of the 
draft law   National Assembly   Executive  
branch  
Organic laws:  
Standing committees 
of the National 
Assembly; ministers; 
the Supreme Court of 
Justice, the National 
Attorney General and 
the Attorney General 
of Administration; the 
Electoral Tribunal  First reading (Standing 
Committee)  
The initial text may be 
amended.  Approves the draft law. The law is enacted and 
gazetted.  
Second reading 
(plenary)  
The initial text may be 
amended.  Presents objections.  The draft law returns to the 
National Assembly: (a) If the National Assembly 
does not amend the text, the Executive must 
approve the draft law, which is enacted and 
gazetted; (b) If the National Assembly r ejects the 
amendments, the draft law is archived.  
Ordinary laws:  
Members of the 
National Assembly, 
ministers and 
presidents of provincial 
councils  Third reading (plenary)  
The initial text cannot be 
amended. The approved 
draft law is passed on to 
the executive branch.  Presents constitutional challenges.  The draft 
law returns to the National Assembly. If the National 
Assembly does not amend the text, the Executive 
passes it on to the Supreme Court of Justice. If the 
Supreme Court declares the text cons titutional, the 
Executive must approve the draft law. The draft law 
is enacted and gazetted.  
Note:  In the National Assembly, draft laws must be approved by an absolute majority of votes, except in 
the case of the third reading of a draft ordinary law, when a simple majority is sufficient.  
Source:  Political Constitution and National Assembly. Viewed at: 
https://www.asamblea.gob.pa/sites/default/files/2018 -10/AN -CONSOLIDADO -WEB.pdf . 
 
1 The Con stitution was last revised in 2004.  
2 The Ministry of the Environment, created in 2015, is the only new ministry that has been created 
since 2014.  
3 The services provided by public utilities are water; sewage; telecommunications; electricity 
generation, di stribution and marketing; and broadcasting services.  
4 Resolution No. 93 of 31 October 2009, as amended by Resolution No. 198 of 5  October  2015; and 
United Nations Development Programme and Asamblea Nacional de Panamá  (2016), Fortalecimiento de los 
Mecanis mos para la Participación Ciudadana en la Asamblea Nacional de Panamá . Viewed at: 
https://www.undp.org/content/dam/panama/docs/documentos/undp_pa_informe_participacion_ciudadana_an.
pdf. WT/TPR/S/421 /Rev.1  • Panama  
- 36 - 
  2.5.  The Executive may request that the National Assembly grant it special legislative powers while 
the National Assembly is in recess. The National Assembly grants such powers by passing legislation 
indicating the issues for which the pow ers are granted and the purpose of those powers. The 
Executive may legislate on any matter except the budget, international treaties, taxes, monopolies, 
fundamental guarantees, suffrage, the party system, and criminal matters. Decree -laws are issued 
by the  Executive and have the status of laws. They may be amended or repealed by the National 
Assembly. Between 2014 and 2021, no special legislative powers were granted to the Executive.  
2.6.  The Executive signs international treaties, which are subsequently approve d by the 
National  Assembly.  
2.7.  The administration and operation of the Panama Canal are governed by the Constitution. Any 
plans related to canal operations are subject to a referendum.  
2.2  Trade Policy Formulation and Objectives  
2.8.  The Ministry of Trade and Industry  (MICI) formulates and implements policy on foreign trade 
and attracting investment.5 In formulating trade policy, MICI works with other ministries such as 
the Ministry of the Economy and Finance (MEF), the Ministry of Foreign Affairs (MIRE) and 
the Ministry of Agricultural Development (MIDA). Trade unions from the various production sectors 
are also involved in formulating trade policies through the International Trade Negotiations 
Commission.6 
2.9.  In 2019, the Logistics Office took over the functions of the  National Trade Facilitation 
Committee (CNFC).7 Established in 2018, the Office is formed by 12 public -sector entities and 
private -sector representatives.8 When the Office meets as the CNFC, it is chaired by the Minister for 
Trade and Industry.9 According to the authorities, no meeting of the Committee has yet taken place 
(as of July 2021).  
2.10.   MICI is responsible for negotiating and managing trade agreements. MIDA also has a trade 
policy office that monitors compliance with agricultural commitments.  
2.11.   Panama's trade policy objectives are set out in the Strategic Governance Plans (PEN) drawn 
up every five years.10 The trade policy objective remains to increase and  diversify Panama's export 
offer and attract foreign investment to allow Panama to "grow more and better"11 by creating more 
jobs and reducing poverty and inequality. As part of its internationalization strategy, which takes 
place through multilateral, reg ional and bilateral negotiations, Panama considers that there should 
be greater participation by women.12 
2.12.   Panama has a services -based economy and is looking to improve its economic performance 
in terms of exports of industrial, agricultural and agro -indust rial goods.13 To boost goods exports 
and gain access to international markets, Panama is trying to improve the quality of its exportable 
agricultural products and take advantage of the opportunities offered by trade agreements. To 
 
5 MICI. Viewed at: https://www.mici.gob.pa/ . 
6 Decree -Law No. 6 of 15 February 2006.  
7 Executive Decree No. 454 of 11 June 2018, as amended by Executive Decree No.  83 of 30  April 2019.  
8 Ministry of the Presidency; MICI; MEF; Ministry of Public Works ; MIRE; Panama Canal Authority (ACP); 
Panamanian Maritime Authority (AMP); Civil Aviation Authority (AAC); National Customs Authority (ANA); 
Transit and Land Transport Authority (ATTT); Ministry of Science, Technology and Innovation; and Panama 
Metro Secre tariat.  
9 Article 8 of Executive Decree No. 454 of 11 June 2018, as amended by Executive Decree No.  83 of 
30 April 2019.  
10 Following the previous review in 2014, Panama implemented the National Energy Plan (PEN) 
2015-19. It is currently implementing the PEN 2019 -24. 
11 Plan Estratégico Nacional con Visión de Estado: Panamá 2030 . 
12 Since 2019, MICI has been running the Mujer Em prendexport  project to help women -led companies 
enter international markets.  
13 PowerPoint presentation by MICI. Viewed at: 
https://www.mici.gob.pa/uploads/media_ficheros/2019/06/2/comercio -exterior/exportaciones/guias -para-
exportar/estrategias -de-marketing -internacional.pdf . WT/TPR/S/421 /Rev.1  • Panama  
- 37 - 
  achieve these objectives, the country launched the Panama Export seal in 2017,14 opened its first 
agri-business office located outside Panama in 2018 and created its first trade information platform, 
called INTELCOM, in 2019.  
2.13.   Panama's investment policy aims to attract m ultinational companies, for which there are 
various incentives in the form of special schemes, and to promote the growth of the special economic 
zones, in particular the Colón Free Zone (ZLC), in order to encourage diversification and participation 
in valu e chains. Panama hopes that foreign investment will drive technology and knowledge transfer 
and boost production growth, creating jobs and supporting the development of the local business 
sector.15 The country is therefore trying to facilitate investment b y offering new incentives to specific 
sectors (such as tourism). For example, the special regime for the establishment and operation of 
multinational companies providing manufacturing -related services (EMMA special regime) aims to 
encourage investment in t he services needed to develop the manufacturing sector, while the special 
regime for the establishment of companies operating and developing agri -food clusters aims to 
encourage investment in agricultural activities. Panama is also making it easier for cer tain investors 
to obtain permanent residency. Lastly, Panama is trying to attract foreign investment to turn sectors 
such as the knowledge economy, the creative industries and disruptive technology for industry into 
drivers of growth.16  
2.14.   Currently (Septemb er 2021), the Directorate -General of Investor Services at MICI and the 
Investment and Export Promotion Agency (PROPANAMA) are the bodies responsible for promoting 
investment and exports. In 2019, the Agency was transferred from MICI, where it operated unde r 
the name PROINVEX PANAMA, to MIRE, where it took the name PROPANAMA.17 In 2021, PROPANAMA 
became an independent body with its own budget.18 
2.15.   MEF conducted several assessments of the incentive and investment schemes during the 
review period. In 2017, it de emed it necessary to monitor how the free zones operated, especially 
in terms of goods invoiced improperly, and to adopt measures to monitor the use of cash in the free 
zones and the real estate and construction sectors.19 In 2017, MEF's Financial Analysis  Unit (UAF) 
recorded 12 suspicious transactions in the ZLC and one in the Barú Free Zone.  
2.16.   An evaluation of Panama's policies to prevent money laundering and the financing of terrorism 
released by the Financial Action Task Force of Latin America (GAFILAT)20 in 2018 stated that the 
amount of cash used in the free zones did not match the volume of transactions and that cash 
transactions posed a risk because they were more likely to remain anonymous. The report also noted 
that allowing offshore trade in the fre e zones and the ZLC, with goods not circulating in the country, 
also posed a risk, since such transactions could facilitate fictitious foreign trade transactions 
(triangulation, under -invoicing and over -invoicing of goods).21 In 2020, Panama's Supervisory 
Authority for Non -Financial Services improved risk management in the free zones by identifying 
several inherent risks in the activities that were being carried out there (Table 2.1).  
 
14 Currently (2021), the seal is used by exporters of coffee, craft b eer, fresh fruit and marine products 
that have demonstrated the traceability and safety of their products , MICI. Viewed at: 
https://mici.gob.pa/panama -exporta/acerca -de-panama -exporta. 
15 PEN 2019 -24. 
16 Information provided by the authorities.  
17 Executive Decree No. 181 -A of 27  August  2019.  
18 MICI news article, 5 April 2021. Viewed at: https://www.mici.gob.pa/noticias/presidente -sanciona -la-
ley-que-crea-la-autoridad -para-la-atraccion -de-inversiones . 
19 MEF (2017), Acciones y medidas para la prevención del blanqueo de capitales, financiamiento del 
terrorismo  y financiamiento de la proliferación de armas de destrucción masiva: Informe 2017 . Viewed at: 
https://www.mef.gob.pa/wp -content/uploads/2020/10/Acciones -y-Medidas -para-la-prevencion -de-Blanqueo -
de-Capitales.pdf . 
20 A regional intergovernmental organization with 17 members.  
21 GAFILAT (2018), Mutual Evaluation Report of the Republic of Panama , January  2018. Viewed at: 
https://www.gafilat.org/index.php/es/biblioteca -virtual/miembros/panama/evaluacion es-mutuas -12/1264 -
mutual -evaluation -report -of-panama/file . WT/TPR/S/421 /Rev.1  • Panama  
- 38 - 
  Table  2.1 Free zones/ZLC a nd risks identified by the authorities  
Factor  Rationale  
Nature, size and 
complexity of the 
business activity  Activities are sometimes complex, as they involve companies from many different 
parts of the supply chain, sometimes operating in several economic sectors. 
Monitoring all activities taking place can therefore be complex.  
Products/services  Companies using the free zones, especially the ZLC, may be exposed to being used 
for money laundering, depending on the nature of the product or service. Other 
risks include the excessive use of cash or cash equivalent, the cross -border 
movement of funds and the transaction channels used.  
Distribution channels 
for products/services  Distribution channels for products/services offered by the free zones may i nvolve 
payments to third parties or relations, as well as several transactions or payments 
from or to anonymous parties. This can allow criminals to infiltrate and influence 
how the zones operate, especially the ZLC, given the multimodal platform's high 
connectivity.  
Types of clients  Clients may be natural or legal persons. Some may be politically exposed or 
nationals of high -risk territories.  
Country risk  Trade transactions may be linked to high -risk territories.  
Source:  Superintendencia de Sujetos no Financieros  (Panama) (2020), Guía: Análisis y Gestión de Riesgo: 
Sector Zonas Francas . Viewed at: https://www.mef.gob.pa/wp -content/uploads/2020/03/zonas -
francas.pdf.  
2.3  Trade Agreements and Arrangements  
2.3.1   WTO  
2.17.   Panama has been a Member of the WTO sinc e 1997. It grants at least most -favoured -
nation(MFN) treatment to all its trade partners.  
2.18.   Panama believes that it is important to have a rules -based, inclusive multilateral trading 
system. As a services -oriented economy, Panama calls for progress to be mad e in negotiations on 
services. At the same time, it supports initiatives to remove distortions in agriculture and fisheries.22 
Panama takes part in discussions on new trade issues such as the joint initiative on electronic 
commerce and supports discussions related to international trade, health and the environment. It is 
a member of the group of small, vulnerable economies, the Group of Article XII, the Tropical Products 
Group and the G -33. 
2.19.   In 2015, Panama ratified the Trade Facilitation Agreemen t (TFA).23 By September 2021, it 
had implemented 84.5% of the provisions of the Agreement and had indicated that it would 
implement the remaining provisions within the time limits notified.24  
2.20.   Panama accepted the Protocol amending the Agreement on Trade -Related Aspects of 
Intellectual Property Rights (TRIPS) in November 2011. The country is a party to the Information 
Technology Agreement (ITA), but does not participate in the expanded ITA. It is an observer on the 
Committee on Government Procurement. Panama  does not participate in the Agreement on Trade 
in Civil Aircraft. Since 2017, Panama grants preferential treatment to services and service suppliers 
from least developed countries (LDCs).  
2.21.   This is Panama's third trade policy review, the previous one having  taken place in 2014. 
During the period under review, Panama notified several measures adopted under the WTO 
Agreements (Table A2.1).  
2.22.   Since 2014, Panama has not been involved in any trade disputes as a complainant, but there 
is one case against it.25 Panam a has participated as a third party in five disputes.  
 
22 WTO documents WT/MIN(15)/ST/66 of 21 December 2015 and WT/MIN(17)/ST/29 of 
13 December  2017.  
23 Law No.  55 of 9 September 2015.  
24 TFA database. Viewed at: https://tfadatabase.org/members/panama . 
25 Panama – Measures concerning the importation of certain products from Costa Rica  (DS599). The 
Panel was established on 27 September 2021.  WT/TPR/S/421 /Rev.1  • Panama  
- 39 - 
  2.3.2   Regional and preferential agreements  
2.23.   Panama has more than 20 trade agreements (Chart 2.2). It is a member of the 
Central  American Common Market (CACM) and the Latin American Integration Association (LAI A). 
As part of LAIA, Panama has entered into partial scope trade agreements, as well as agreements 
with the Dominican Republic and Trinidad and Tobago.  
Chart 2.2 Panama , current trade agreements, 2021  
 
 
 
Note: PSAA25TM: Partial Scope Agreement under Article 25 of the Treaty of Montevideo  
RM.OAs: Regional Market -Opening Agreements  
PS.ECA: Partial Scope Economic Complementarity Agreement  
Source:  WTO Secretariat.  
2.24.   When Panama joined the Central American Economi c Integration Subsystem (SIECA) in 2013, 
it adopted the provisions of the Central American economic integration process. These provisions 
included the Central American Import Tariff, with certain exceptions,26 the origin regime, technical 
regulations, and provisions on trade in services and investment. Panama immediately adopted 
certain provisions and is still negotiating the full adoption of the remaining provisions with the other 
States Parties.27  
2.25.   Panama adopted the Central American Import Tariff nomenclature and tariff duties 
immediately, with certain exceptions.28 According to the authorities, as of 2021, around 40% of the 
Central American Import Tariff has yet to be adopted by Panama.  
2.26.   When Panama joined the CACM in 2013, it immediately granted c ustoms duty free treatment 
to goods from Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, with certain exceptions 
 
26 Annexes 5.1 and 5.2 to the Protocol incorporating Panama.  
27 Protocol incorporating Panama into SIECA.  
28 Annexes 5.1 and 5.2 to the Protocol incorporating Panama.  
WT/TPR/S/421 /Rev.1  • Panama  
- 40 - 
  for which tariffs would be maintained or phased out (Table 2.2). The liberalization of excluded goods 
could be the subject of futur e negotiations. For example, in 2018, Panama agreed with Costa Rica 
to liberalize tariff lines that were initially excluded.29 Panama negotiated tariff quotas with Costa  Rica 
and Guatemala.30  
Table  2.2 Panama CACM tariff reduction programme  
 Costa Rica  El Salvador  Guatemala  Honduras  Nicaragua  
End of tariff reduction period  2025 2013 2028 2026 2024 
 % of Panama's tariff lines  
Immediate reduction  88.8 82.0 84.7 76.7 87.6 
Less than 10 years  8.7 0.0 11.2 4.5 3.8 
10 years  0.1 0.0 1.1 1.7 0.0 
More than 10 years  0.1 0.0 0.6 0.1 0.2 
Excluded lines (tariff remains)  2.4 18.0 2.5 17.0 8.5 
Source:  Information provided by the authorities.  
2.27.   The Council of Ministers for Economic Integration (COMIECO) is responsible for amending the 
Central American Import Tariff. However, States Parties may unilaterally amend import duties if 
necessary owing to circumstances, whether due to balance -of-payments difficulties, supply 
shortages or unfair practice s. In principle, such amendments are valid for no more than 30  days, 
during which COMIECO must meet to consider the situation and decide whether to suspend, amend 
or prolong the measure. If COMIECO does not issue a ruling during the 30 -day period, the 
amen dment is maintained until the ruling is issued. In 2014, Panama reduced the tariff for refined 
soya-bean oil (HS 1507.90.10) and other soya -bean oils (HS 1507.90.90) to 10%; the measure was 
maintained for a period of one year to ensure the supply of the do mestic market at a low cost.31 
Since 2014, Panama has not amended any import duties unilaterally.  
2.28.   In 2013, Panama adopted the Central American Regulations on the Origin of Goods.32 
Although it adopted some specific rules of origin, the others are still und er negotiation.33 
2.29.   Since 1 January 2017, Panama has implemented several legal instruments that are part of 
the Central American Integration System, namely: the Central American Agreement on Uniform 
Road Signs and Signals; the Regional Agreement on the Temporary Importation of Road Vehicles; 
the Central American Agreement on Road Traffic; the Provisional Declaration for Marine Products; 
the Reiteration of a Ban on the Application of Minimum or Reference Prices in Intraregional Trade; 
the General Principl es for the Administration of Import Quotas on Agricultural Products within the 
Framework of the Central American Customs Union; and the General Principles for the Administration 
of Donations of Food and Agricultural Inputs within the Framework of the Centr al American 
Customs  Union.34 
2.30.   Six trade agreements have entered into force in Panama since the previous review in 2014: 
the 2014 agreement with the European Free Trade Association (EFTA); the 2015 agreement with 
Mexico; the 2016 agreement with Trinidad and Tobago; the 2020 agreement with Israel; and the 
2021 agreements with the Republic of Korea and the United Kingdom. These agreements cover trade 
in goods and services and promote investment. Most of them include new trade topics.  
2.31.   The free trade agreement wi th Mexico that entered into force in 2015 replaced Partial Scope 
Agreement No. 14 under Article 25 of the Treaty of Montevideo, under which Mexico had granted 
unilateral preferences to Panama since 1985.  
2.32.   The United Kingdom -Central America Association Agreement is a trade continuity agreement 
that preserves the terms of the Association Agreement between Central America and the EU. 
Therefore, the tariff reduction programme, customs quotas, rules of origin an d special treatment for 
banana imports negotiated with the EU are applicable to the United Kingdom. The only amendments 
to the Association Agreement with the United Kingdom are the legal and technical changes required 
 
29 Resolution No. 08 -2018 (COMIECO -EX) of 28 June 2018.  
30 Article 4 and Annexes 4.2 and 4.3 to the Protocol incorporating Panama.  
31 Resolution No. 336 -2014 (COMIECO -EX) of 17 January 2014.  
32 Article 6 of the Protocol incorporating Panama.  
33 Information provided by the authorities.  
34 Annex 3.3 to the Protocol incorporating Panama; and information provided by the authorities.  WT/TPR/S/421 /Rev.1  • Panama  
- 41 - 
  for the agreement to be implemented (t he mutatis mutandis  principle). For instance, the volume 
and annual increase of tariff quotas have been modified.  
2.33.   The tariff reduction programmes negotiated by Panama with the EFTA, Israel, Mexico, the 
Republic of Korea and the United Kingdom cover all tar iff lines (Table 2.3). Generally, Panama did 
not negotiate the liberalization of trade in "sensitive" products, most of which are agricultural 
products. It has agreed tariff quotas with Israel, Switzerland and the United Kingdom. In a partial 
scope agreeme nt with Trinidad and Tobago, Panama has agreed to grant preferential treatment 
to 214 tariff lines: 191 of those lines have a 100%, 50% or 25% preference, and 23 will be 
eliminated within 10 years.35 
Table  2.3 Tariff reduction programmes negotiated by Panama  
 EFTA  Republic 
of Korea  Israel  Mexico  United 
Kingdom  Iceland  Norway  Switzerland 
and 
Liechtenstein  
Signature  24.6.2013  21.2.2018  17.5.2018  3.4.2015  18.7.2019  
Entry into effect for 
Panama  5.9.2014  29.8.2014  1.3.2021  1.1.2020  1.7.2015  1.1.2021  
Coverage  Goods and services  
End of tariff 
reduction period  2028 2039 2035 2029 2027 
Tariff reduction 
programme  (% of Panama's tariff lines)   
Immediate 
reduction  59.80  59.64  59.63  60.59  75.0 51.0 58.7 
Less than 10 years  14.47  14.47  14.47  16.72  1.5 22.0 - 
10 years  18.94  19.08  19.05  13.60  4.9 12.8 30.9 
More than 10 years  0.47 0.47 0.45 4.39 0.04 7.7 5.4 
Partial reduction  0.00 0.00 0.00 0.00 0.56 0.00 0.00 
Tariff remains  6.32 6.34 6.40 4.70 18.0 6.5 5.0 
Other provisions         
Customs quotas  No No Yes No Yes No Yes 
Trade in services  Negative list  Negative 
list Positive 
list Negative 
list Positive 
list 
Source:  Information provided by the authorities; and WTO documents WT/REG374/1/Rev.1 of 23 November 
2017 and WT/REG357/1/Rev.1 of 6 April 2016.  
2.34.   In 2015, the First Protocol to Partial Scope Economic Complementarity Agreement No.  71 
between Panama and Cuba entered into effect. The Protocol ame nded the preferences initially 
negotiated and introduced new preferences, as well as provisions on science and technology, the 
environment and intellectual property.36  
2.35.   Since 2014, Panama and the Dominican Republic have been negotiating the expansion of th e 
partial scope trade agreement.  
2.3.3   Other agreements and arrangements  
2.36.   As of September 2021, Australia, Japan, New Zealand, the Russian Federation and Turkey 
have granted unilateral tariff preferences to Panama under the Generalized System of Preferences 
(GSP) .37 
2.37.   Panama participates in negotiations on the Trade in Services Agreement (TISA).  
2.4  Investment Regime  
2.38.   The main rules governing the investment regime in Panama are the Constitution and Law 
No. 54 on legal stability contracts of 22 July 1998 (and its implemen ting Regulations).38 Panama 
 
35 Information provided by the auth orities.  
36 Law No.  54 of 9 September 2015; and information provided by the authorities.  
37 Information provided by the authorities.  
38 Executive Decree No. 9 of 22 February 1999.  WT/TPR/S/421 /Rev.1  • Panama  
- 42 - 
  also has 21 investment promotion and protection agreements39 and 17 double taxation 
agreements.40 
2.39.   Panama grants national treatment to foreign investment.41 Foreign nationals do not require 
prior authorization to invest in the co untry unless the investment benefits from an incentive regime 
or is made in the financial sector (banking and insurance). In the latter case, they must acquire a 
licence from the Banking Supervisory Authority or authorization from the Supervisory Authority  for 
Insurance and Reinsurance.42 
2.40.   Private investment, whether domestic or foreign, is permitted in all sectors except electric 
power transmission and postal services, which remain state monopolies. The country's salt pans, 
mines, underground and thermal wa ters, hydrocarbon deposits, quarries and mineral deposits are 
state-owned, and a state concession is required to exploit the subsoil and salt pans.43 The State thus 
controls activities such as the lottery and betting, which may also be the subject of a concession, 
although this is not currently the case.44 
2.41.   As was the case in 2014, foreign direct investment (FDI) in the media45 and in retail is 
prohibited. Foreigners may, however, market their products and services at the retail level. Further, 
since 2007 , foreign investors may operate travel and tour operator agencies.46 
2.42.   FDI is allowed in other sectors, but ceilings may be imposed, as is still the case for road and 
air transport (Table 2.4). In addition, the Constitution allows FDI of up to 49% of the capital of utility 
companies (water suppliers; sewage companies; companies that generate, distribute and market 
electricity; and free -to-air broadcasters), unless stated otherwise by sectoral legislation. In 2021, 
this 49% cap applied only to free -to-air broadcasters; sectoral legislation allows other utility 
companies to have a higher share of foreign capital.  
Table  2.4 FDI cap, 2014 -21  
Activity  FDI cap  
Air transport (Law No. 21 of 29 January 2003)  49% (inte rnational transport);  
40% (domestic transport)  
Road transport (Law No. 51 of 28 June 2017)  40% 
Public utility services (Article 285 of the Constitution)  49%, notwithstanding the exceptions 
provided for by legislation  
Public broadcasting (Law No. 24 of 30 June 1999)  35%  
Source:  WTO Secretariat.  
2.43.   Panama's only restriction on access to land is that foreigners are prohibited from buying land 
within 10 km of a national border.47 In the rest of the country, foreigners – like Panamanians – may 
purchase lan d or – if they are established in Panama – obtain state concessions (for example, for 
tourism projects48) or rights -of-possession certificates. Holders of rights -of-possession certificates 
have the right to possess the land that is occupied or exploited.  Possession requires "material 
occupation" of the land for more than five continuous years.49 Rights -of-possession certificates are 
filed with MIDA for agricultural land or MEF for coastal and insular land. There is no obligation to file 
certificates granting rights to possess other types of land; in the event of a dispute, it is possible to 
 
39 Argentina; Canada; Chile; Cuba; Czech Republic; Dominican Republic; Finland; France; Germany; 
Italy; Republic of Korea; Mexico; Netherlands; Qatar; Spain; Sweden; Switzerland; Ukraine; United Kingdom; 
United  States; and Uruguay.  
40 Barbados; Czech Republic ; France; Ireland; Israel; Italy; Republic of Korea; Luxembourg; Mexico; 
Netherlands; Portugal; Qatar; Singapore; Spain; United Arab Emirates; United Kingdom; and Viet Nam. The 
agreement with Viet Nam was signed during the period under review (in 2017).  
41 Article 20 of the Constitution.  
42 MICI. Viewed at: https://www.mici.gob.pa/direccion -general -de-servicios -al-inversionista/marco -
legal-direccion -general -de-servicios-al-inversionista . 
43 Article 257 of the Constitution.  
44 Article 297 of the Constitution and Decree -Law No. 2 of 10 February 1998.  
45 Law No.  67 of 7 September 1978.  
46 Article 293 of the Constitution and Law No. 5 of 11 January 2007.  
47 Article 291 of the  Constitution.  
48 Law No.  2 of 7 January 2006.  
49 Article 423 of the Civil Code; Article 3 of Law No. 80 of 31 December 2009; and the National Land 
Administration Authority (ANAT). Viewed at: https://www.anati.gob.pa/index.php/normativas . WT/TPR/S/421 /Rev.1  • Panama  
- 43 - 
  reque st the Regional Property Tax Office or the office of the mayor to investigate who owns the 
certificate.50 The Constitution guarantees the right to private property for holders of property titles 
and rights -of-possession certificates; private property may, however, be expropriated for reasons 
of public interest.51 
2.44.   Foreign investment does not need to be registered. There are no foreign exchange controls 
and no restrictions on the repatriation of investment capital or on remittances of dividends, interest 
and other profits to other countries.52 Apart from repatriated dividends, however, remittances are 
generally subject to a withholding tax.53 
2.45.   Panama continues to implement the legal -stability regime. This regime guarantees stability 
for 10 years for legislation , taxation (except indirect taxes), customs regimes (except tariff 
changes)54 and labour laws and stability for five years for municipal taxes. Investments exceeding 
PAB 2 million in certain sectors and activities55 benefit from this regime, as do companie s that opt 
for the special regimes. MICI's Directorate -General of Services to Investors is responsible for 
approving investment plans and filing them in the Register of Legal Stability of Investment.56 As of 
31 July 2021, 337 legal -stability contracts had been filed. According to the authorities, it is not 
possible to measure the fiscal cost of the legal -stability regime.  
2.46.   Panama has several horizontal and sectoral regimes to promote foreign investment, including 
free-zone regimes, initiatives such as the City of Knowledge, the special regime for the establishment 
and operation of multinational business headquarters and, since 2020, the special regime for the 
establishment and operation of multinational c ompanies providing manufacturing -related services.  
2.47.   The special regime for the establishment of companies operating and developing agri -food 
clusters was created in 2021 to attract investment in agricultural activities that allow value chains 
and technology  transfer. Measures are also taken that seek to promote industries related to the 
forestry sector, marine products and raw materials for the pharmaceutical industry. Companies that 
hold the licence for companies operating and developing agri -food clusters or that operate within an 
agri-food cluster benefit from a five -year exemption from tariffs, taxes, fees and charges on building 
material, equipment, machinery, vehicles and furniture and a preferential tariff of 3% on raw 
materials, semi -manufactured good s and other inputs. In addition, they are automatically granted 
legal stability.57 
2.48.   Domestic and foreign public and private enterprises and academic institutions based on the 
City of Knowledge campus benefit from several incentives (Table 2.5).58 The City o f Knowledge is 
managed by a private non -profit foundation.  
Table  2.5 City of Knowledge incentives  
Duties  Exemptions  
Import duties  Exempt on machinery, equipment, furniture, vehicles, appliances and inputs  
Tax on the Transfer of 
Movable Property and the 
Provision of Services 
(ITBMS)  Exempt on machinery, equipment, furniture, vehicles, appliances and inputs  
Income tax  Exempt  
Withholding tax on 
remittances abroad  Exempt  
Stamp tax  Exempt, unless the sale takes place in the national fiscal territory  
Source:  Information provided by the authorities.  
 
50 Information provided by the authorities.  
51 Article 291 of the Constitution; and information provided by the authorities.  
52 Article 2 of Law No. 54 of 22 July 1998.  
53 Directorate -General of Revenue. Viewed at: https://dgi.mef.gob.pa/D -Informe/Formulario05.php . 
54 The stability of customs regimes is guaranteed when refunds or exemptions are granted through the 
regimes.  
55 Sectors: tourism, industry, ag riculture and agro -forestry, mining, telecommunications, construction, 
ports and railway transport. Activities: exports, export processing zones, commercial and petroleum free 
zones, electricity generation, and water irrigation and conservation.  
56 Law No.  54 of 22 July 1998.  
57 Law No.  196 of 8 February 2021.  
58 Decree Law No. 6 of 12 February 1998.  WT/TPR/S/421 /Rev.1  • Panama  
- 44 - 
  2.49.   The special regime for the establishment and operation of multinational busines s 
headquarters (the SEM special regime), established in 2007, remains in force. SEM companies are 
multinational companies with the parent company based in Panama that offer specific services from 
Panama to their business group. SEM licences are issued by M ICI where the business group has 
assets of at least USD  200 million or the company provides services to at least seven companies in 
its group. Under this regime, companies and executives receive tax concessions and tariff 
exemptions (Table  2.7), as well as  labour and migration benefits. Until 2018, SEM companies were 
exempt from income tax, but since 2019 they have been subject to a reduced rate of 5% and benefit 
from automatic legal stability (previously, legal stability was not granted automatically). Dur ing the 
period under review, the types of services that these companies can provide were expanded. Since 
2019, in addition to financial management services, they may also offer financial support and 
technical and administrative support services.59 
2.50.   Since 20 14, 175 multinational companies have used the SEM special regime, investing more 
than USD  95 million in Panama (Table 2.6). The companies operate in all sectors of the economy: 
construction; energy, oil and gas; and services (financial and logistics), espe cially in the 
manufacturing sector (food and beverages; motor vehicles and aeronautics; pharmaceuticals; 
textiles; and other consumer and industrial goods).  
Table  2.6 SEM company indicators, 2014 -21 
 2014  2015  2016  2017  2018  2019  2020  2021a 
SEM companies (number)  109 112 132 146 144 153 164 175 
Investment (USD million)  2.1 10.5 25.0 8.3 9.6 9.4 12.5 17.9 
a As of 31 July 2021.  
Source:  Information provided by the authorities.  
2.51.   The special regime for the establishment and operation of multinational companies providing 
manufacturing -related services (the EMMA special regime) was introduced in 2020. Multinational 
companies with assets of at least USD  75 million or providing services for at least three compan ies 
in their economic group may apply to MICI for a licence to join the regime.60 These EMMA companies 
and their executives receive tax concessions and tariff exemptions (Table 2.7.), as well as labour 
and migration benefits. EMMA companies are automatical ly included in the legal -stability regime. 
They may also establish themselves in a zone with a special tax regime, such as a special economic 
area or a free zone. If they do so, however, they are subject only to the provisions of the EMMA 
special regime, w hereas the provisions of the other special regime do not apply to them. The EMMA 
special regime is for companies that manufacture, assemble, remanufacture, condition, maintain, 
repair, develop products; conduct research and innovation on products; or provi de logistics services. 
These companies are required to provide training to Panamanian workers.61 As of September  2021, 
no EMMA licences had been issued.  
Table  2.7 Tax benefits and tariff exemptions for SEM and  EMMA companies  
 SEM EMMA  
Company benefits  
Import duty  No exemptions  Exempt  
Tax on the Transfer of 
Movable Property and the 
Provision of Services 
(ITBMS)  Exempt  Exempt  
Income tax  5% 5% 
Dividend tax  Exempt  Exempt  
Supplementary tax  Exempt  Exempt  
Tax on branch offices  Exempt  Exempt  
Capital gains tax  2% 2% 
Start-up notification tax  Exempt, since they do not require the 
start-up notification  Exempt, since they do not require the 
start-up notification  
 
59 Law No. 41 of 27 August 2007; Law No. 57 of 24 October 2018; and information provided by the 
authorities.  
60 Information provided by the authorities.  
61 Law No. 1 59 of 31 August 2020; Executive Decree No.  33 of 4 February 2021.  WT/TPR/S/421 /Rev.1  • Panama  
- 45 - 
   SEM EMMA  
Benefits for foreign executives  
Import duty  Exempt for household effects. Once -
for-all exemption on personal motor 
vehicles every two years  Exempt. Once -for-all exemption on 
personal motor vehicles every two 
years  
Income tax  Exempt  Exempt  
Dividend tax  No exemptions  No exemptions  
Source:  Law No.  41 of 27 August 2007; Law No. 159 of 31 August 2020; and information provided by the 
authorities.  
2.52.   To promote foreign investment in the real -estate, construction and financial sectors, 
since 2020, fo reigners have been able to obtain permanent residence if they invest at least 
PAB 300,000 (PAB 500,000 from 2022) in the real estate sector, PAB 500,000 in the securities 
market, or PAB  750,000 in fixed deposits on deposit accounts. Investors must undertak e to keep 
investments in the financial system for at least five years.62 
2.53.   Commercial companies (whether new companies or subsidiaries), branches and 
representative offices may be established in Panama. There are three types of commercial 
companies: general partnerships, limited partnerships and joint stock companies.63 The most 
common type of commercial company is the joint stock company. Companies incorporated in other 
jurisdictions may "redomicile" in Panama to operate under Panamanian law as if they were 
companies originally incorporated in Panama.64 
2.54.   According to information provided by the authorities, it takes less than 10 days to set up a 
company in Panama (Table 2.8). Apart from companies engaged in agriculture, handicrafts and 
activities related to professional services,65 which fall under a special regime or operate in special 
economic areas and free zones, all companies must have been issued a start -up notification by MICI 
to operate. For certain activities (such as financial -sector acti vities, sales of alcoholic beverages and 
the provision of public services), companies must present their permit issued by the regulator before 
the start -up notification is processed.66 All companies that hold a start -up notification are subject to 
an annua l start -up notification tax equal to 2% of the company's capital, of at least PAB 100 up to 
a maximum of PAB 60,000. Companies with a capital of less than PAB 10,000 are exempt from this 
tax; companies operating in special economic zones and free zones are  not subject to payment of 
this tax, since they are not required to submit a start -up notification; both of these categories of 
company, however, are subject to an annual tax equal to 1% of their capital, of at least PAB  100, 
up to a maximum of PAB 50,000.67 
Table  2.8 Steps to form a business  
Stages  Days  Cost 
Hire a resident agent to draft the 
company's articles of association  1 USD 1,000 -1,500  
File the public deed of incorporation with a 
notary  1 USD 75  
Register in the Public Register  2 Registration fee, which varies according to the 
amount of capital: USD  50 for the first USD  10,000; 
USD 0.75 for every additional USD  1,000 or fraction 
thereof. Annual registration maintenance fee: 
USD 300 (1st year: USD 250)  
Obtain the start -up notification (processed 
using the digital platform called Panamá 
Emprende ) 1 Annual fee to maintain the start -up notification: 
USD 55 
Register in the Single Register of Taxpayers  1 Free  
Register in the (municipal) Register of New 
Businesses  2 The cost depends on the type of company and the 
investment made.  
Register in the Social Insurance Fund  1 Free 
Source:  Information provided by the authorities.  
 
62 Executive Decree No. 722 of 15 October 2020.  
63 Commercial Code (Law No. 2 of 22 August 1916) and Law on Public Limited Companies (Law No.  32 
of 26 February  1927).  
64 Article 11 -B of the Com mercial Code and Article 90 of Law No. 32 of 26  February  1927.  
65 Article 4 of Law No. 5 of 11 January 2007.  
66 Article 2 of Law No. 5 of 11 January 2007.  
67 Article 1004 of the Constitution and information provided by the authorities.  WT/TPR/S/421 /Rev.1  • Panama  
- 46 - 
  2.55.   Panama continues to prioritize local recruitment. All companies established in Panama except 
SEM and EMMA companies68 must have at least a certain proportion of Panamanian staff:69 85% for 
technical jobs and 90% for other jobs. Foreign technical staff may be employed for up to five years, 
after which they mus t be replaced by Panamanian technical staff. The Ministry of Labour and Work 
Development may authorize a higher proportion of foreign technical staff if there are reasons for 
doing so.70 
 
68 However, in the case of EMMA companies, a quota (percentage) of Panamanian workers may be 
determined.  
69 Foreign nationals who are married to a Panamanian or have been resident  in Panama for at least 
10 years are considered Panamanian.  
70 Articles 17 -18 of the Labour Code; Article 30 of Law No. 41 of 27 August 2007; and Article  31 
(paragraph 4) of Law No. 159 of 31 August 2020.  WT/TPR/S/421 /Rev.1  • Panama  
- 47 - 
  3  TRADE POLICIES AND PRACTICES BY MEASURE  
3.1  Measures Directly Affecting Imports  
3.1.1   Customs procedures  
3.1.  The National Customs Authority (ANA) is responsible for administering the policies, guidelines 
and provisions governing the customs system, in accordance with the legislation in force in this area, 
and for ensuring their implementation. ANA's functions and powers have not changed substantially 
since 2014 (Box 3 .1). 
Box 3.1 Functions  and powers of ANA, 2020  
Issue the regulations necessary for the control, risk management, collection and monitoring of foreign trade 
levies and other customs revenue entrusted to it.  
Carry out administrative procedures to enforce the payment of the taxes under its control and impose 
penalties, where appropriate.  
Administer, strengthen and consolidate customs policy by applying modernization criteria.  
Control and supervise customs operati ons, as well as the flow of goods entering, remaining in or leaving the 
country and those covered by customs regimes.  
Facilitate foreign trade and provide guidance to users on their rights and duties before ANA.  
Ensure the proper application of value for customs purposes.  
Demarcate and administer areas under customs jurisdiction, special border zones and authorized channels, 
and establish or abolish customs administrations and premises, and designate their location and functions.  
Investigate cu stoms offences and apply penalties.  
Check and apply certification and verification of origin  procedures . 
Recognize and assess taxes, duties, fees and other payable charges whether or not related to customs.  
Guarantee intellectual property rights in acco rdance with the provisions of national legislation and international 
agreements and treaties.  
Manage selectivity, randomness and security parameters using risk analysis throughout the logistics chain.  
Implement the rules and procedures established by exi sting international, bilateral or multilateral trade 
agreements or treaties.  
Generate statistical data on customs operations and foreign trade operations.  
Source:  Decree -Law No. 1 of 13 February 2008.  
3.2.  In 2013, following the signing of the Protocol incorporating Panama into the Central American 
Economic Integration Subsystem (SIECA)1, Panama adopted the Central American Uniform Customs 
Code (CAUCA) and its Implementing Regulations (RECAUCA), with certain exceptions2, as well as 
the Central American Import Tariff (based on the Central American Tariff System), also with a 
number of exceptions.3 Panama undertook to adopt further SIECA instruments by January  2017 
at the latest (section 2.3.2).  
3.3.  Importers (and exporters), customs auxilia ry agents and intermediaries, and other users, as 
well as customs brokers, are required to register with ANA.4 ANA issues licences for customs brokers, 
who must be Panamanian nationals. Minimum fees for the services provided by customs brokers are 
determi ned in line with the c.i.f. value of the goods; the fees for related services are determined by 
the market.5  
 
1 Law No. 26 of 17 April 2013.  
2 Exceptions relate t o: the transhipment of goods, the abandonment of goods, family consignments of a 
non-commercial nature and challenges to customs service resolutions and acts and multilateral treaties 
(information provided by the authorities).  
3 Cabinet Decree No. 4 of 30 January 2018.  
4 Decree -Law No. 1 of 13 February 2008.  
5 Law No. 2 of 7 January 2016.  WT/TPR/S/421 /Rev.1  • Panama  
- 48 - 
  3.4.  Panama continues to require the use of a customs broker to act on behalf of a third party 
before customs authorities for the purposes of processi ng the release of goods under the various 
customs regimes, including imports, whether temporary or definitive, and duty suspension regimes, 
unless specifically excluded by international agreements or by law.6 However, there is no need to 
use a customs bro ker in the following cases: where conventions or treaties to which Panama belongs 
so indicate; where the State is the importer; imports of goods by natural persons for personal and 
household use, provided that the c.i.f. value does not exceed PAB 4,000 (up  to three times a year); 
imports from diplomatic agents; travellers' luggage; the transhipment and warehousing regime; and 
goods entering or leaving free zones.7  
3.5.  All goods imported into, transiting or stored in Panamanian territory or entering into a fre e 
zone must be declared (Article s 92 and 112). Customs declarations must be accompanied by 
supporting documents (e.g. commercial invoice, cargo manifest, certificate of origin or health 
certificate), which vary according to the type of good and the customs  regime to which it is subject. 
Goods or customs destinations requiring prior authorizations or licences for clearance require a pre -
declaration, which, in turn, is needed to generate the final customs declaration in the computer 
system.8  
3.6.  For definitive imports, customs declarations (prepared and signed by a customs broker) must 
be accompanied by the commercial invoice; the transport document (air waybill for air cargo, bill of 
lading for sea cargo and waybill for land freight); packing list; declaration of value; and, where 
applicable, certificate of origin, phytosanitary permit and/or import permit in the case of restricted 
items. Food items and other products for human consumption (including products to be applied to 
the skin or clothing) may require a certificate of sale (CFS), the purpose of which is to prevent the 
entry into the market of poor -quality products.9 There are eight types of declaration in Panama 
(Box 3.2). However, at present, only the standard declaration, advance declaration, ex officio 
declaration and corrective declaration are used.  
Box 3.2 Types of declaration  
Standard declaration  
This must be submitted from the day of entry of the goods into the primary customs zone.  
Simplified declaration  
This may be used by the person subject to the tax obligation (the person who will pay the tax), when making 
use of the definitive import, def initive export or courier system.  
Advance declaration  
This is processed prior to the arrival of the goods, allowing the importer to take possession of the goods upon 
arrival. Prior authorizations or import licences must be issued by the various competen t institutions while this 
type of declaration is in "pre -declaration" status, prior to processing the final declaration.  
Provisional declaration  
This is used for the clearance of bulk goods.  
Supplementary declaration  
This complements the advance declaration.  
Cumulative declaration  
Exporters using simplified declarations  to export the same type of goods through the same customs may, 
at the end of the month, use a single cumulative declaration . 
 
6 Article 42 of Decree -Law No. 1 of 13 February 2008.  
7 Article 43 of Decree -Law No. 1 of 13 February 2008.  
8 Article 114 of Decree -Law No. 1 of 13 February 2008 and Artic le 97 of Cabinet Decree No. 12 of 
29 March  2016.  
9 Article No. 115 of Cabinet Decree No. 41 of 11 December 2002.  WT/TPR/S/421 /Rev.1  • Panama  
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  Ex officio  declaration  
Prepared by ANA offi cials to establish the taxes to be paid on goods of a value less than PAB 500.  
Corrective declaration  
This is used to rectify or supplement the information contained in any type of declaration, post -clearance.  
Source:  Article Nos. 95 to 105 of Cabinet Decree No. 12 of 29 March 2016.  
3.7.  Customs declarations can be submitted electronically or in paper form.10 They may be 
submitted prior to the arrival of goods (Article 113). Electronic submission of c ustoms declarations 
(with supporting documents) is via the Integrated Customs Management System (SIGA), which 
facilitates and enables the exchange of electronic information among the different competent 
institutions.11 The use of SIGA is mandatory for all customs regimes and also for function s such as 
customs inspection, valuation, payment of taxes and registration of entry and exit of vehicles.  
3.8.  Customs uses risk management to determine the type of control to which the goods will be 
subject. Goods may pass through the green (without inspection ), orange (review of documents) or 
red (documentary and physical inspection) channel. In 2020, a total of 81.87% of declarations went 
through the green channel, 8.27% through the orange channel and 9.86% through the red channel. 
The average time required t o clear goods is 30 minutes to one hour under SIGA and 24 to 48 hours 
when permits or licences are required. In addition to immediate control, there is ongoing or post -
clearance customs control. Ongoing control can be exercised over goods subject to non -definitive 
customs regimes after release, to monitor and verify compliance with their conditions of 
permanency, use and destination. Post -clearance control can be exercised within a period of four 
years in respect of, inter alia , customs operations, customs declarations, customs tax obligations 
and the payment of taxes.12 The customs authorities indicated that 364 post -clearance inspections 
were conducted between 2014 and 2021.  
3.9.  Goods in transit or transhipment are not subject to review, nor do they require an y customs 
formalities.13 The transit of goods through the Panama Canal is covered by the transhipment regime 
and is therefore subject to controls for national security purposes, but not to controls for customs 
purposes.14 
3.10.   ANA may seize goods that are banne d from being imported (or exported), and may, upon 
reasoned or ex officio  application, detain goods, including those in transit or transhipment, if 
intellectual property rights are presumed to have been infringed.15 In the case of goods in transit or 
transhipment, Panamanian Customs shall warn the destination customs authority of any possible 
irregularity in the field of intellectual property or of any possible infringement of international 
agreements regulating trade in goods.16 During the review period, t he value of detained goods 
amounted to some PAB 104.4 million, and there were 8,401 detentions (Table 3.1).  
Table 3.1 Goods detained at customs, 2014 -21 
 2014  2015  2016  2017  2018  2019  2020  2021ª  Total  
Detentions  617 1,162  929 1,183  1,258  1,117  1,152  98 8,401  
c.i.f value (in millions of 
PAB) 7.7 41.0 3.5 3.4 11.6 9.5 20.9 6.8 104.4  
a Data at September 2021.  
Source:  Information provided by the authorities.  
 
10 In July 2020, the Contingency Procedure for the Import, Export and International Transit Regimes 
was implemented to ensure the continuity of customs procedures in the event of a failure or stoppage of the 
customs computer system, including the manual generation of physical customs declarations (Law No. 55 of 
9 September  2015).  
11 Integrated Customs Management System, Panamá Portal de Servicios d e Aduanas . Viewed at: 
https://siga.ana.gob.pa/pcus/jsf/homepage/home.jsf.  
12 Decree -Law No. 1 of 13 February 2008.  
13 Article 152 of Cabinet Decree No. 41 of 11 December 2002.  
14 The Panama C anal area comprises the maritime ports and the Canal terminals, as well as the route 
connecting them by rail. (Article 11 of Cabinet Decree No. 12 of 29 March 2016).  
15 Article 100 of Decree -Law No. 1 of 13 February 2008.  
16 Article 22 of Cabinet Decree No. 12 of 29 March 2016.  WT/TPR/S/421 /Rev.1  • Panama  
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  3.11.   In addition to the definitive import (export) regime and transit and transhipment regimes, 
Panama has a number of temporary, suspensive, special, industrial and exceptional customs 
regimes. These include: temporary import and re -export in the same state; temporary admission 
for inward process ing; temporary export for re -import in the same state; temporary export for 
outward processing; and exemption (re -import, free zones and re -export) (Box 3.3).17 The operator 
is required to attach different documents in accordance with the regime (Table 3.2 ).  
Box 3.3 Admission regimes  
Temporary import and re -export in the same state  
Allows entry into the customs territory, for a set period of time and with the suspension of import duties, of 
goods with a specifi c purpose, which shall be re -exported within that period without having undergone any 
change other than normal depreciation as a result of their use.  
Temporary admission for inward processing  
Allows entry into the customs territory, with the suspension o f import duties, of goods intended for re -export 
after transformation, processing, repair or another legally authorized process.  
Temporary export and re -import in the same state  
Allows the temporary exit from the customs territory of domestic or imported goods, with the suspension of 
the payment of duties, for a specific purpose and for a set period of time, provided that the goods are re -
imported without having undergone any transformation, processing or repair abroad, in which case they shall 
be admitted on their return with full exemption from import duties.  
Temporary export for outward processing  
Allows domestic or imported goods to  leave the customs territory for a set period of time in order to undergo 
transformation, processing  and repair or other permitted operations abroad, with exemption from any export 
duties, and to be re -imported with the tax treatment and in the time frame stipulated in the Regulations.  
Re-import  
Allows the entry into the customs territory of domestic or imported goods that were definitively exported and 
are returning in the same state, with exemption from duties.  
Source:  Authorization and Registration Procedure for Special Regimes (code: PM -ANA-GAR-002).  
Table 3.2 Import requirements according to customs regime, 2020  
Document to attach  Temporary 
import and re - 
export in the 
same state  Temporary 
admission for 
inward 
processing  Temporary  
export and re-
import in the 
same state  Temporary  
export for 
outward 
processing  Re-import  
Commercial invoice or 
equivalent  x x n.a. n.a. x 
Transport documents  x x x x x 
Declaration of customs 
value, where 
applicable  x x x x x 
Certificate of origin, 
where applicable  x x x x x 
Licences, permits, 
certificates or other 
authorizations  x n.a. x x n.a. 
Guarantees  x x x x x 
Document covering 
the exemption or 
exoneration, where 
applicable  n.a. x x x x 
n.a. Not applicable.  
x Required.  
Source:  Authorization and Registration Procedure for Special Regimes (code: PM -ANA-GAR-002).  
 
17 Definitive customs regimes are: import, import for consumption, import of goods with exemption from 
customs duties, re -import in the same state, export and re -export; suspensive customs regimes: transit, 
deposit, warehousing, transhipment, temporary admiss ion for re -export in the same state; customs regimes 
for industrial operations: drawback, temporary admission for inward processing, temporary export for outward 
processing, duty-free replacement of goods ; exceptional customs regimes : traveller s, household  effects; 
duty-free fairs, border traffic, tourist vehicles, relief consignments, and on -board provisions and supplies; and 
special regimes: free zones and duty -free shops (Decree -Law No. 1 of 13 February  2008). WT/TPR/S/421 /Rev.1  • Panama  
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  3.12.   Panama implemented the Authorized Economic Operator (AEO) programme in 2013, although 
the official launch did not take place until 2016.18 ANA is the only entity authorize d to issue AEO 
certification. Companies and/or natural persons conducting activities and/or providing services 
related to foreign trade are eligible to apply for this certification. To do so, they must have been 
registered in the Public Register and with t he Directorate -General of Revenue for at least five years.19 
Applying for AEO certification is free of charge.20 The first phase of the AEO programme was launched 
for export companies, maritime and port operators, and land freight carriers in 2016.21 Other  
operators have been gradually included during the implementation stages established by ANA.22 
3.13.   Panama ratified the Trade Facilitation Agreement (TFA) in 2015. In 2014, the country notified 
the WTO of the Category A commitments it would undertake upon the e ntry into force of the TFA23; 
in 2019, it notified its Category B and C commitments and their indicative implementation dates 
(2021 and 2022, respectively).24  
3.1.2   Customs valuation  
3.14.   The legislation governing customs valuation in Panama is the WTO Agreement on Customs 
Valuation and the Central American Uniform Customs Code (CAUCA).25 There have been no 
substantial changes in this area since 2014; according to the authorities, in Panama the customs 
value of imported goods is determined in accordance with the methods of the WTO Agreement on 
Customs Valuation. Likewise, if it is necessary to use alternative methods of valuation, Panama 
follows the provisions of that Agreement.  
3.15.   During the review period, Panama mainly used the transaction value (99.16% o f cases) as 
the basis for determining customs value. Other methods, such as the transaction value of identical 
goods and the transaction value of similar goods, were used to value just 0.84% of imports. Only in 
0.002% of cases were there objections to the declared value.26  
3.16.   Where it is determined that there is a justified risk by reason of source, origin, value or 
condition of use of the imported goods (e.g. in the case of rice; meat; onions and potatoes; new or 
used cars; new or used ships and aircraft; ne w or used heavy machinery and equipment; and new 
and used mining machinery and self -propelled machines), these goods, which are deemed to be 
special, will be subject to mandatory prior consultation with the Valuation Department.27 The list of 
special goods  may be amended when such risks are considered to arise or cease to exist. The "Sworn 
Declaration of Value " used for goods subject to mandatory prior consultation was replaced in 2013 
by the "Declaration of the Customs Value of Goods".28  
3.17.   Panama uses refer ence values only in cases where no commercial invoice is submitted or 
where the commercial invoice is not accepted and the goods are valued according to successive 
methods, and not in accordance with the transaction value. Before taking a final decision, c ustoms 
must inform the declarant of the technical grounds for its decision. The importer may appeal the 
decision taken by customs.  
 
18 Executive Decree No. 988 of 2 October 2013 . 
19 These activities are: export, import, transport (air, maritime, land), sea ports, customs brokers, cargo 
agents, customs warehouses, airports, railways, logistics operators, courier or postal consignments.  
20 To be certified as an AEO, the entity must h ave a satisfactory record of compliance with customs, tax 
and judicial requirements, accredited financial viability, appropriate administrative, accounting and logistics 
management, and protection and security measures (Article 4 of Executive Decree No. 98 8 of 2 October 2013).  
21 Administrative Resolution No. 195 of 16 May 2016.  
22 Article 43 of Decree -Law No. 1 of 13 February 2008.  
23 WTO document WT/PCTF/N/PAN/1 of 6 August 2014.  
24 WTO Document G/TFA/N/PAN/1 of 8 May 2019.  
25 Law No. 26 of 17 April 2013.  
26 Information provided by the authorities.  
27 Resolution No. 276 of 20 August 2019.  
28 Law No. 26 of 17 April 2013 and Memorandum 907 -02-020-DGT-2014 of 26 June 2014.  WT/TPR/S/421 /Rev.1  • Panama  
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  3.1.3   Rules of origin  
3.18.   Panama does not use non -preferential rules of origin.  
3.19.   Imports originating in countries with which Panama ha s trade agreements are subject to 
preferential rules of origin. ANA is responsible for verifying origin, which may require the necessary 
evidence and verification of compliance with the rules on the origin of goods.29 
3.20.   The origin requirements in the six agr eements (European Free Trade Association (EFTA) 
(2014), Republic of Korea (2021), Israel (2020), Mexico (2015), Trinidad and Tobago (2016) and 
United Kingdom (2021)) that entered into force from 2014 onwards are similar to those that confer 
origin under th e preferential agreements Panama had signed previously (section 2.4). Therefore, 
products originating in or wholly obtained in the territory of a Party to these agreements receive 
preferential treatment. If non -originating materials are used, origin is con ferred when the goods are 
sufficiently worked or processed. In general, products are considered to be sufficiently worked or 
processed if a change in tariff heading occurs, or a minimum regional value content (RVC) or specific 
rules of origin are met.  
3.21.   Origin is also conferred if the value of non -originating materials does not exceed a minimum 
of the ex -works price/f.o.b. value (generally 10%). The agreements allow for bilateral – and, in 
some cases, diagonal – cumulation of origin. A good retains origin if it is transported directly between 
the territories of the Parties.  
3.1.4   Tariffs  
3.1.4.1   Structure and levels  
3.22.   Panama uses, with certain exceptions, the Central American Import Tariff.30 In 2021, the 
Tariff comprised 9,370 lines at the HS 2017 12 -digit level, of which 9 9.7% were ad valorem  (Table 
3.3). As in 2013, vessels (HS 8903.10, HS 8903.91, HS 8903.92 and HS 8903.99) are the only 
goods subject to specific tariffs. Panama does not apply seasonal or variable tariffs.  
3.23.   The simple average applied MFN tariff fell from 7 .6% in 2013 to 6.8% in 2021. This could be 
due to the increase in tariff lines that are currently duty -free, the percentage of which has risen from 
34.5% to 45.5%. However, both the percentage of lines subject to rates that exceed three times 
the overall s imple average applied tariff (domestic tariff peaks) and the percentage of those subject 
to rates exceeding 15% (international tariff peaks) have increased, albeit to a lesser extent.  
Table 3.3 Structure of MFN tariffs, 2013 and 2021  
 
2013  2021  
 (HS12)  (HS17)  
Total number of lines  8,881  9,370  
 Ad valorem  rates (> 0%)  5,791  5,076  
 Tariff-free 3,062  4,266  
 Non-ad valorem rates 28 28 
Non-ad valorem  tariffs (% of tariff lines)  0.3 0.3 
Non-ad valorem  tariffs with no ad valorem  equivalents (% of tariff lines)  0.3 0.3 
Tariff rate quotas (% of tariff lines)  0.7 0.8 
Duty-free tariff lines (% of tariff lines)  34.5 45.5 
Average of lines exceeding zero (%)  11.6 12.6 
Simple average (%)  7.6 6.8 
 Agricultural products (WTO definition) (%)  13.7 15.3 
 Non-agricultural products (including petroleum, WTO definition) (%)  6.4 5.3 
Domestic tariff peaks (% of tariff lines)a 1.4 2.0 
International tariff peaks (% of tariff lines)b 1.5 2.1 
 
29 Decree -Law No. 1 of 13 February 2008.  
30 Cabinet Decree No. 4 of 30 January 2018.  WT/TPR/S/421 /Rev.1  • Panama  
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2013  2021  
 (HS12)  (HS17)  
Overall standard deviation of applied rates (%)  10.9 12.8 
Bound tariff lines (% of tariff lines)  100.0  100.0  
a Domestic tariff peaks are defined as rates that exceed three times the overall simple average applied tariff.  
b International tariff peaks are defined as rates exceeding 15%.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
3.24.   The average tariff for agricultural products (WTO definition), which rose from 13.7% in 2013 
to 15.3% in 2021, remains substantially higher than the average tariff for non -agricultural products 
(5.3%). The products with the highest average tariff are dairy products, with a tariff of 43%, followed 
by animals and animal products (30.1% ), and sugar and confectionery (23.4%). The non -
agricultural products with the highest average tariffs continue to be fish and fish products (12.5% 
in 2013 and 11.1% in 2021) and clothing (10.7% in both 2013 and 2021) (Table A3.1).  
3.25.   Since the last review in  2014, the number of tariff rates remains unchanged. The Tariff 
continues to have 30 rates, ranging from 0% to 260%. In 2021, some 45.5% of tariff lines were 
subject to a 0% rate, compared with 34.5% in 2013 (Chart 3.1). This has been one of the most 
significant changes in the distribution of tariff rates in Panama during the review period. However, 
the percentage of tariff lines spread between 1% and 10% fell from 40.4% to 31.9%, and the share 
of lines with rates of 10% to 20% also decreased. In contrast, the percentage of lines with a tariff 
level above 25% increased. The products that receive the highest tariff protection continue to be 
fresh, chilled and frozen poultry cuts (260%) (10 lines), milk and cream products (155%) (seven 
lines), cane sugar (144% ) (three lines) and whey (120%) (three lines). In  all,23 lines have tariffs 
exceeding 100%.  
Chart 3.1 Frequency  distribution of MFN tariff lines, 2021  
 
a The total number of lines is 9,370.  
Source:  WTO Secret ariat calculations, based on data provided by the authorities.  
3.1.4.2   Tariff bindings  
3.26.   Upon accession to the WTO, Panama bound its entire Tariff at rates ranging from 0% to 260%. 
The majority of tariff lines (54.9%) were bound at a rate of 30%; the other most comm on rate is 
6.5%, which affects 656 tariff lines. For agricultural products (WTO definition), bound tariffs range 
from 0% to 260%, and for non -agricultural products from 0% to 81%. The agricultural products that 
were bound at the highest rate were meat and edible meat offal (260%) (HS 0207 – three lines), 
dairy products (155.7%) (HS 0402 - six lines ), and sugar and confectionery (144%) (HS 1701 - 
WT/TPR/S/421 /Rev.1  • Panama  
- 54 - 
  three lines ). For non -agricultural products, the binding rate of 81% applies only to salt (HS 2501 – 
two lines).  
3.27.   A comparison of the applied MFN tariff (2021) and the bound tariff, taking into account only 
those lines that are strictly comparable because of the change in nomenclature, shows that the 
applied MFN tariff exceeds the bound tariff for seven tariff lines a nd for three sub -lines (Table 3.4).  
Table 3.4 Tariff lines for which MFN tariffs are higher than bound tariffs, 2021  
Applied tariff 
(HS Code)  Bound tariff  
(HS code)  MFN 
tariff  Bound  
tariff  Description  
Bound tariff  Description  
MFN tariff  
1202.42.00.00.00  1202.42.00  10 5 Shelled, whether 
or not broken  Shelled, whether or 
not broken  
2852.90.10.00.00  2852.90.00  15 6.5 Other  Albumin compounds 
of subheading 
3502.90  
3826.00.00.00.00  3826.00.00  10 6.5 Biodiesel and 
mixtures thereof, 
not containing or 
containing less 
than 70% by 
weight of 
petroleum oils or 
oils obtained from 
bituminous 
minerals  Biodiesel and 
mixtures thereof, not 
containing or 
containing less than 
70% by weight of 
petroleum oils or oils 
obtained from 
bituminous minerals  
4810.19.10.00.10  4810.19.10  10 5 Weighing more 
than 150 g/m2 Printed for self -
recording apparatus 
only 
8443.99.90.00.00  8443.99.90  15 0 Other  Other  
8519.20.90.00.00  8519.20.90  10 5 Other  Other  
8519.89.19.00.00  8519.89.19  15 5 Other  Other  
Parts of bound tariff lines  
4807.00.10.00.00  4807.00.10  15 5 Weighing not 
more than 150 
g/m2 Paper and 
paperboard, 
laminated internally 
with bitumen, tar or 
asphalt  
8414.90.10.00.00  8414.90.10  15 10 Other  For fans of tariff 
subheading 
8414.51.00.00  
9504.50.00.00.10  95.04.50.10; 
95.04.50.20; 
95.04.50.90  15 18.3 Which connect to 
a television 
receiver (HS 
9504.50.10)  Distributing cash 
prizes; and others, 
which connect to a 
television receiver  
Source:  WTO Secretariat.  
3.1.4.3   Tariff rate quotas  
3.28.   Under its WTO commitments, Panama uses tariff rate quotas for a number of agricultural 
products (rice, pork, poultry meat, potatoes, dairy products, beans and tomatoes). Th e duties 
applied within these quotas in 2021 ranged from 0% to 15%, while out -of-quota rates range from 
15% to 260% (Table A3.2).  
3.29.   Tariff rate quotas are distributed using non -automatic licences. In 2019 and 2020, the rice 
quota was fully utilized (Table A3 .2). In 2020, following the national emergency declared due to the 
pandemic, Panama approved the importation of an additional quota for rice in the husk of 2.3 million 
quintals to prevent shortages and urged the Tariff Quota Licensing Commission to facilit ate the quota 
allocation procedure.31 In 2019, the use of quotas for pork and tomatoes was also high at 94% and 
96%, respectively, while the utilization of other quotas was less than 50%; in the case of beans, the 
quota was not used at all. In 2020, as in 2019, the use of quotas for tomatoes was high (99.4%); 
however, in -quota imports of pork decreased (73.3%) while in -quota imports of potatoes increased 
substantially from 46.8% in 2019 to 81.7% in 2020. The demand for in -quota imports of potatoes 
 
31 Cabinet  Decree No. 5 of 17 March 2020.  WT/TPR/S/421 /Rev.1  • Panama  
- 55 - 
  rose due to a fall in the price in 2020 and a decline in domestic supply due to climatic problems 
(Table A3.2). Under its trade agreements, Panama negotiated preferential quotas with Canada, 
Costa Rica, El Salvador , the EU, Guatemala, Honduras, Israel, Nicaragua, P eru, Switzerland, the 
United Kingdom, and the United States.  
3.1.4.4   Preferential tariffs  
3.30.   Panama grants preferential treatment to imports originating in countries with which it has 
preferential agreements (Table A3.1). Most imports originating in the Central American Common 
Market (CACM) enter duty -free, with some exceptions.32  
3.31.   The average preferential tariff under the agreements negotiated by Panama is in all cases 
below the average MFN tariff. The preferential tariffs in the trade agreements range from 0.5% to 
5.2%, while in the Latin American Integration Association (LAIA) agreements, they range from 5.2% 
to 6.4%. Preferential tariffs are always lower for non -agricultural products, ranging from 0% to 3.6% 
in the trade agreements an d from  3.6% to 4.8%  in the LAIA agreements. The preferential tariffs 
granted under most of the agreements cover around 50% of the entire Customs Tariff (Table 3.5).  
Table 3.5 Analysis of the tariff applied und er Panama's trade agreements with other 
countries, 2021  
 
Number  
of 
preferent
ial 
lines Preferent
ial part  
of the  
tariff  
(%) Total WTO categories  
Agricultural 
products  Non-agricultural 
products  
(including 
petroleum)  
Average  
(%) Duty -free 
lines  Averag
e (%)  Duty -free 
lines  
(%) Average  
(%) Duty -
free 
lines  
(%) 
MFN - - 6.8 45.5 15.2 23.9 5.3 49.6 
Trade 
agreements          
Canada  4,966  53.0 1.3 86.8 7.1 70.4 0.2 89.8 
Korea, Rep. of  4,298  45.9 5.2 58.6 13.5 34.2 3.6 63.2 
Costa Rica  4,987  53.2 0.5 98.5 3.2 93.1 0.0 99.6 
El Salvador  4,147  44.3 1.9 89.7 7.5 78.6 0.9 91.8 
United States  5,090  54.3 0.5 97.6 3.0 85.0 0.0 100.0  
Guatemala  4,995  53.3 0.7 97.6 4.6 85.6 0.0 99.8 
Honduras  4,220  45.0 1.8 88.9 6.0 79.2 1.0 90.7 
Iceland  4,868  52.0 2.0 73.7 9.7 54.2 0.6 77.4 
Israel  3,712  39.6 3.3 79.4 14.7 25.8 1.1 89.4 
Mexico  4,451  47.5 2.6 74.3 9.1 61.4 1.4 76.7 
Nicaragua  4,535  48.4 1.3 93.8 5.0 87.8 0.6 94.9 
Norway  4,883  52.1 1.9 75.6 9.1 57.4 0.5 79.0 
Peru 4,777  51.0 1.4 95.2 8.6 74.9 0.1 99.0 
United 
Kingdom  4,583  48.9 2.0 61.5 9.2 42.7 0.6 65.1 
Singapore  4,862  51.9 1.1 97.3 6.9 83.2 0.0 100.0  
Switzerland/Li
echtenstein  4,863  51.9 1.9 75.6 9.1 57.7 0.5 79.0 
Chinese Taipei  4,729  50.5 1.3 96.0 8.1 77.7 0.1 99.4 
European 
Union  4,584  48.9 2.0 61.6 9.2 42.9 0.6 65.1 
LAIA          
Paraguay  3,322  35.5 5.4 48.6 13.9 25.3 3.8 53.0 
Bolivia  3,445  36.8 5.2 50.0 13.8 26.7 3.6 54.3 
Ecuador  3,297  35.2 5.8 46.3 14.2 24.3 4.2 50.4 
Cuba 3,274  34.9 6.1 45.6 14.5 24.1 4.5 49.7 
Colombia  3,295  35.2 6.1 45.6 14.5 24.1 4.5 49.7 
Chile 3,295  35.2 6.1 45.6 14.5 24.1 4.5 49.7 
Peru 3,295  35.2 6.1 45.6 14.5 24.1 4.5 49.7 
Uruguay  3,295  35.2 6.1 45.6 14.5 24.1 4.5 49.7 
 
32 The number of exceptions and products varies according to the country. However, most of the 
exceptions apply to food products (coffee, sugar, rice, chicken, onions, eggs and potatoes) and textiles and 
made -up articles (for  El Salvador, of the 1,605 lines 1,081 lines are textiles and made -up articles; in the case 
of Honduras, 1,064 lines out of 1,356 lines are subject to exceptions; and in the case of Nicaragua, this figure 
stands at 383 lines out of 568). Costa Rica and Gua temala have the smallest number of exceptions (38 and 43 
tariff lines, respectively) and all relate to food products.  WT/TPR/S/421 /Rev.1  • Panama  
- 56 - 
   
Number  
of 
preferent
ial 
lines Preferent
ial part  
of the  
tariff  
(%) Total WTO categories  
Agricultural 
products  Non-agricultural 
products  
(including 
petroleum)  
Average  
(%) Duty -free 
lines  Averag
e (%)  Duty -free 
lines  
(%) Average  
(%) Duty -
free 
lines  
(%) 
Venezuela, 
Bolivarian 
Rep. of  3,295  35.2 6.1 45.6 14.5 24.1 4.5 49.7 
Argentina  3,295  35.2 6.4 45.6 14.8 24.1 4.8 49.7 
Brazil  3,295  35.2 6.4 45.6 14.8 24.1 4.8 49.7 
Mexico  3,295  35.2 6.4 45.6 14.8 24.1 4.8 49.7 
Partial Scope 
Agreements 
(PSA)          
Colombia  265 2.8 6.6 46.5 14.8 24.4 5.0 50.7 
Dominican 
Republic  133 1.4 6.7 46.9 15.1 25.3 5.1 51.0 
Trinidad and 
Tobago  148 1.6 6.7 46.5 15.0 25.7 5.2 50.5 
Note:  For the calculation of averages, where the preferential tariff is higher than the MFN tariff, the MFN 
tariff has been used.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
3.1.4.5   Tariff concessions  
3.32.   As in 2014, the following are exempt from the payment of tariffs: imports by the State; 
non-profit donations; imports by diplomats; educational material for  teaching; medical equipment 
and instruments for hospitals and machinery and equipment required for the construction or 
maintenance of hospitals; articles to be used to conduct religious activities; equipment for use by 
the police; and goods of social inte rest as determined by the Cabinet Council.33 Imports for exhibition 
fairs34, as well as imports by political parties, are also exempt from the payment of tariffs.35 
3.33.   The Cabinet Council establishes general or special exemptions from the payment, either in 
whole or in part, of customs duties.36 In 2020, as a result of the pandemic, Panama temporarily 
eliminated or lowered tariffs on certain disinfection products, protective material and oxygen.37 This 
measure was originally implemented for six months and was renewed twice until 30 September 
2021.38 
3.34.   Customs duty is also waived on imports of goods that have been exported or re -exported 
temporarily, provided that they have not undergone any transformation, processing or repair 
abroad.39 Imports destined for special customs regimes such as free zones  and other export support 
programmes (section 3.3.4) and duty -free shops are also exempt from the payment of customs 
duties. Foreign executives employed in companies with SEM and EMMA licences  may import 
household goods and personal motor vehicles duty -free (section 2.4).  
3.35.   Panama continues to grant tariff exemptions on imported goods under various laws to 
promote the development of specific sectors/activities such as tourism, reforestation, mining, 
renewable energy, and the shipbuilding industry (section 3. 1.4 and section 4). Tax exemptions are 
granted to activities such as the construction of tourist accommodation or the promotion of new 
tourism products (section 4.4.4). In addition, through the National Industrial Competitiveness 
Programme (PNCI), a 3% dedu ction on import taxes is granted on raw materials, semi -finished or 
 
33 Articles 81 and 82 of Decree -Law No. 1 of 13 February 2008 and Cabinet Decree No.  12 of 
29 March  2016.  
34 Article 246 of Cabinet Decree N o. 41 of 11 December 2002.  
35 Article 95 of the Electoral Code (Single Text).  
36 Article 200.7, of the Political Constitution and Article 82 of Decree -Law No. 1 of 13 February 2008.  
37 The exempted products are: HS 3402.20.21; HS 3808.94.99; HS 4818.90.90; HS  6307.90.90; HS 
4015.19.00; HS 3401.11.10; HS 3401.30.90; HS 6211.32.10; HS 6211.33.10; HS 6211.39.10; HS 
6211.42.10; HS 6211.43.10; HS 6211.49.10; HS 2804.40.00; and HS 9402.90.12 (Cabinet Decree No.  7 of 
18 March  2020).  
38 Cabinet Decree No. 33 of 15 Sept ember 2020 and Cabinet Decree No. 4 of 23 March 2021.  
39 Article 246 of Cabinet Decree No. 41 of 11 December 2002.  WT/TPR/S/421 /Rev.1  • Panama  
- 57 - 
  intermediate goods, machinery, equipment, spare parts, containers and packaging used in the agro -
industry, and in the manufacturing, aquaculture, forestry and fisheries industries.40  
3.1.5   Othe r charges and taxes affecting imports  
3.36.   As in 2014, domestic and imported products are subject to the following indirect taxes: the 
Tax on the Transfer of Movable Property and the Provision of Services (ITBMS), the Selective 
Consumption Tax (ISC), and the C onsumption Tax on Petroleum -Derived Fuels (ICCDP). The ITBMS 
and the ISC are also levied on services.  
3.37.   The ITBMS is a value -added tax and applies to imported goods, products sold and services 
provided in Panama. The general ITBMS rate is 7%; however, some goods and services are subject 
to rates of 10% and 15% (Table 3.6). Some goods – mainly agricultural products and inputs used 
in the agricultural sector – as well as some services are exempt from ITBMS (Table A3.3).  
3.38.   The ISC taxes certain domestic and impor ted products and services. The most common rate 
is 5%, but higher rates of up to 100% (32.5% in 2014) apply to products such as cigars and other 
tobacco (HS 2402). Alcoholic beverages are subject to a flat rate based on alcohol content per litre; 
in 2014 t he fixed rate depended on the price and alcohol content (Table 3.6).  
Table 3.6 Other charges and taxes affecting imports, 2021  
 Fee  
ITBMS   
General rate for goods and services  7% 
Alcoholic beverages  10% 
Pure ethyl alcohol and absolute alcohol for use in the preparation of biofuels  15% 
Tobacco products  15% 
Hotel and accommodation services  10% 
ISCa  
Sweetened aerated beverages  7% 
Other sweetened beverages  5% 
Syrups or concentrates used in the production of sweetened beverages  10% 
Alcoholic beverages  PAB 0.045 per 
degree of alcohol 
per litre  
Pure ethyl alcohol and absolute alcohol for use in the preparation of biofuels (HS 
2207.10.11 and HS 2207.10.91)  30% 
Tobacco and manufactured tobacco substitutes  100%  
Inorganic chemicals  5% 
Organic chemicals  6% 
Natural pearls, precious stones, precious metals; imitation jewellery; coin  10% 
Nuclear reactors, boilers, machinery and mechanical appliances  5% and 10%  
Electrical machinery and equipment; sound and/or image recorders and reproducers  5% 
Motorized land vehicles, tractors  5% - 25% 
HS 87.03 whether or not with four -wheel drive (c.i.f. value up to PAB 8,000)  15% 
HS 87.03 whether or not with four-wheel drive (c.i.f. value from PAB 8,000 to PAB 
20,000.00)  18% 
HS 87.03 whether or not with four -wheel drive (c.i.f. value from PAB 20,000 to PAB 
25,000.00)  23% 
HS 87.03 whether or not with four -wheel drive (c.i.f. value from PAB 25,000)  25% 
HS 87.03 electric and/or hybrid vehicles (as of 1 January 2013)  5% 
HS 87.03 vehicles adapted for use by disabled persons whether or not with four -wheel 
drive 5% 
HS 87.03 vehicles for the transport of both persons and goods, but principally 
designed for the transport of goods  12% 
HS 87.04 and HS 87.05 for commercial transport of goods  10% 
HS 87.01 road tractors for semi -trailers  10% 
HS 87.02 for the transport of passengers  10% 
Aircraft, spacecraft, and parts thereof  10% 
Boats and other floating structures (outboard engines exceeding 150 cc, yachts, 
sailing boats, boats and vessels for pleasure or sports, watercraft, ships, aircraft and 
helicopters for non -commercial use)  10% 
 
40 Law No. 76 of 23 November 2009  (Law on the Promotion of Industry); Law No.  25 of 23 May 2017 
and Executive Decree No.  37 of 10 April 2018. WT/TPR/S/421 /Rev.1  • Panama  
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   Fee  
A number of products in HS Chapters 84, 85 and 90, including calculators, office 
machines, data processing equipment, telephones, cameras, and various electronic 
devicesb 5% 
Optical, photographic or precision instruments and apparatus; medical or surgical 
instruments and apparatus  5% 
Firearms and ammunition  10% 
Sulphides (HS 2830.90.90)  5% 
Heterocyclic compounds with nitrogen hetero -atom(s) only (HS 2933.39.90)  6% 
Cable, microwave and satellite television services, as well as contracted mobile 
telephony services or mobile telephony services that are prepaid, whether by card, 
electronic top -up or any other modality  5% 
Coupons or payment tickets, tokens and other documents resulting from games of 
luck and chance and gambling activities as of 2015  5.5%  
ICCDP   
Gasoline (87 and 95 octane)  PAB 0.60/gallon  
Unleaded gasoline (87 and 95 octane)  PAB 0.60/gallon  
Unleaded gasoline containing 5% anhydrous bioethanol of foreign origin  PAB 3.78/gallon  
Unleaded gasoline containing 5% anhydrous bioethanol of domestic origin  PAB 0.57/gallon  
Unleaded gasoline containing 7% anhydrous bioethanol of domestic origin  PAB 0.56/gallon  
Unleaded gasoline containing 10% anhydrous bioethanol of domestic origin  PAB 0.54/gallon  
Gasoline blended with biodiesel of foreign origin  PAB 1.58/gallon  
Kerosene  PAB 0.13/gallon  
Low sulphur diesel  PAB 0.25/gallon  
Fuel oil  PAB 0.15/gallon  
Low viscosity fuel oil  PAB 0.15/gallon  
a Based on Law No. 6 of 20 March 2015.  
b The full list is contained in Article 16 of Law No. 52 of 28 August 2012.  
Source:  WTO Secretariat.  
3.39.   The ICCDP is a specific tax per gallon that varies according to the product and, in the case of 
gasoline, according to the source of the bioethanol or biodiesel with which it is blended (Table 3.6). 
The tax is much higher for gasoline blended with imported  bioethanol or biodiesel. This differentiation 
in the tax rate is one of the energy policy instruments used by Panama to, inter alia , protect the 
environment and promote energy self -sufficiency, encouraging the production and use of biofuels in 
national te rritory and generating electricity from biomass. In addition to this differentiation in the 
ICCDP, since 2014 the purchase of bioethanol and biodiesel made from domestic raw materials and 
used in the blending of gasoline as biofuels generates a tax credit of PAB 0.60 per gallon. This credit 
can only be used to offset the payment of ICCDP and is not transferable.41 
3.40.   In addition, companies engaged in banana production may obtain an exemption from the 
ICCDP, for which a request must be made to the Ministry of T rade and Industry (MICI).42  
3.41.   In 2020, the collection of ITBMS, ICCDP and ISC was affected by the decline in imports caused 
by the pandemic (Table 3.7).  
Table 3.7 Tax collection, 2014 -20 
(PAB million)  
 2014  2015  2016  2017  2018  2019  2020  
ITBMS  557.6  559.4  535.6  546.1  519.5  481.6  310.8  
ICCDP  133.3  157.1  213.6  189.5  168.0  195.5  122.4  
ISC  365.4  401.1  399.9  382.6  375.4  362.8  234.9  
Source:  Information provided by the authorities (Directorate -General for Revenue, Ministry of the Economy 
and Finance).  
3.42.   Importers must pay an administrative charge for customs services (TASA) for each customs 
import declaration, provided that the c.i.f. value of the import is equal to or greater than PA B 2,000. 
 
41 Law No. 42 of 20 April 2011 and Cabinet Decree No. 16 of 11 March 2014.  
42 Law No. 16 of 18 June 1993 and Law No. 13 of 12 February 1998.  WT/TPR/S/421 /Rev.1  • Panama  
- 59 - 
  The amount of the TASA charge is PAB 100 and it is collected by ANA.43 In addition to the TASA, 
ANA collects other fees for customs services and/or formalities.44 
3.1.6   Import prohibitions, restrictions and licensing  
3.1.6.1   Prohibitions and restrictions  
3.43.   The im port (or export) of goods harmful to the environment and human, animal or plant 
health or which conflict with the security of the State and the financial economic system, and others  
determined by special regulations or laws (Article 99 of Decree -Law No. 1 of 13 February 2008), is 
prohibited.  The Executive is responsible for determining those goods the import (or export) of which 
is to be prohibited, restricted or controlled. The list of restricted or prohibited imports has not 
changed since the last review (Table 3.8). The import of the following products is prohibited: 
counterfeit coins and tools for minting coins; falsely labelled alcoholic beverages and medicines; 
indecent or morally offensive printed publications; and non -original products that im itate the 
workmanship of traditional products of the indigenous peoples.45 
Table 3.8 Restricted or prohibited imports, 2021  
HS 2012  Description  Measure  
490700560000  Lottery tickets in circulation.  Restricted  
871000000000  Tanks and other armoured fighting vehicles, motorized, whether or not fitted 
with weapons, and parts of such vehicles.  Restricted  
890610100000  Warships of any kind.  Restricted  
890690100000  Other warships of any kind.  Restricted  
890800100000  Ships, boats and other floating military structures.  Restricted  
930110000000  Artillery weapons (for example, guns, howitzers and mortars).  Restricted  
930120000000  Rocket launchers; flame -throwers; grenade launchers; torpedo tubes and 
similar projectors,  Restricted  
930190000000  Other military weapons, other than revolvers, pistols and the arms of heading 
93.07.  Restricted  
930591100000  Other military weapons.  Restricted  
930599100000  Other military weapons.  Restricted  
930630100000  Other cartridges for military weapons and parts thereof.  Restricted  
930690100000  Other munitions of war and grenades and parts thereof.  Restricted  
930700100000  Swords, cutlasses, bayonets, lances and similar arms for military purposes.  Restricted  
950430100000  Other games, operated by coins, banknotes, bank cards, distributing cash or 
non-cash prizes.  Restricted  
950490100000  Other articles for games operated by coins, distributing cash or non -cash 
prizes.  Restricted  
130190200000  Cannabis resin and other narcotics.  Prohibited  
130211100000  Raw opium.  Prohibited  
130219200000  Extracts and tinctures of cannabis.  Prohibited  
130219300000  Concentrates of poppy straw, and other narcotics.  Prohibited  
360490200000  All kinds of rockets.  Prohibited  
Source:  WTO Secretariat.  
3.44.   Panama also imposes restrictions to comply with the commitments the country has 
undertaken as a signatory of various international agreements/conventions (Box 3.4).  
Box 3.4 Conventions to which Panama is a signatory, 2021  
Kimberley Process Certification Scheme (rough diamonds)  
Basel Convention (hazardous wastes)  
Rotterdam Convention (hazardous chemical products and fertilizers)  
Stockholm Convention (persistent organic pollutants)  
Montreal Protocol (substances that deplete the ozone layer)  
 
43 Article 106 of Cabinet Decree No. 12 of 29 March 2016.  
44 ANA. Viewed at: https://www.ana.gob.pa/w_ana/index.php/organisation/servicios/cargos -y-
formalidades -aduaneras . 
45 Cabinet Decree No. 19 of 30 June 2004.  WT/TPR/S/421 /Rev.1  • Panama  
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  United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (narcotic drugs)  
Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) (endangered 
species)  
Convention on Psychotropic Substances (psychotropic substances)  
International Plant Protection Convention (IPPC)  
Kyoto Protocol to the United Na tions Framework Convention on Climate Change  
United Nations Convention on Biological Diversity  
Montreal Convention (marking of plastic explosives for the purpose of detection)  
Source:  WTO Secretariat.  
3.45.   During 2014 -21, imports of certain products were prohibited for plant and animal health 
reasons (Table 3.9).  
Table 3.9 Import prohibitions for plant and animal health reasons, 2014 -21 
Product/Risk  Legislation  
Amendment of general and specific import requirements for active organic 
substrates (coconut fibre, peat, peat moss, cereal straw (rice, maize, 
sorghum), rice husks and vegetable fibres, used as a support for the sowing 
of plant material) /  
The hazard represented by the khapra beetle ( Trogoderma granarium ) for 
stored grains and seeds  National Directorate of Plant 
Health (DNSV) Resolution No. 
SO001 of 5 February 2021 
(MIDA)  
Birds / Highly pathogenic avian influenza (HPAI)  Resolution No. DINASA -002-
2020 of 21 April 2020  
Plants, Musaceae  and heliconia plant and reproductive material / Fungi  Resolution No. OAL -102-ADM 
-2019 (MIDA), Official Journal 
No. 28.866  
Pigs/African swine fever (ASF)  Resolution No. OAL -036-
ADM-2019 Panama of 20 
August 2019  
Plants, Musaceae  and heliconia plant and reproductive material/ Musaceae 
fungus Fusarium o xysporum f.sp cubense  Tropical Race 4  Resolution No. OAL -001-ADM 
-2015 (MIDA), Official Journal 
No. 27.717  
Source:  Information provided by the authorities.  
3.1.6.2   Import licensing  
3.46.   Panama continues to use import licences; according to the authorities, the system has not 
changed substantially since 2014. In 2020, Panama informed the WTO Committee on Import 
Licensing that the information submitted in 2004 concerning its licensing system remained valid.46 
As notified to the WTO, the system has two types of imp ort licence: automatic licences used for 
statistical purposes and non -automatic licences to administer tariff quotas.47  
3.47.   According to the information provided by the Panamanian authorities in the context of this 
review, automatic licences are used to impor t products subject to plant and animal health 
measures.48 The Executive Directorate of Agricultural Quarantine (DECA) of the Ministry of 
Agricultural Development (MIDA) is responsible for issuing plant and animal health import (and 
export) and transit lice nces.49  
3.48.   Automatic licences may be processed at any time of the year and are free of charge, although 
the application must be made before the goods arrive at the port. Licences must be obtained before 
 
46 WTO document G/LIC/N/3/PAN/11 of 22 June 202 0. 
47 WTO document G/LIC/N/3/PAN/4 of 30 September 2012.  
48 These licences are currently governed by Title III of Law No. 23 of 15 July 1997 and Law No.47 of 
9 July 1996 regulating plant protection measures (to prevent and control plant health problems).  
49 Government of Panama, Solicitud de Licencia Fitozoosanitaria de Importación - Vegetal . Viewed at: 
https://www.panamatramita.gob.pa/es/t ramite/solicitud -de-licencia -fitozoosanitaria -de-importaci%C3%B3n -
vegetal  and MIDA, Trámites de Licencia . Viewed at: 
https://www.mida.gob.pa/direcciones/direcciones_nacionales/direcci -n-ejecutiva -de-cuarentena -
agropecuaria/tr -mites -de-licencias.html . WT/TPR/S/421 /Rev.1  • Panama  
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  the import declaration is definitively registered. In s ome cases, they can be obtained through SIGA. 
According to the authorities, if the goods arrive at the port without the licence having been 
processed, they will be returned to their origin or destroyed. Licences are usually issued in 24 -48 
hours. They are valid for a period of 60 days from the date of issue, and this period can be extended. 
Licences are non -transferable, but their non -use is not penalized.  
3.49.   In addition to automatic import licences or animal health import licences, seeds imported for 
sowing a re subject to a prior import permit to confirm the quantity of seeds actually imported. 
Panama considers this information important when assessing whether there is an excess or shortage 
of imported seed of a particular species.  
3.50.   Non-automatic licences are u sed to administer MFN and preferential tariff quotas.50 These 
licences are issued on a random basis, through a draw, and applications for the permits may come 
from both nationals and foreigners. At least 21 days before the start of a draw, a notice is publ ished 
in three editions of two newspapers on different days, providing detailed information on the products, 
tariff items, delivery times, quota volume, number of lots into which the total quota shall be divided, 
the validity period of the import licence, the tariff payable, the state of the products, sanitary 
requirements and eligibility conditions (buyers and sellers). Once allocated, tariff quotas are not 
transferable. If a quota is not allocated, in whole or in part, for a specific period, the correspon ding 
quantity may be added to the quota for the period immediately following that specific period. This 
rule of accumulation applies for periods within the same year, but for not more than two periods. To 
ensure that the goods are actually imported, a sum equal to 20% of the quoted price must be 
deposited. Applications must be processed within 21 days of the announcement of the opening of 
quotas. Once a licence has been received, the minimum time for import is 72 hours. The licence is 
valid for a period of 60 days from the date of issue; this period may be extended at the request of 
the applicant (section 4.1).  
3.51.   In 2019, Panama introduced a temporary tariff of 0% for 60,000 quintals of onions due to 
shortages of onions of national origin.51 The Potato and On ion Agri -Food Chain was responsible for 
establishing the percentage of participation of the importers concerned, in accordance with the 
competitiveness pact of 10 July 2019 and the national onion purchase register.  
3.52.   Importers may lodge administrative appea ls against decisions of the bodies responsible for 
granting permits. During the period 2014 -20, no importer lodged an appeal.  
3.1.7   Contingency measures  
3.53.   The authority responsible for administering trade defence mechanisms (anti -dumping, 
countervailing and safeguard measures) in Panama is the Directorate -General of Trade Protection 
(DGDC), attached to MICI. The DGDC, which is the investigating authority, ha s the power to 
examine, analyse, investigate and recommend to the Cabinet Council the administrative procedures 
to be followed in the event of unfair trade practices, and to impose, revise or eliminate anti -dumping, 
countervailing and safeguard measures.  
3.54.   The legal framework governing trade defence mechanisms includes: at the multilateral level, 
the relevant WTO Agreements; at the Central American level, the Regulations on Unfair Trade 
Practices and on Safeguard Measures; and at the national level, Decree -Law No. 7 of 15 February 
2006 and its Implementing Regulations (Executive Decree No. 1 of 8 January 2009). In the context 
of this review, the authorities indicated that the legislation has not been amended since 2014.  
3.55.   The Implementing Regulations (Executive  Decree No. 1) determine procedures for conducting 
investigations and imposing remedies where appropriate. They establish common rules on unfair 
business practices, including: the bases for determining material/serious injury or threat of injury; 
causality ; the concepts of domestic industry, like product and public interest; the period of 
investigation; and the elements to be taken into account in determining the amount of a subsidy. 
The Implementing Regulations also provide for the possibility of appeal, t o the investigating 
authority, against administrative rulings in all three types of investigations.  
 
50 Law No. 23 of 15 July 1997 and Resolution No. 5 -98 of 18 November 1998.  
51 Information provided by the authorities and Cabinet Decree No. 23 of 16 July 2019.  WT/TPR/S/421 /Rev.1  • Panama  
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  3.1.7.1   Anti-dumping and countervailing measures  
3.56.   Panama does not make frequent use of anti -dumping and/or countervailing measures. During 
the period 2014 to 2021 (July), it did not notify the WTO of the initiation of any dumping investigation 
or the application of any measure.52 Moreover, Panama did not initiate any countervailing 
investigations or impose any countervailing measures during that period.53 
3.57.   The p rocedure for conducting an investigation relating to anti -dumping or countervailing 
measures has not changed substantially since 2014 (Chart 3.1). Investigations into dumping or 
subsidies may be initiated at the request of a party or ex officio , when the d omestic industry is not 
organized or is fragmented, or where such an investigation is in the public interest.54 The DGDC 
receives and processes applications for the initiation of an investigation and requests for sunset 
reviews, and examines them to decide  whether or not the initiation of an investigation is justified. 
If the DGDC determines that the margin of dumping or the subsidy is de minimis  or where the 
volume of dumped or subsidized imports is negligible, the investigation is terminated.55 
Chart 3.2 Procedure for the adoption of anti -dumping and countervailing measures, 
2021  
 
Source:  WTO Secretariat.  
3.58.   Anti-dumping and countervailing measures or provisional duties may not be imposed 
concurrently on the sam e product.56 Anti-dumping or countervailing duties may not exceed the 
margin of dumping or the amount of the subsidy.57 A lower duty may be applied when circumstances 
permit it.58 The period of application of anti -dumping and countervailing duties may not exceed five 
years.59 In addition, when at least one year has elapsed since the imposition, the measures may be 
reviewed at the request of one of the parties or ex officio . The provisions for the consideration of an 
extension may also be reviewed. The exten sion of a measure may not exceed five years.60  
 
52 WTO document G/ADP/N/328/Add.1 of 15 November 2019 and information provided by the 
authorities.  
53 WTO document G/SCM/N/349/Add.1 of 15 November 2019 and information provided by the 
authorities.  
54 The domestic industry affected may request that an investigation be initiated when: (i) the application 
is supported by domestic producers accounting for over 50% of total production of the like product (taking as a 
basis the companies expressing support and those expressing opposition); and  (ii) the producers expressly 
supporting the application account for at least 25% of total production of that product.  
55 Title V, Section VII (Early termination) of the Implementing Regulations.  
56 Article 46 of Decree -Law No. 7 of 2006 and Article 101 of Executive Decree No. 1 of 2009.  
57 Article 19 of Decree -Law No. 7 of 2006 and Article 117 of the Implementing Regulations.  
58 Article 118 of the Implementing Regulations.  
59 Article 19 of Decree -Law No. 7 of 2006.  
60 Title VII, Section III (Review of measures) and Section IV (Consideration of extension) 
of the Implementing Regulations.  
WT/TPR/S/421 /Rev.1  • Panama  
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  3.1.7.2   Safeguard measures  
3.59.   In 2019, Panama notified the initiation of a safeguard investigation concerning pork imports,61 
but the investigation was terminated at the request of the Panamanian National Pig Farmers' 
Association, which represented the domestic industry.62 Panama is able to impose bilateral and 
special safeguard measures negotiated under the trade agreements. In  this regard, during the period 
2014-21, Panama initiated several investigations under the special agricultural safeguard 
mechanism of the Trade Promotion Agreement between Panama and the United States, which led 
to the introduction, as of 2018, of safegua rd measures (special agricultural) on beef, other cheese, 
yoghurt, whole milk powder and butter.63 During the period 2014 -20, Panama did not use the WTO's 
special agricultural safeguard.64  
3.60.   The procedure for conducting a safeguard investigation has not cha nged substantially since 
2014 (Chart 3.2). Producers in the domestic industry affected may request the initiation of a 
safeguard investigation provided that they account for at least 25% of total production of the like or 
directly competitive product. In s pecial cases, the DGDC may initiate an investigation ex officio .65  
Chart 3.3 Safeguard investigation procedure, 2021  
 
Source: WTO Secretariat.  
3.61.   During the investigation, the DGDC may recommend the adoption of provisional measures if 
it has been determined that the increase in imports has caused or threatens to cause serious injury 
and if delay might cause damage to the domestic industry which it would be difficult to repair. 
Provisional measures ado pted must be in the form of tariff increases and may not last for more than 
200 days.66  
3.62.   Definitive safeguard measures may consist of a tariff increase or a quantitative import 
restriction, with a maximum duration of four years, which may be extended only once for up to 
six years.67 Any measure with a duration of more than one year must be progressively liberalized 
during the implementation period. A safeguard measure may be extended at the request of one of 
the parties or ex officio , when a consideration o f extension is undertaken. The authority may also 
suspend measures when the domestic industry fails to comply with the plan to overcome the alleged 
circumstances, provided that the final resolution establishes such a plan. The DGDC conducts 
examinations an d reviews to determine whether a measure may be extended or suspended.  
3.63.   In 2018, Panama adopted measures on beef imports from Nicaragua and Costa Rica. The 
authorities indicated that this measure was taken under Decree -Law No. 6 of 22  February  2006 
defining  the functions of MICI, and was of a temporary nature to control and restructure the 
marketing of beef in national territory. The measure was applied between September 2018 and 
 
61 Resolution No. 003 of 3 May 2019 and WTO document G/SG/N/6/PAN/2 of 14 May 2019.  
62 Resolution No. 004 of 4 July 2019 and WTO document G/SG/N/9/PAN/1 of 19 November 2019.  
63 DGDC. Viewed at: https://www.mici.gob.pa/direccion -general -de-defensa -comercial/investigaciones -
salvaguardia . 
64 WTO documents G/AG/N/PAN/30 of 27 June 2014; G/AG/N/PAN/34 of 7 April 2015; G/AG/N/PAN/37 
of 31 March 2016; G/AG/N/PAN/42 of 13 April 2017; G/AG/N/PAN/45 of 17 M ay 2018; G/AG/N/PAN/48 of 
16 May 2019; G/AG/N/PAN/53 of 9 June 2020; and G/AG/N/PAN/56 of 17 May 2021.  
65 Articles 146 and 147 of the Implementing Regulations.  
66 Articles 170 -173 of the Implementing Regulations.  
67 Article 57 of Decree -Law No. 7 of 15 Februa ry 2006.  
WT/TPR/S/421 /Rev.1  • Panama  
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  June 2019, and imposed on companies importing under the preferential tariff the  obligation to 
purchase domestic beef in equal proportions to the imported volume.68 In addition, companies 
importing under the preferential tariff had to register with the Panamanian Food Safety Authority 
(AUPSA)69; be up to date with national health perm its; and comply with domestic technical 
regulations for the marketing of beef. Imports subject to the special agricultural safeguard 
mechanism were exempted in accordance with the agreements signed by Panama,70 as were imports 
of high -quality prime and cho ice grade meat.71  
3.2  Measures Directly Affecting Exports  
3.2.1   Export procedures and requirements  
3.64.   Export procedures are governed by the Central American Uniform Customs Code (CAUCA) , 
the Regulations implementing the Central American Uniform Customs Code (RECAUCA) and their 
supplementary provisions, as well as other laws such as Decree -Law No. 1 of 13 February 2008 and  
the amendments thereto.  
3.65.   The Vice -Ministry of Foreign Trade (VICOMEX) within MICI is responsible for r egulating 
procedures relating to exports. However, procedures prior to import involve other government 
entities such as MIDA, the Ministry of Health (MINSA) and ANA; in other cases, for products coming 
from natural forests, the Ministry of Environment (MIT S) must be involved and, in the case of marine 
products , the Panama Aquatic Resources Authority (ARAP).72 
3.66.   For exports or re -exports, the use of a customs broker is optional. However, the Executive 
may determine which exports or re -exports require the invol vement of a customs broker.73 
3.67.   In general, the documents required for export are: the start -up notification (indicating the 
customs procedure to be applied); the export declaration; the customs form (this can be obtained 
from the Panamanian National Customs  Brokers ' Union (UNCAP) for PAB 5); the transport document; 
the commercial invoice; and, where appropriate , the certificate of origin and animal health 
certificates. Exporters submit documents at the Single Window for Foreign Trade (VUCE), which is a 
physi cal one -stop shop for this purpose.74 Exporters may process any other type of permit or 
authorization required to export (or re -export) at the VUCE. Once the documents have been 
approved, they are processed via SIGA.75 
3.68.   Other requirements (export or re -export permits or authorizations) depend on the product to 
be exported, such as the requirements for wood and some marine products , and/or their destination. 
In these cases, exports that are generally not subject to physical inspection may be inspected to 
ensure compliance with the established measures (Section 3.3.3).  
3.69.   Panama does not use minimum export prices to value the good.  
3.2.2   Export taxes, charges and levies  
3.70.   There are no domestic taxes on exports. In general, Panama does not impose export taxes, 
charges or l evies, except for on processed wood from natural forests, which is subject to a levy of 
 
68 Resolution No. 110 of 17 September 2018. Viewed at: https://www.mici.gob.pa/direccion -general -de-
defensa -comercial/investigaciones -salvag uardia . 
69 AUPSA's register of importers remains in force during the transition period of the Law establishing the 
new Panamanian Food Agency (APA).  
70 Law No. 53 of 13 December 2007.  
71 Resolution No. 086 of 20 August 2019. Viewed at: https://www.mici.gob.pa/direccion -general -de-
defensa -comercial/investigaciones -salvaguardia . 
72 MICI, Directorate -General for Foreign Trade Services, Single Window for Fore ign Trade (VUCE) 
(15 January  2020), Instructivo para el manejo de la documentación utilizada en la ventanilla única de comercio 
exterior . 
73 Article 43 of Decree -Law No. 1 of 13 February 2008.  
74 The Single Window for Foreign Trade (VUCE) has been in use since 2012. Currently, as was the case 
in 2014, there are seven single windows in Panama, one in VICOMEX and six in regional customs zones (Colón 
and Comarca Kuna Yala; Chiriquí; Bocas de Toro; Co clé, Veraguas, Herrera and Los Santos; Tocumen airport; 
and Panama and Darién).  
75 Cabinet Decree No. 27 of 27 September 2011.  WT/TPR/S/421 /Rev.1  • Panama  
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  1% of the f.o.b. value.76 However, wood from duly certified forest plantations is not subject to this 
levy.77 
3.2.3   Export prohibitions, restrictions and licensing  
3.71.   Panamanian legislation allows exports, as well as imports, to be prohibited or otherwise 
restricted in order to preserve fauna, flora or cultural, historical and archaeological  heritage.  The 
same applies to staple goods when  there is a shortage of such pro ducts and to any  products 
stipulated by the Executive on the basis of the country's economic interests.78 Panama also restricts 
exports in order to comply with the commitments adopted under international agreements.  
3.72.   Exports of wood from natural forests or extracted from water reservoirs are regulated in 
Panama.79 The prohibition on the export of this type of wood in stumps is in force; only samples 
may be exported to investigate the potential for exploitation (export) of the wood.80 An application 
must be m ade to the Ministry of the Environment to export these samples. Primary processing and 
treatment are a requirement for their export . Moreover , timber species must come from sustainable 
forest plantations certified by the Ministry to be eligible for export.81 In 2015, the export of Cocobolo 
wood was prohibited.82 
3.73.   Exports of sea cucumber are also prohibited; Panama does not permit the extraction, 
possession or sale of sea cucumber.83 
3.74.   In addition to the requirements or certificates that may be determined by the destination 
country,  a special procedure (permits or certifications) may be required for certain export s. However, 
the authorities do not consider these permits or certificat ions to constitute export licences. The 
products subject to these procedures are  primarily  marine products (Table 3.10).  
Table 3.10 Exports subject to special control or procedure  by the Panamanian Aquatic 
Resources Authority (ARAP)  
Product  Procedure  Regulatory framework  
Polychaete worms 
(marine species)  Export permit  Executive Decree No. 4 of 4 February 1997  
J.D. Resolution  No. 1 of 26 February 2008  
Lobster tails  Approval by ANA  Executive Decree No. 15 of 30 March 1981  
Resolution No. 1 of 26 February 2008  
Shark fin  Export certificate for wet 
and dried shark fin  Law No.  9 of 16 March 2006  
Resolution No. 2 of 10 February 2011  
Resolution No. 2 of 10 February 2011  
A.D.M./ARAP  Resolution No. 022 of 10 February 2011  
J.D. Resolution No. 006 of 14 April 2010  
J.D. Resolution No. 45 of 29 August 2012  
Black arks , clams, 
oysters, squid and 
octopus  Approval by ANA  ARAP Resolution No. 3 of 13 December 2007  
Resolution No. 1 of 26 February 2008  
J.D. Resolution No. 020 of 23 May 2012  
Source:  WTO Secretariat, based on information provided by the authorities.  
3.2.4   Export incentives  
3.75.   Panama notified the WTO that , during the period 2014 -17, it did not grant any export 
subsidies for agricultural products.84 
3.76.   Panama continues to maintain a number of export support programmes, comp rising different 
customs regimes (duty drawback, duty -free replacement of goods, and temporary admission 
 
76 Law No. 1 of 3 February 1994.  
77 Information provided by the authorities.  
78 Cabinet Decree No. 41 of 11 December 2002.  
79 Article 12 of Executive Decree No. 57 of 5 June 2002; Decree No. 83 of 10 July 2008; and Executive 
Decree No. 107 of 19 January 2021.  
80 Samples must be squares in certain  dimensions.  
81 Executive Decree No. 107 of 19 January 2021.  
82 Resolution DM -0453-2015 and DM -0438-2016.  
83 Executive Decree No.  157 of 31 December 2003.  
84 WTO document G/AG/N/PAN/44 of 17 May 2018.  WT/TPR/S/421 /Rev.1  • Panama  
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  regimes), various types of special economic zones (free zones, Colón Free Zone and Panama -Pacific 
Special Economic Area) and other tax incentives schem es. 
3.77.   In 2006, Panama applied to the WTO for an extension of the time limit for eliminating the 
export subsidies granted under the export processing zones (ZPE) and Official National Industry 
Register (ROIN) programmes.85 The extension was approved. Panama w as allowed to maintain 
export subsidies under these two programmes until 31 December 2015.86 Panama notified the 
measures it had taken to dismantle the subsidies granted under the ROIN programme; however, 
this programme was extended three times and was in force until December 2020 ( sections 3. 2.4.2 
and 3. 2.4.3 ).87 In 2013, Panama notified the WTO that in 2011 , the country had repealed the ZPE 
Law, broadened the categories of beneficiary enterprises and modified the tax regime applied, by 
eliminating exempti on from income tax and dividend tax, etc.88 
3.2.4.1   Customs regimes by industrial operation ( drawback, duty -free replacement of 
goods and temporary admission regimes)  
3.78.   Panama continues to use the customs regimes for industrial operations.89 These include: the 
custo ms drawback regime, the temporary admission for inward processing regime, and the duty -
free replacement of goods regime (Box 3.5).  
Box 3.5 Customs regimes by industrial operations  
Drawback regime  
This regime allows for the refund of all taxes paid when importing inputs used in the production of goods for 
export. The refund is granted when the imported goods have undergone processing in Panama through which 
value was added (Articles 193 and 194).  
Tempor ary admission regime  
The temporary admission regime allows duty -free import of goods intended for re -export in the same state.  
Security has to be posted to cover all duties if the goods remain in Panama (Articles 195 to 200).  
Duty -free replacement of go ods regime  
This regime allows the duty -free import of equivalent goods (similar in kind, quality and technical 
characteristics) to replace imported goods that were used to produce goods that were exported. Goods that 
are incidental to production (for exam ple, fuel) or parts for machinery or equipment cannot be replaced (Article 
200).  
Source:  Law No.  1 of 13 February 2008 and Cabinet Decree No.  41 of 11 December  2002.  
3.2.4.2   Free zones and special investment regimes  
3.79.   Panama continues to implement a number of tax r egimes, some of which were originally 
established to promote exports, such as the export processing zones (ZPE).90 However, the subsidies 
granted under this regime were eliminated and the current regimes are aimed primarily at attracting 
investment, particularly in activities that support the Canal Zone and promote innovation and 
employment. Moreover, in general, the tax incentives granted are not contingent on an export 
requirement, with the sole exception of companies established in the Colón Free Zone (ZLC) which 
must re -export at least 60% of the imported good.  
 
85 The ROIN programme also gives tax incentives to companies producing for the domestic market.  
86 WTO Document G/TFA/N/PAN/691 of 31 July 2007.  
87 WTO documents G/SCM/N/211/PAN of 24  June 2010 and G/SCM/N/211/PAN/Corr.1 
of 29 September  2010.  
88 WTO document G/ SCM/N/253/PAN -G/SCM/N/260/PAN of 2  July 2013.  
89 Law No. 1 of 13 February 2008 and Cabinet Decree No.  41 of 11 December  2002.  
90 Law No. 25 of 30 November establishing the export processing zone (ZPE) regime was repealed 
in 2011. Free zones were established instead by Law No. 32 of 5 April 2011.  WT/TPR/S/421 /Rev.1  • Panama  
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  3.2.4.2.1   Free zone regime  
3.80.   As in 2014, the free zone regime is r egulated by Law No. 32 of 5 April 2011 and its 
implementing regulations, Executive Decree No. 26 of 9 February 2012 and Decree No. 62 of 
11 April 2017.  
3.81.   To establish a free zone in Panama, developers  must, inter alia , invest a minimum of 
PAB 250,000, have a  minimum area of 2 hectares and employ Panamanian workers with the 
exception of experts. The developer of the free zone must have  a licence issued by the National Free 
Zones Commission (CNZF) and be registered in the Official Register of Free Zones. Both d omestic 
and foreign c ompanies wishing to set up in a free zone have to obtain a licence from the CNZF and 
be registered in the Official Register of Free Zones. Companies are not required to have a minimum 
investment capital to set up. Companies eligible fo r the free zone regime are those engaged in the 
manufacturing, assembly, processing of finished and semi -finished goods, as well as high-tech, 
scientific research  and higher education  companies, and those offering  logistics, environmental, 
health, and gene ral services.  
3.82.   Tax incentives granted to free zone developers  and companies have not changed substantially 
since 2014 (Table 3.11).  
Table 3.11 Tax benefits, 2021  
Type of tax  Promoter  Company  
Import taxes  Exempt: equipment, construction materials, raw materials, machinery, 
tools, accessories, inputs and any goods or services required for 
operations  
Income tax  Exempt  Exempt: companies offering certain servicesa are 
exempt from income tax on their operations outside 
the free zone and on the operations among 
themselves  
Tax on the Transfer of Movable 
Property and the Provision of 
Services (ITBMS)  Exempt  Not exempt, except for master developer services  
Dividend ta x 5%, regardless of the original source, plus a supplementary tax of 2 % 
if there is no distribution of profits  
Withholding tax on interest 
revenue  Exempt  
Capital taxes  1% annual tax on the company's capital (minimum of PAB  100 and 
maximum of PAB 50,000)  
Operations tax  Exempt  
Municipal taxes  Exempt  
Withholding tax on royalties 
payable to foreign nationals  Exempt  
Capital gains tax due to the 
transfer of shares of the company  Exempt  
Stamp tax  Exempt, unless the sale takes place in the national fiscal territory  
Property tax  Exempt until 31 December 2018  
After 31 December 2018: for developers , 30-year exemption; and for 
companies that have set up , 10-year exemption  
Surtax to finance Special Interest 
Compensation Fund (FECI)  Exemption fo r loans secured by bank deposits  
a Services such as: logistics, high technology, scientific research, higher education, general business 
services, health and environmental services.  
Source:  Panamanian National Investment Promotion Directorate (information provided by the authorities) 
and Directorate -General of Free Zones.  
3.83.   Goods produced in free zones and exported to markets abroad are not subject to any type of 
domestic taxes, charges and levies or export duties. Goods produced in or introduced  into free zones 
and then imported into national fiscal territory must pay the applicable customs tariffs or  duties and 
the corresponding ISR . 
3.84.   Goods entering a free zone must comply with sanitary, health, environmental and other 
regulations required by the  authorities for the rest of the fiscal territory.  WT/TPR/S/421 /Rev.1  • Panama  
- 68 - 
  3.85.   In 2021, there were 23 free zones, of which 11 were operating, nine were being developed 
(installation/construction) and three  were being closed; 119 companies were established in the free 
zones. As in 201 4, the main branches of activity of companies established in the free zones are 
services, processing of finished or semi -finished products, assembly and manufacturing.  
3.2.4.2.2   Other free zones  
3.86.   In addition to the free zones covered by Law No.  32 of 2011, there are other special economic 
areas in specific geographical areas: the Panama -Pacific Special Economic Area and the 
Barú Multimodal and Logistic Support Tourist Free Zone (Bar ú Free Zone ), which are governed by 
their own laws.91 
3.87.   The Panama -Pacific Special Econom ic Area, which is located on the west coast of the 
Panama  Canal, was created in 2004 to promote investment and generate employment.92 
3.88.   In order to operate in the Area, companies must be registered with the Panama -Pacific Area 
Agency (APP), a  government body  that manages the Area. There is no minimum investment 
requirement. Companies may engage in any form of production or trade activities, including the 
import and re -export of finished products at the wholesale level. The activities to be promoted 
include se rvices provided to vessels and other means of transport, and storage and logistics services. 
In 2021, a total of 359 companies were established in the Panama -Pacific Special Economic Area 
(174 in 2014). Most of these are companies engaged in logistics.  
3.89.   The operations of companies registered with the APP are exempt from the payment of import 
duties and ITBMS, except for companies providing services related to regulated professions; 
companies whose income comes from abroad are exempt from the ISR. All compani es registered 
with the APP are exempt from the withholding tax on interest revenue, capital tax, operating tax, 
royalties tax and tax on remittances abroad.93 In general, tax stability is guaranteed for all 
companies  for a period of 10 years and five years  for municipal taxes.94 The Integrated Procedures 
Scheme (SIT), which acts as a one -stop shop, operates within the zone to facilitate customs 
procedures.95 
3.90.   Goods entering the APP free of tax may be sold in the national fiscal territory following 
payment of the respective taxes and duties for their consumption, assembly, processing, treatment, 
or donation. Likewise, goods manufactured or assembled by APP companies may be brought into 
the national fiscal territory by paying customs tariffs or taxes only on the value of foreign raw 
materials and components incorporated in the product, on the basis of the tariff applicable to each 
raw material or component incorporated in the final product.96 
3.91.   The Barú Free Zone, located in Chiriquí province, was create d in 2001 to attract investment 
through tax incentives. Companies in this Zone, as in the other zones, are exempt from payment of 
any national taxes, including import duties.97 Companies may carry out industrial, trade and tourism 
activities. Since it was set up, the Barú Free Zone has few companies and its performance has not 
met expectations. Five companies were set up  in the Zone during the period 2014 -21. 
3.92.   In 2003, Panama issued a new national petroleum policy, which promotes the development 
of petroleum  free zones (ZLP).98 One of the objectives of this policy is to create, through investment 
by local and foreign companies in petroleum free zones, an international centre for the processing, 
 
91 Law No. 19 of 4 May 2001.  
92 Law No.  41 of 20 July 2004; Law No.  3 of 10 February 2015; and Executive Decree No.  66 of 
13 December 2018.  
93 Companies registered as involved in "special business activities" in accordan ce with Law No.  41 
of 2004 are exempt from the ISR, the dividend/supplementary , and the tax on remittances abroad.  
94 Information provided by the authorities.  
95 The institutions participating in the SIT are: the National Migration Services (SNM), Ministry o f Labour 
and Work Development (MITRADEL), National Environment Authority (ANAM), Municipality, Social Insurance 
Fund (CSS), ANA and Public Registry of Panama (Panama Pacific Agency). Viewed at: 
www.app.g ob.pa/page/plantilla ). 
96 Law No.  3 of 10 February 2015.  
97 Law No.  19 of 4  May 2001 and online information from the Barú Free Zone, “Beneficios”, viewed at: 
http://www.zfb.gob.pa. http://www.zfb.gob.pa/ . 
98 Cabinet Decree No. 36 of 17 September 2003.  WT/TPR/S/421 /Rev.1  • Panama  
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  distribution and redistribution of petroleum and its by -products in Panama, so as to take advantage 
of the country's strategic geographical position and installed petroleum storage capacity. In the ZLP , 
natural or legal persons, whether domestic or foreign, may engage in multiple operations under a 
special tax regime (B ox 3.6). In addition, crude oil and petroleum products introduced in the areas 
of the ZLPs may leave these areas free of tax to be exported and re -exported, introduced into the 
customs territory, and sold to vessels transiting the Panama Canal or aircraft using domestic airports.  
Box 3.6 Main  features of ZLPs, 2021  
Activities that can be carried out in ZLPs  
Introducing, stor ing, refining, transforming, manufactur ing, blending, purifying, packaging, marketing , 
transporting, transit ing, pumping, selling for the domestic market, exporting, re -exporting, and in general,  
handling and supplying crude  oil, semi -processed oil or any of its derivatives; constructing, installing and 
opera ting refineries, stor ing, pumping, trans ferring,  distributi ng, marketing, refining crude oil and petroleum 
products . 
Specific uses for ZLP products  
Export; re -export; or sales: in the customs territory; vessels transiting the Panama Canal; aircraft using 
Panamanian airports; and electricity -generating companies providing the public service.  
Tax regime  
Activity : introduction to ZLP (export or re -export) of crude oil and petroleum products , inputs, raw materials, 
machinery, spare parts, prov ided that they are exported or re -exported.  
Tax exemption : products are not subject to any tax as long as they enter the ZLP to be exported or re -
exported.  
Activity : sale or delivery of crude  oil, semi -processed oil or other petroleum products leaving th e ZLP.  
Tax exemption : no taxes, including income tax, fees, levies and other contributions.  
Source: Cabinet Decree No. 36 of 17 December 2003.  
3.2.4.2.3   Colón Free Zone  
3.93.  The Colón Free Zone (ZLC) was created in 1948.99 Until 2016, its regime did not undergo any 
substantial changes.100 The ZLC is a multimodal logistics hub with a regime of tax exemptions and trade 
facilitation. The ZLC continues to be the largest free zone on the American continent, with 1,064.5 
hectares and 3,200 companies; it is located on the Caribbean coast, in the province of Colón, near the 
recently extended Panama Canal.101 The value of commercial operations (imports and re -exports) in the 
ZLC has declined since 2014, when it stood at PAB 24,022 mill ion (Table 3.12). This decline is due to the 
contraction of some markets in the region; an increase in the use of the direct clearance method to 
minimize expenses; the supply of goods in smaller quantities, facilitating direct delivery from the factory 
to the final destination; and Panama's restrictions on cash entering the financial system as a payment 
method, which have resulted in higher costs of international transfer of funds.  
Table 3.12 ZLC f oreign trade,  2014 -20 
(PAB million)  
Year Imports  Re-exports  Total trade  
2014 11,060.3  12,962.1  24.022,4  
2015 10,373.5  11,365.5  21,739.0  
2016 9,238.0  10,417.5  19,655.5  
2017 9,214.6  10,432.7  19,647.3  
2018 9,772.9  10,808.1  20,581.0  
2019 8,656.3  9,814.0  18,470.3  
2020a 6,753.8  7,923.2  14,677.0  
a Preliminary  figures.  
Source:  Colón Free Zone, Informe de Principales Indicadores Económicos 2010 -2020. Viewed at: 
http://200.46.125.168/sites/default/files/2021 -
01/PRINCIP%C3%81LES%20INDICADORES%20ECONOMICOS%202010%20 -
%202020%20MEJORA DO.pdf . 
 
99 Decree -Law No. 18 of 17 June 1948.  
100 Law No.  8 of 4 April 2016.  
101 ZLC. Viewed at: http://www.zolicol.gob.pa/es/ventajas -de-la-zlc. WT/TPR/S/421 /Rev.1  • Panama  
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  3.94.   To set up in the ZLC , companies must obtain an operating permit and commit  to re-export ing 
at least 60% of imported goods and employ ing a minimum of five Panamanian staff on a permanent 
basis. The fiscal benefits available to ZLC companies include e xemption from payment of  taxes on 
imports, re -exports and manufacture of goods, re -export earnings and the repatriation of dividends, 
as well as exemption from other national and provincial taxes.  
3.95.   Activities carried out in the ZLC include wholesale sales, import, export and re -export, 
consolidation, repackaging, manufacturing, warehousing, marketing, distribution and logistics and 
banking services.102 In addition, a law was issued in 2016 that specifies the activities permitted in 
more detail and covers the provision of air transport related services, including handling and storage 
of cargo in general, as well as repair and maintenance services.103 
3.96.   Following changes to legislation in 2016, measures were also implemented to promote the 
transparency of transacti ons carried out in the ZLC, as well as to streamline formalities and 
multimodal trade activities.104 Consequently, prior authorization from the Executive Board of the 
ZLC is required for certain activities in the ZLC. Activities requiring prior authorizatio n include: the 
provision  of services to natural or legal persons located outside Panama; the provision of services 
between the users of the ZLC or between these and other companies established in the various free 
zones, the fuel free zones, the port precin cts or the Panama -Pacific Special Economic Area; call 
centre services; data processing and digital information; telecommunication services; and 
e-commerce.105 
3.97.   In 2016, the Single Window for Formalities (VUT) was created to deal with foreign trade 
formalities  and permits , as well as  any other formalities required to operate in the ZLC , in a more 
expeditious manner.106 In 2019, the Declaration of Electronic Commercial Activity (DMCE)107 system, 
launched in 2009, was adopted for use. The DMCE system is a platform through which declarations 
of commercial activity are created, sent, approved and paid by means of a sworn statement setting 
out or detailing the trade formalities or movements of goods or merchandise from the ZLC.108 This 
system seeks to facilit ate the exchange of information to improve the traceability of cargo of 
companies operating in the ZLC.109 The DMCE system enables customs brokers, importers and 
exporters to submit all documentation to the administration of the ZLC and ANA by electronic 
means.110 
3.98.   ZLC users may temporarily transfer raw materials and semi -finished products to companies 
located outside the International Free Trade Area111 to undergo a manufacturing, assembly, 
processing or treatment process. The entry of these inputs or products into the national fiscal 
territory does not incur any import tax or charge up to a maximum period of six months, which may 
be extended for a furth er six months at the request of the company . However, if the inputs or 
products do not return to the ZLC after processing, or if their re -entry is recorded in smaller quantity 
or volume, the company responsible is required to pay the corresponding import t axes and levies, 
without prejudice to any penalties that may be applied.112 
3.99.   Products, equipment and other goods in general that are exported or re -exported from the 
ZLC are exempt from payment of any tax, levy or other fiscal charges. Products brought into the 
 
102 PROPANAMA. Viewed at: http://propanama.mire.gob.pa/incentivos -especiales/zona -libre-de-colon.  
103 Article  43, paragraph 6, of Law No.  8 of 4 April 2016.  
104 Article  43, paragraph 1, of Law No.  8 of 4 April 2016.  
105 Article 44 of Law No. 8 of 4 Apri l 2016.  
106 The institutions that make up VUT include ANA and the Panamanian Food Agency (APA); the 
National  Bank; the Ministries of Health, Agricultural Development and Labour and Work Development; and the 
National Migration Service (Chapter III of JD Resol ution No. 008 -2019 of 4 April 2019 and Article 58 of Law 
No. 8 of 4  April 2016).  
107 JD Resolution No. 008 -2019 of 4 April 2019.  
108 Article 2 of JD Resolution No. 008 -2019 of 4 April 2019.  
109 Article 3 of JD Resolution No. 008 -2019 of 4 April 2019.  
110 DMCE. Vie wed at: https://dmce2.zonalibredecolon.gob.pa/TFBFTZ/cusLogin/login.cl?language=es . 
111 The International Free Trade Area is the area operated and located within the ZLC or any territory or 
area that has been included and considered as part of the ZLC, used exclusively for trad e, transfer or 
international trade operations as detailed in Law No. 8 of 4 April 2016 or between the other free zones or the 
Panama -Pacific Special Economic Area (Article 2 of Law No. 8 of 4 April 2016).  
112 Article 46 of Law No. 8 of 4 April 2016.  WT/TPR/S/421 /Rev.1  • Panama  
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  national fiscal territory are subject to payment of all taxes and/or duties on imports and the payment 
of ITBMS, and require a customs declaration by a duly authorized customs broker.113 
3.2.4.3   ROIN/RIN  
3.100.   Panama granted an extension for companies registered unde r the Official National Industry 
Register (ROIN) to continue benefiting from export subsidies until 31 December 2015.114 Howeverm 
since 2015, Panama has extended the deadline three times for companies registered in ROIN to be 
able to continue to obtain subs idies.115 ROIN establishes three types of registration for companies. 
Companies can be registered as wholly exporting, part ially exporting or not exporting. Until the end 
of 2020, tax incentives received by companies depended on their exports (Table 3 .13).116 During 
the period 2014 -20, the fiscal sacrifice of incentives under ROIN amounted to a total of PAB 40 
million, of which PAB 38.5 million represented fiscal sacrifice related to import duties. During the 
same period, 573 companies benefited from the prog ramme, most of which were engaged in agro -
industrial activities, including the processing of marine products.117 
Table 3.13 Tax incentives granted under ROINa 
1. Companies wholly engaged in export production  
Exemption from all levies, taxes or customs duties, and from the ITBMS on the import of  machinery, 
equipment and spare parts used in the production process, excluding construction materials, vehicles, 
furniture, office supplies and any other in puts not directly used in the production process  
Full exemption from income tax on profits, with the exception of mining industries and industries  using 
natural resources  
2. Companies partially engaged in export production  
Full exemption from income tax on profits earned from production for export, with the exception of  mining 
industries and industries  using natural resources  
Full exemption from export tax  
Full exemption from export sales taxes (where applicable)  
Full exemption from export production tax  
Deduction of fixed costs (interest, depreciation, maintenance) from taxable income, provided that total 
export sales do not exceed 20% of the total value of sales  
3. Companies engaged in production f or the domestic market  
Preferential tariff of 3% for imported inputs and machinery and equipment used in the production process. 
These products are not exempt from ITBMS  
Partial exemption from income tax on net profits reinvested in expanding production capacity or producing 
new items  
Special carry -over regime for losses  
Special depreciation formula  
Companies established in the districts of Santiago, Chitré, Bugaba, Chorrera, Los Santos, Las Tablas, 
Aguadulce, Natá, Penonomé and the provinces of Colónb are granted:  
(a) exemption from 100% of property taxes for a period of 10 yearsb; 
(b) exemption from 100% of income taxes on profits from sales to the domestic market for the first five 
years of production and 50% for the following three years.c 
a These incentives were in effect until 31 December 2020.  
b Article 13 of Law No. 3 of 1986.  
c Phased out in 2005. Implemented only during the first 10 years of registration in the ROIN.  
d Applicable only for the first eight years of production of the company.  
Source:  WTO document G/SCM/N/95/PAN of 3 July 2003; Article 13 of Law No. 3 of 1986; and information 
provided by the authorities.  
3.101.   The Industrial Promotion Certificate (CFI), in force since 2009, was adopted to replace some 
aspects of ROIN.118 Companies do not necessarily have to export to be eligible to apply for the CFI, 
but they do have to invest in activities ai med at promoting productivity. The CFI is a non -transferable 
tax credit valid for eight years , which a company can use to pay all national taxes, charges and 
 
113 Article 48 of Law No. 8 of 4 April 2016.  
114 WTO document WT/L/691 of 31 July 2007; and Law No. 11 of 4 January 2008.  
115 Law No.  72 of 15 December 2015; Law No.  1 of 17 January 2017; and Law No. 25 of 23 May 2017  
(Article 50) . 
116 Companies  which, as of 31 December 2016, were still registered  in ROIN m aintained the tax benefits 
granted to them under ROIN until 31 December 2020 (Law No. 25 of 23 May 2017).  
117 Information provided by the authorities.  
118 Law No. 76 of 23 November 2009; and WTO documents G/SCM/N/211/PAN and 
G/SCM/N/211/PAN/Corr.1, of 24 June 2010 and 29 September 2010, respectively.  WT/TPR/S/421 /Rev.1  • Panama  
- 72 - 
  contributions.119 As in 2014, the CFI may be requested by manufacturing or agro -industrial 
companie s, or companies that process marine, agriculture and forestry resources, or invest in R&D 
and management systems, to invest or reinvest their profits in training and training human resources 
and to increase employment associated with production.120 The amou nt of the CFI is a percentage 
of the investment made. In 2014, this amount was equivalent to 35% of investment for an agro -
industrial activity and 25% for other  industrial activities. During the review period, this amount was 
harmonized and increased to 40 %.121 
3.102.   Since 2018, to apply for the CFI, companies must first register with the National Industry 
Register (RIN).122 RIN was established to collect statistical data and develop indicators to assess the 
growth of competitiveness and productivity of the domesti c industry. Companies registered with RIN 
benefit from certain tax incentives (Box 3.7).  
Box 3.7 Tax benefits granted under RIN, 2021  
Preferential tariff of 3% on imported inputs, machinery and equipment, except building materials, furniture, 
office supplies and other inputs not used in the production process, as well as raw materials, semi -finished or 
intermediate goods and inputs deemed to be sensitive for the domestic economy.a 
Deduction as c osts from income statement for the first year of 100% of ITBMS on machinery, equipment and 
spare parts used in processes of industrial food processing and/or contributing to these processes.  
Any losses suffered during a fiscal period may be deducted in th e following five tax periods at a rate of 20% 
per year. No more than 50% of net taxable income can be deducted in the year in which the respective quota 
is deducted. The portion not deducted over a period may not be deducted in subsequent years.  
a Sensiti ve products are those subject to tariff quotas (rice, pork and chicken meat, milk and dairy 
products, maize, potatoes, beans, tomatoes); onions, roasted and decaffeinated roasted coffee, raw 
cane sugar and refined sugar (Cabinet Decree No. 25 of 16 July 20 03). 
Source:  Article 26 of Law No. 25 of 23 May 2017.  
3.103.   All industrial (agro -industrial or manufacturing) companies established on Panamanian 
territory may be registered in RIN regardless of their size. The following c ompanies may not be 
registered : companie s established in a special tax or customs regime; communications companies 
(other than those developing  high-tech goods); electricity - generati ng, transmi tting and distribut ing 
companies  (except renewable energy and co -generation for self -consumption); companies 
packaging or distributi ng a product ( i.e. without an industrial transformation process); construction 
companies; and companies that exploit metallic mineral resources.123 
3.2.4.4   CEFA  
3.104.   The Agricultural Exports Promotion Certificate (CEFA), instituted in 2009 to promote 
non-traditional agricultural exports, is still in use.124 CEFA is a document issued by MEF that can be 
used to pay all taxes (except municipal taxes).125 Its value is a percenta ge calculated based on a 
reference value per unit of exported product.126 Up to 2017, this percentage was 10% or 15% of the 
reference value per unit of exported product; 15% applied to finished and semi -finished leather, 
melons and pumpkins.127 Since 1 January 2018, due to increased marketing costs (packaging, 
packing, transport  and internal freight costs), a 20% increase in the value of CEFA was approved 
for almost all beneficiary products.128 Companies established in free zones and those making use of 
 
119 Article 14 of Law No. 76 of 23 November 2009 (this Article was not amended by Law No. 25 of 
23 May 2017).  
120 WTO document G/AG/N/PAN/19 of 12 October 2012.  
121 Articles 30 to 34 of Law No. 25 of 23 May 2017.  
122 Law N o. 25 of 23 May 2017.  
123 Law No.  25 of 23 May 2017.  
124 Law No. 82 of 31 December 2009; Executive Decree No.  65 of 25 March 2010.  
125 Law No. 82 of 31 December 2009, Chapter II.  
126 Executive Decree No. 179 of 27 December 2017.  
127 The reference value is the estima ted average of the cost of marketing incurred for wrapping, 
packing, transport and domestic freight costs.  
128 Executive Decree No. 179 of 27 December 2017.  WT/TPR/S/421 /Rev.1  • Panama  
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  other fiscal incentive programmes may not use CEFA. Products exported to count ries with which 
Panama has trade treaties or agreements may not use it either .129 
3.105.   The products covered by CEFA may be modified annually through an Executive Decree, 
taking into account the outcome  of a public consultation.130 During the review period, theref ore, the 
products covered have changed. In 2014, about 250 products were covered by  CEFA, and some 
66 products were added to the list in 2017, including some spirits (rum and vodka), beer and 
preparations of pork, chicken and beef. This list does not appea r to have been modified  since 2017.131 
3.2.4.5   Agricultural and Agro -Industrial Promotion and Modernization Programme 
(PROMAGRO)  
3.106.   The Agricultural and Agro -Industrial Promotion and Modernization Programme (PROMAGRO) 
was created in 2013 to promote agricultural and ag ro-industrial activity. This Programme provides 
loans and direct financial assistance through a Production Promotion Certificate (CFP).132 PROMAGRO 
was created to support producers that are not eligible for  CEFA. It is financed by public funds through 
a trust provided by MIDA in the National Bank of Panama.  
3.107.   To obtain credit support under PROMAGRO, an Agricultural and Agro -Industrial 
Modernization Project is submitted to the National Commission for Agricultural and Agro -Industrial 
Promotion and Modernization,  under MIDA. After evaluating the project, the Commission either 
approves or rejects it. The amount of the loans is determined on the basis of a percentage of the 
average cost of production, processing and marketing of each product ,133 as well as other fact ors 
considered by the Commission.134 The loans shall cover not more than 85% of the costs incurred by 
the producer during the preceding five years.135 The period of the loan shall be between nine and 24 
months, depending on the use of the financing, with a n ominal interest rate of 2%.136 These loans 
can be provided by any financial intermediation entity incorporated in Panama. To date, however, 
the Commission has not established any assessment  parameters for approving or rejecting loans . 
Thus, during the perio d 2014 -21, no projects have been financed through loans ; only direct financial 
assistance has been provided.  
3.108.   The products covered by the direct assistance and the amount thereof are set by the 
Commission.137 Financial assistance is a reimbursement to finance marketing costs; this support 
cannot be used for any other type of expenditure. Repayment takes place through a CFP, with the 
approval of the Commission. The CFP, like CEFA, can be used to pay any nationa l tax except 
municipal taxes.138 The amount of the CFP is calculated in a manner similar to that of CEFA, i.e. on 
the basis of an estimated average percentage of the costs of packing and packaging material and 
internal transport and freight.139 The list of C FP products and values can be updated and/or modified 
 
129 MICI (2019), Manual de Procedimientos del Incentivo Certificado de Fomento para la 
Agroexportación . Viewed at: 
https://intelcom.gob.pa/doc/otros/manual%20de%20proced.%20Cefa%202019.pdf . 
130 Law No.  82 of 31 December 2009.  
131 The list of products covered by  CEFA and th eir unit value is contained in Annex I of Law No. 82 of 
31 December  2009 and Executive Decree No. 179 of 27 December 2017.  
132 Law No.  105 of 21 November 2013.  
133 Production costs include genetic material; inputs for production; pest, disease and weed control s; 
partial costs on investments in equipment to be used in production and harvesting processes; construction and 
adaptation of production infrastructure; technological innovation; and technical assistance. Processing costs 
include: post -harvest infrastruct ure, handling and/or processing of agricultural products; machinery necessary 
for the conservation, management and/or processing of products in the primary production sector and/or 
partial costs of amortization or rental of post -harvest machinery; technolo gical innovation;  and technical 
assistance. Marketing costs (supply chain) include packing materials and packaging and internal transport and 
freight.  
134 Articles 12 , paragraph 1,  of Law No.  105 of 21 November 2013.  
135 Article 14 and Article 12, paragraphs 2 and 3 , of Law No.  105 of 21 November 2013.  
136 Articles 13 and 14 of Law No.  105 of 21 November 2013.  
137 Executive Decree No.  46 of 16 April 2014 and Executive Decree No.  1 of 13 January 2015.  
138 Article 23 of Law No. 105 of 21 Nov ember 2013.  
139 Article 23 of Law No. 105 of 21 November 2013.  WT/TPR/S/421 /Rev.1  • Panama  
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  if deemed necessary by the Commission, taking into account the outcome  of the public consultation 
mechanism140 that must  be conducted by the Commission and approved by the Executive.141 
3.2.4.6   Payment Certificat e (CPC)  
3.109.   The Directorate -General for Revenue (DGI) continues to grant Payment Certificates (CPC) 
to taxpayers that export or re -export goods.142 The CPC can be used to pay all taxes. In 2013, the 
fiscal cost of this instrument was PAB 1.4 million, while in t he first quarter of 2021 , it was 
PAB 376,404.34.  
3.2.5   Export financing, insurance and guarantees  
3.110.   As in 2014, there are currently no official export finance, insurance and guarantee 
programmes in Panama.143 MICI, through VICOMEX, is responsible for implementing t his type of 
programme.  
3.111.   Commercial banking is the main source of financing for exporters.144 However, in 2018, the 
Agricultural Development Bank of Panama (BDA) implemented the Programme supporting the 
production of fruit crops for export , under the concept of Precision Agriculture , to promote the 
production of fruit crops in high demand in the i nternational market.145 This Programme provides 
credit for export products such as avocado, citrus fruits, soursop, guava and mangoes. The 
maximum loan amount is PAB 250,000, with an interest rate of 1% and a grace period of three  to 
15 years.146 
3.2.6   Export prom otion  
3.112.   During the review period (2014 -21), there were a number of changes in the institutions 
responsible for promoting exports. Until 2019, the Investment and Export Promotion Agency 
(PROINVEX PANAMA), an entity attached to VICOMEX147, was responsible for e xport promotion.148 
In 2019, it was replaced by the Investment and Export Promotion Agency (PROPANAMA), attached 
to the Ministry of Foreign Affairs (MIRE).149 In 2021, the law establishing PROPANAMA as an 
autonomous agency with its own budget and independent administration  was ratified.150 
PROPANAMA assumed the functions of PROINVEX PANAMA, including  the promotion of goods and 
services in international markets t hrough the network of diplomatic missions.151 
3.113.   3.113. PROPANAMA developed the propanamaconnecta.com platform ,152 which came  into 
use in 2020 and replaced the panamaexporta.gob.pa portal.153 This platform provides companies 
(especially SMEs) with information on  international markets, as well as on procedures for importing 
and exporting and on financing.154 
 
140 Article 12 of Executive Decree No. 46 of 16 April 2014.  
141 Article 3 of Executive Decree No. 1 of 13 January 2015.  
142 Law No. 75 of 22 December 1976 and Law No. 59 of 24 March 1977.  
143 Information provided by the authorities.  
144 Panamanian Exporters Association (APEX). Viewed at: https://www.apexpanama.com/m anual -de-
exportacion/ . 
145 Informe de Gestión, November 2017 - October 2018, Agricultural Development Bank of Panama, 
p. 25. Viewed at: http://www.bda.gob.pa/web/phocadownload/2019/MEMORIA -BDA-2017-2018.pdf.  
146 Resolution No. 017 -2018 of 28 May 2018; and the Agricultural Development Bank of Panama. 
Viewed at: http://www.bda.gob.pa/web/phocadownload/TRANS -ENE20/RESOLUCION%20017 -
2018%20PRODUCCION%20DE%20CULTIVOS%20FRUTALES%20DE%20EXPORTACIN.pdf.  
147 Executive Decree No.  134 of 16 July 2010.  
148 Executive Decree No. 191-A of 27 August 2019.  
149 Executive Decree No. 181 -A of 27 August 2019.  
150 MICI, News dated 5 April 2021. Viewed at: https:// www.mici.gob.pa/noticias/presidente -sanciona -la-
ley-que-crea-la-autoridad -para-la-atraccion -de-inversiones . 
151 Ministry of Foreign Affairs (Official Journal of 27 August 2019). Viewed at: 
https://mire.gob.pa/presidente -cortizo -crea-propanama/ . 
152 Viewed at: https://mire.gob.pa/lanzamiento -de-la-plataforma -propanamaconecta/ . 
153 Viewed at: https://www.iadb.org/es/project/RG -T3453 . 
154 Viewed at: https://connectamericas.com/es/content/preguntas -frecuentes . WT/TPR/S/421 /Rev.1  • Panama  
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  3.114.   In addition, the Office for Trade Intelligence and Trade Capacity Building (INTELCOM) was 
established in 2019 under MICI155 to identify products that can be exp orted to markets where 
preferential access has been secured. INTELCOM works in a cross -cutting manner with MICI and 
PROPANAMA.  
3.115.   In order to promote the role of women in the economy and improve gender equality, MICI's 
General -Directorate for Export Promotio n is implementing the Mujer EmprendExport programme 
launched in 2021.156 It aims to improve the competitiveness of companies led by women exporters 
or women who have the potential to export , by providing them with technical assistance and 
training.157 
3.3  Measur es Affecting Production and Trade  
3.3.1   Incentives  
3.116.   Panama offers tax incentives to stimulate production, promote exports or increase 
investment in certain economic activities and/or provinces considered to be in the public interest.158 
Panama grants horizontal in centives through the different special regimes such as free zones, the 
SEM and EMMA special regimes and the City of Knowledge to attract investment and promote 
employment and the transfer of technology and knowledge. It also provides sectoral incentives, 
including tax incentives to support medicine and food production, banana production,159 
reforestation,160 mining, renewable energies,161 the film and audiovisual industry,162 call centres,163 
tourism,164 construction,165 and shipbuilding (section 4). Most sectoral incentives have not 
undergone any major changes since Panama's previous review in 2014.  
3.117.   Since 2014, there has been a tax credit of PAB 0.60 per gallon on purchases of bioethanol 
and biodiesel made from domestic raw materials mixed with petroleum spirits and used as biofuel. 
This tax credit is in place as an incentive to produce and use biofuel and to generate electricity using 
biomass. The credit may be used only against the ICCDP on fuels and petroleum products and is 
non-transferable.166 
3.3.1.1   Credit and financial incentives  
3.118.   The Agricultural Development Bank (BDA) is the only state development bank in Panama. 
Created in 1973,167 the Bank continues to provide financial assistance at preferential rates, through 
several c redit programmes.168 Interest rates range from 0% to 4%, depending on the programme. 
 
155 Executive Decree No. 23 of 20 March 2019.  
156 Viewed at: https://mici.gob.pa/promocion -general-de-exportaciones/programa -mujer -
emprendexport -2021. 
157 UNDP, press release, 11 August 2020. Viewed at: 
https://www.pa.undp.org/content/panama/es/home/presscenter/articles/2020/mujer -exporta -inicia-la-fase-
de-desarrollo -de-planes -de-internac.html . 
158 Viewed at: https://dgi.mef.gob.pa/Incentivos.p hp. 
159 Decree -Law No. 6 of 10 February 1998.  
160 Law No.  24 of 23 November 1992.  
161 Law No. 41 of 2012 (electricity generation for public electricity service); Law No. 42 of 20 April 2011 
(biomass); Law No. 44 of 2011 (wind power for public electricity service ); and Law No. 45 of 2004 
(hydroelectric power generation).  
162 Law No.  16 of 27 April 2012.  
163 Executive Decree No. 175 of 2011 and Article 70 of Law No. 32 of 5 April 2011.  
164 Law No.  80 of 8 November 2012.  
165 Cabinet Decree No. 44 of 17 February 1990.  
166 Viewed at: https://dgi.mef.gob.pa/Incen -Exo/G -Licuado.php ; and Law No. 42 of 20 April 2011 and 
Cabinet Decree No. 16 of 11 March 2014 . 
167 Law No.  13 of 25 January 1973.  
168 The Agro -Solidarity Programme, the National Restocking Programme, the Programme Supporting the 
Production of Fruit Crops for Export (under the concept of precision agriculture), the Women Agro -Entrepreneur 
Programme, the Programme for Sustainable Producti on in the Regions, the Mi Primer Crédito Agropecuario 
programme and the Climate Change Adaptation and Mitigation Programme.  WT/TPR/S/421 /Rev.1  • Panama  
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  Between 2014 and 2021, the BDA disbursed a total of PAB 293 million in loans to 13,000 
producers.169 
3.119.   The National Bank of Panama (BNP) is currently one of the pillars of the  country's economic 
recovery from the effects of the pandemic. The BNP is implementing the Opportunities Bank 
programme, which is part of the economic revitalization plan for microenterprises. Under the 
programme, microenterprises may, after receiving trai ning from the Authority for Micro, Small and 
Medium -Sized Enterprises (AMPYME), apply for loans of between PAB 2,000 and PAB 5,000 at a rate 
of between 6% and 9% for a period of up to 84 months. This programme focuses mainly on 
supporting five sectors: agr iculture, agribusiness, handicrafts, technology and tourism. In addition, 
as part of the action plan to revitalize the economy after the pandemic, the BNP is managing a 
PAB 150 million trust set up to provide loans to MSMEs through the Comprehensive Credit  
Programme for the Defence of the Production Sector and Employment.  
3.120.   The AMPYME offers training, technical assistance and financial intermediation services to 
support MSMEs.170 Enterprises are classified by gross income or annual turnover (Table 3.14).171  
Table 3.14Type of enterprise, 2021  
Type of enterprise  Gross income or annual turnover  
Microenterprises  < PAB 150,000  
Small ≥ PAB 150,000 < PAB 1 million  
Medium  ≥ PAB  1 million < PAB 2.5 million  
Source:  Law No.  8 of 31 May 2000.  
3.121.   The AMPYME implements several financial products: (i) PROFIPYME additional security for 
loans contracted by SMEs with financial entities in order to acquire fixed assets and working capital, 
which cover 60% to 80% of the l oan, depending on the type of activity; (ii) lines of credit of up to 
PAB 1 million for financial entities to allow them to grant loans of up to PAB  25,000 per enterprise 
to SMEs; (iii)  seed capital, which is a non -refundable contribution of up to PAB  1,000 to finance SME 
start-ups and is granted by means of a competition.172 In addition, SSEs listed in the AMPYME's 
register of businesses pay no income tax for two years following their registration and do not pay 
the annual interest surtax under the FECI on their loans. Furthermore, they have priority in public 
tendering proce dures.173 During the period 2014 -20, there were 15,847 registered MSMEs, of which 
4,178 were exempt from income tax.  
3.3.2   Standards and technical regulations  
3.122.   The provisions related to technical standardization, conformity assessment, accreditation 
and quality ce rtification are set out in the same laws that were in force in 2014. According to 
information provided by the authorities, no substantial changes have been made to those laws (Table 
3.15).  
Table  3.15 Legislati on governing the national quality system, 2021  
Standard  Subject  
Law No.  23 of 15 July 1997  Standardization, conformity assessment, 
accreditation and certification  
Executive Decree No. 55 of 6 July 2006  Accreditation  
Decision ( Resuelto ) No. 132 of 27 March 2006  Establishes the National Accreditation Council (CNA)  
Law No.  52 of 11 December 2007  Calibration and measurement  
Source:  WTO Secretariat.  
 
169 BDA. Viewed at: https://www.bda.gob.pa/primera -pagina/ ; and information pro vided by the 
authorities.  
170 Law No.  33 of 25 July 2000.  
171 Law No.  8 of 31 May 2000.  
172 During the period from 2014 to 2020, the programme provided PAB  5.7 million to finance the 
creation of 7,325 enterprises (information provided by the authorities); and information viewed at: 
http://www.ampyme.gob.pa/home/financiamientos.  
173 Articles 12 and  57 of Law No. 22 of 27 June 2006 (Single Text of 7 September 2020).  WT/TPR/S/421 /Rev.1  • Panama  
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  3.123.   MICI's Directorate -General of Standards and Industrial Technology (DGNTI) remains the 
only body authorized to develop standards and technical regulations in Panama. The DGNTI is also 
the national standardization body and the WTO enquiry point.174 The roles of the DGNTI have not 
changed substantially since 2014. As the national standardizatio n body, it develops, adopts or adapts 
standards for industry, trade and services. It is also authorized to establish agreements with national 
and international institutions and to conclude mutual recognition agreements with the bodies 
responsible for certi fying and inspecting testing and metrology laboratories. Moreover, it is 
responsible for monitoring and verifying compliance with technical standards and technical 
regulations and it penalizes manufacturers and importers.  
3.124.   Several institutions support the D GNTI with its work. One such institution is the Panamanian 
Industrial and Technical Standards Commission (COPANIT), which is composed of representatives 
from the public and private sectors. The Commission reviews draft standards prepared by the 
technical c ommittees and submits recommendations to the DGNTI during the period of public 
discussion. The DGNTI is also supported by the National Accreditation Council (CNA), which is 
responsible for accreditation, and the National Metrology Council (CNM), which deve lops 
metrology -related regulations.  
3.125.   The goal of the standardization policy is to develop voluntary technical specifications to be 
used as a benchmark for improving the quality and safety of technological, scientific and industrial 
activities as well as ser vices. Technical regulations are developed based on objectives that include 
national security requirements, the prevention of deceptive practices, the protection of human health 
or safety, the protection of animal or plant life or health, and the protectio n of the environment. 
Before a procedure to draft a technical regulation is initiated, the DGNTI evaluates whether the 
application reflects these objectives.  
3.126.   The procedures for developing national technical regulations have not changed substantially 
during  the period under review (Chart 3.3).  The procedure for preparing, updating and revising 
standards is the same, unless the public consultation process is conducted only at the national level. 
To make the technical standards and regulations official, the co rresponding Ministerial Resolution is 
drawn up without the technical content and is published in the Official Journal. Technical regulations 
are usually revised every five years, or when there is a request to revise, update or adapt them.  
Chart 3.4 The process for developing standards and technical regulations  
 
Source:  WTO Secretariat, based on information provided by the authorities.  
 
174 The TBT Information Management System of the WTO. Viewed at: http://tbtims.wto.org/en . 
WT/TPR/S/421 /Rev.1  • Panama  
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  3.127.   The DGNTI is also responsible for conformity assessment procedures, with the  support of 
other public institutions. It accepts foreign technical regulations that differ as equivalent, provided 
that they meet the objectives of the Panamanian regulations. It also establishes mutual recognition 
agreements for conformity assessment pro cedures. Before they place a product on the market, 
manufacturers and importers must prove that the product complies with relevant technical 
regulations by presenting a certificate of conformity issued by a certifying body. Panama recognizes 
certificates i ssued abroad. The sampling, testing and analysis required to obtain a certificate of 
conformity must be carried out by laboratories and inspection agencies that are duly accredited by 
the accreditation body.  
3.128.   The CNA is responsible for accrediting Panamanian or foreign public and private conformity 
assessment bodies (OECs).175 Its quality system and its accreditation processes are based on 
international accreditation standards (International Organization for Standardization (ISO) and 
ISO/International Electrical Commission (IEC)) and follow the guidelines of International Laboratory 
Accreditation Cooperation (ILAC), the International Accreditation Forum (IAF) and Inter -American 
Accreditation Cooperation (IAAC).176 The CNA currently offers a ccreditation services to testing 
laboratories, calibration laboratories and inspection bodies.177 
3.129.   The CNA notifies OECs of any changes in the accreditation requirements. OECs that are 
recognized, accredited or in the process of becoming accredited may use t he accreditation symbol. 
The CNA may fully or partially suspend accreditation for up to six months. During their suspension, 
OECs may not issue or use documents that mention accreditation or recognition. During the period 
under review, 19 OECs lost their a ccreditation. There were 58 accredited national bodies in 2021: 
31 testing laboratories (of which four are public), 3 calibration laboratories and 24 inspection bodies.  
3.130.   Between 2014 and 2021 (September), Panama notified the WTO of 74 new technical 
regulati ons on quality requirements; the protection of human, animal and plant health; protection 
of the environment; and consumer protection and information (labelling). Most are based on Central 
American Technical Regulations (RTCAs).178 Panama also notified the WTO of amendments to 19 
technical regulations that had already been notified. Between 2013 and 2021 (September), 
Panama's technical regulations were the subject of a specific trade concern raised before the WTO 
Committee on Technical Barriers related to th e harvest life and sprouting requirements of onions 
and potatoes.179 Panama has catalogues containing technical standards, technical guides and 
technical regulations. Panamanian technical standards and technical guides are sold at the DGNTI's 
Regulatory Inf ormation Centre.180 
3.3.3   Sanitary and phytosanitary measures  
3.131.   Since 2014, there have been no structural changes to the main legal instruments that 
regulate the phytosanitary system in Panama.181 However, since the animal and health situation at 
the global, regional and local levels is constantly evolving, new regulations are issued as required 
by circumstances.182 Furthermore, a law passed in 2021 modified the powers of the institutions that 
devel op and implement sanitary and phytosanitary measures.183 
 
175 Article 101 of Law No.  23 of 15  July 1997 and Executive  Decree No.  55 of 6  July 2006.  
176 The CNA is a full member of Inter American Accreditation Cooperation.  
177 Accreditation schemes: Testing Laboratories, subject to DGNTI -COPANIT ISO/IEC 17025:2017; 
Calibration Laboratories, subject to DGNTI -COPANIT ISO/IEC 17 025:2017; and Inspection Bodies, subject to 
DGNTI -COPANIT ISO/IEC 17020:2014.  
178 The Central American technical regulations currently in force in Panama are available at  
https://mici.gob.pa/acuerdos -comerciales -vigentes/protocolo -de-incorporacion -de-la-republica -de-panama -al-
sistema -de-integracion -centroamericana . 
179 The TBT Information Management Sy stem of the WTO. Viewed at: http://tbtims.wto.org/en . 
180 Viewed online: https://www.mici.gob.pa/normalizacion -tecnica/catalogos . 
181 Law No. 47 of  9 July 1996 (phytosanitary protection); Law No. 23 of 15 July 1997 (zoosanitary and 
agricultural quarantine measures); and Law No. 1 of 10 January 2001 (registration of medicines and other 
human health -related products).  
182 These regulations are DNSV Resol ution No. SO001 of 5 February 2021 (MIDA, National Directorate of 
Plant Health); Resolution No. OAL -102-ADM-2019 (MIDA), Official Gazette No. 28,866; Resolution 
No. OAL-001-ADM-2015 (MIDA), Official Gazette No. 27,717 (information provided by the authoriti es). 
183 Law No.  206 of 30 March 2021.  WT/TPR/S/421 /Rev.1  • Panama  
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  3.132.   When Panama's Protocol of Incorporation into SICA entered into force in 2013, the country 
adopted the Central American Regulations on Sanitary and Phytosanitary Measures and Procedures 
(COMIECO Resolu tion No. 271 -2011).184 As a result, it had to adopt certain changes to its 
SPS system to bring its measures into line with the measures in place in the rest of the region. The 
changes included those related to requirements for producing and marketing certif ied seeds of staple 
grains and soya and requirements for developing labels and pamphlets.185 
3.133.   The Panamanian Food Safety Authority (AUPSA), which used to issue safety standards for 
imported foods, including those in transit and transhipment, was dissolved in  2021 and replaced by 
the Panamanian Food Agency.186 MIDA is responsible for plant and animal health measures; the 
Ministry of Health is responsible for measures related to food safety, animal disease control and 
food-borne diseases; and MICI is responsible  for measures related to technical standards and 
management of the implementation of international trade agreements (Box 3.8).  
3.134.   APA is an autonomous state body subject to the policies and guidelines of the three ministries 
mentioned above. Through the Integ rated Procedures Scheme,187 APA ensures that food production, 
import, export, transit and transhipment requirements are met, in accordance with animal health, 
plant health, quarantine and safety regulations and international trade rules.  
Box 3.8 Institutions responsible for developing sanitary and phytosanitary measures, 2021  
Ministry of Agricultural Development (MIDA)  
National Directorate of Plant Health (phytosanitary measures) (DNSV)  
Develops phytosanitary measures for imported goods in transit and transhipment, except for food.  
Establishes quarantine for plants and plant products entering the country.  
Takes care of the export aspects of plants and plant products.  
National Animal Health Direct orate (animal health measures) (DINASA)  
Lays down the animal health requirements for importing live animals, products of animal origin, veterinary 
pharmaceuticals and biological, biotechnological, chemical and food products for animal consumption and use.  
Determines which areas, countries and regions have animal health conditions that make them eligible to 
export to Panama live animals and animal products other than those for human and animal consumption.  
Authorizes sites for livestock farms and operations on those farms in areas with a risk to animal health.  
Establishes a national epidemiological surveillance programme, based mainly on controlling the movement of 
animals and sampling at processing plants and animal production units.  
Regulates the use of biological, biotechnological and chemical products and veterinary medicines and food 
products exclusively used for and consumed by animals.  
Registers medicines, biological products and drugs for exclusive veterinary use.  
Executive Direct orate of Agricultural Quarantine (DECA)  
Carries out inspections and quarantines animals, plants and their by -products not deemed to be food at entry 
points into Panama.  
Issues plant and animal health import, transit and transhipment licences for live animals, non -food animal by -
products (leather), veterinary drugs, non -food plants and plant products, seeds, flowers, fertilizers, pesticides 
for agricultural use and wood packaging.  
Ministry of Health (safety and animal disease)  
Food Safety Department ( DEPA)  
Issues health registration certificates for domestic and imported food and beverages.  
Monitors and controls the food production and retailing chain.  
Certifies domestic and foreign food -processing plants.  
Issues export health certificates.  
Certifies compliance with good manufacturing practice, sanitation standard operating procedures and hazard 
analysis critical and control points.  
 
184 Text of the Protocol incorporating Panama into the Central American Economic Integration 
Subsystem (Annex 3.2: Instruments that Panama accedes to and adopts when the Protocol enters into force).  
185 Information provided  by the authorities.  
186 Law No.  206 of 30 March 2021.  
187 The roles of the Integrated Procedures Scheme include carrying out virtual formalities such as storing 
health records on domestic and imported food, processing food import notifications, processing sanitary 
operating permits, issuing certificates for the unrestricted sale of domestic food products, and providing 
phytosanitary certification for plants for human and animal consumption.  WT/TPR/S/421 /Rev.1  • Panama  
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  Animal Disease Monitoring and Control Department  
Prevents and monitors diseases in animals and in food of ani mal origin that are transmissible to humans.  
Source:  Information provided by the authorities.  
3.135.   The National Directorate for the Administration of International Trade Agreements and Trade 
Protection is responsible for notifications to the WTO. MIDA, through the DNSV, is the national 
enquiry point that was notified to the WTO.188 
3.136.   Between 2014 and 2021 (September), Panama submitted 18 regular SPS notifications to the 
WTO, none of which was an emergency measure. The SPS measures that Panama has notified t o 
the WTO are based on the recommendations of international organizations. The affected products 
include flours, meals and pallets of fish; molluscs; aquaculture fish, freshwater and saltwater fish, 
shrimps and prawns, lobsters, crabs and dairy produce. Pa nama also notified the WTO that it had 
abolished AUPSA and replaced it with APA. During the period under review, WTO Members raised 
five concerns regarding Panama's sanitary and phytosanitary measures. These concerns related to 
restrictions imposed on impo rts of animal and plant products in general, imports of specific products 
(beef and poultry meat, potatoes and onions) and delays in the renewal of authorizations for plants 
of fishery and livestock enterprises.189 In this context, Costa Rica requested WTO consultations 
regarding measures related to imports of certain products (DS599).190 
3.137.   All imports of live animals and plants, fresh fruit and vegetables, and grain are tested in the 
laboratory at the point of entry into the country to verify that they meet sa nitary and phytosanitary 
requirements. For all other products, random tests may be carried out at the border based on the 
product's risk and origin and the importer's background. Such tests take into account international 
sanitary or phytosanitary warnings  and any cases of non -conformity detected in  previous imports.  
3.138.   When products subject to a phytosanitary requirement established by the DNSV enter 
Panamanian territory, they must be accompanied by an import permit (plant and animal health 
import permit) iss ued by the Executive Directorate of Agricultural Quarantine (DECA). In accordance 
with phytosanitary standards, if a pest risk analysis (PRA) is required, DECA must inspect the 
imported plants, plant products and phytosanitary inputs imported before the sh ipment is 
released.191 Sometimes, samples are sent to official DNSV laboratories for analysis. Panama accepts 
laboratory analyses conducted in other countries if the laboratories are accredited, but reserves the 
right to carry out its own tests once the pro duct reaches Panamanian territory. Upon inspection and 
review of the import documents, the phytosanitary authority may require that the goods be 
processed, isolated, re -exported or destroyed at the cost of the importer. Inspections may be carried 
out at an y time. DECA carries out inspections and technical measures.192 
3.139.   If there is no phytosanitary import requirement, the DNSV shall establish one at the request 
of the user and/or importer. Once the DNSV's Section for Pest Risk Analysis and Phytosanitary 
Requirements has analysed the information provided by the importer (t ype of product being 
imported (seeds, grain, plants, seedlings, rooted cuttings, slips, rhizomes or tubers), the scientific 
and common name, the country of origin and provenance, and the supplier's details), determines 
whether or not to conduct a PRA study . If a PRA study is required, the DNSV will ask the National 
 
188 Information viewed at: 
http://spsims.wto.org/en/EnquiryPointsNotificationAuthorities/Search?countryCode=C591&filter= . 
189 SPS Information Management System of the WTO. Information viewed at: http://spsims.wto.org/ . 
190 The products c oncerned included strawberries, dairy products, bovine, pork, poultry and turkey meat 
products, fish food, fresh pineapple, and plantains and bananas. The case is in the consultations stage 
(consultations were requested on 11 January 2021).  
191 Phytosanitary  import requirements. Viewed at: 
https://www.mida.gob.pa/direcciones/direcciones_nacionales/direcci -n-nacional -de-sanidad -vegetal/requisitos -
fitosanitarios -para-importaci -
n.html#:~:text=DNSV%3A%20Direcci%C3%B3n%20Nacional%20de%20Sanidad,por% 20un%20solo%20Certi
ficado%20Fitosanitario . 
192 Viewed at: http://www.fao.org/faolex/country -profiles/en/  WT/TPR/S/421 /Rev.1  • Panama  
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  Plant Protection Organization for the information needed to certify the origin of the product or by -
product being imported and to develop the PRA study.193 
3.140.   Based on a risk assessment study, the Na tional Animal Health Directorate (DINASA) 
establishes the animal health requirements for introducing into Panama animals, animal products 
and by -products, medicines exclusive for veterinary use, and biological, biotech, chemical and food 
products used for and consumed by animals. Likewise, it authorizes certain areas, countries and 
regions to export to Panama live animals and animal products other than those for human and 
animal consumption. When an importer first imports live animals, products of animal or igin or plants 
or products of plant origin, pre -inspection at origin of the processing facilities or processing plants 
is required. This is done by through a risk analysis by DINASA that follows the recommendations of 
the relevant international organizatio ns (such as the World Organisation for Animal Health). Based 
on the analysis, DINASA proposes animal health standards for the import, export, transit and 
movement of live animals and supervises and monitors compliance with the standards. Sanitary 
measures may be imposed through a law, executive decree, ministerial decision ( resuelto ) or 
resolution.194 
3.141.   A plant and animal health import permit is required to import live animals and animal 
products. The competent authority in the country of origin must certify t hat the product to be 
exported meets the corresponding animal health requirements. These permits are issued by DECA 
before the goods reach Panamanian territory. If all the correct information is provided, approval of 
the permits normally takes 24 -48 hours.  DECA reserves the right to assess, approve or reject an 
application. Once the goods reach Panamanian territory, DECA may decide to quarantine animals, 
as well as any animal products or by -products if it is suspected or it is clear that they cause damage 
to the health of animals. When it is confirmed that the goods are dangerous, DECA may determine 
their destination. Goods or products that are considered dangerous may be returned or destroyed, 
with the applicant or importer responsible for all costs. When t he licence application is for live 
animals, a spot must be requested at the quarantine stations before the permit is authorized. The 
live animals must then be quarantined at one of Panama's two stations, which are in Tocumen and 
Paso Canoa.195 Animals in tr ansit must also be quarantined at one of the stations.  
3.142.   Since 2021, food safety has been the responsibility of the Ministry of Health after the 
Government abolished AUPSA, the organization previously responsible for issuing manuals 
containing the procedures  and instructions for importing food.196 197 The National Food Inspection 
and Veterinary Supervision Directorate is responsible for monitoring, prevention and control in terms 
of the quality and hygiene of food for human consumption and in terms of foodborne illnesses.198 
MICI is responsible for the purely commercial formalities required for food imports.  
3.143.   Panama allows the import of genetically modified products. The National Biosafety 
Commission for genetically modified organisms issues decisions ( resueltos ) approving and refusing 
entry to imports ba sed on a risk analysis conducted by the corresponding Sectoral Biosafety 
Committee (agricultural, environmental and public health).  Depending on the outcome of the risk 
analysis and the use of the genetically modified organisms (import, export, production or 
consumption), the Committee approves or rejects the import and issues a recommendation to the 
Commission.  
 
193 DNSV Communiqué 001 - 2017. Viewed at: 
https://www.mida.gob.pa/direcciones/direcciones_n acionales/direcci -n-nacional -de-sanidad -vegetal/requisitos -
fitosanitarios -para-importaci -n.html.  
194 Information provided by the authorities.  
195 Manual de Usuario: Sistema Fitozoosanitario integrado de importación, tránsito y exportación de la 
Dirección Ejecu tiva de Cuarentena Agropecuaria del MIDA . Viewed at: 
https://www.mida.gob.pa/upload/documentos/manualusuarioexterno -2015.pdf.  
196 AUPSA Resolutions. Viewed at: http://200.46.196.152/ aupsa/ResolucionesAdministrativas.asp . 
197 Law No.  206 of 30 March 2021.  
198 Executive Decree No.  770 of 17 May 2021.  WT/TPR/S/421 /Rev.1  • Panama  
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  3.3.4   Competition policy and price controls  
3.3.4.1   Competition policy  
3.144.   Competition policy and consumer protection in Panama are regulated by the Constitution199 
and by Law No. 45 of 31 October 2007 and its implementing Regulations.200 No substantial changes 
have been made to competition policy since 2014, though certain provisions related to consumer 
protection have been amended.201 In addition, during the period un der review, the Authority for 
Protection of the Consumer and Defence of Competition (ACODECO) published various guides to 
clarify the legal provisions on competition. These include a guide on the programme to waive or 
reduce penalties (2015) and one on cor porate conformity programmes (2018).202 
3.145.   In principle, all public and private operators operating in Panamanian territory or abroad 
whose operations affect competition in the Panamanian market are governed by Law No. 45. 
Law No. 45 does not apply to state mo nopolies, which currently exist for electricity transmission and 
postal services, or to activities that are not under concession (activities resulting in bets being placed 
and the activities of the Panama Canal). There are also sectoral provisions that reg ulate competition 
in the electricity and telecommunications markets (section 4).  
3.146.   ACODECO is the body responsible for implementing competition policies and verifying that 
they are adhered to in all sectors. It carries out investigations, either ex officio  or at the request of 
a party, and penalizes anti -competitive practices. ACODECO monitors the various markets and, if it 
observes evidence of a monopolistic practice within the scope of application, it initiates an 
investigation ex officio .203 It is also resp onsible for approving economic concentrations in all sectors 
of the economy, even though there are sectoral provisions on the subject.  
3.147.   Anti-competitive practices are generally prohibited, but the law authorizes such practices if 
they make the economy more efficient, such as by increasing production or improving distribution 
and marketing.204 Furthermore, practices that restrict competition in the market are not prohibited 
if they are adopted to protect intellectual property rights.  
3.148.   Cartels are prohibited in Panama and are penalized. A clemency programme exists for 
economic operators, whether companies or individuals, who participate in a cartel and report it to 
ACODECO, but only the first economic operator to provide enough evidence to determine the 
existence  of the cartel is eligible for the programme.205 Under the clemency programme, the fine 
may be reduced (by 50%) or waived.206 No economic operators took advantage of the programme 
during the period under review.  
3.149.   In anti -competitive practice investigations, A CODECO must determine whether the operator 
has substantial power in a relevant market. It does so by assessing the operator's market share 
(no threshold is specified) and capacity to unilaterally fix prices, as well as whether there are any 
entry barriers and how accessible inputs are.207 In the telecommunications sector, the criteria are 
set by ASEP (section 4.4.2).  
3.150.   During the period under review, ACODECO initiated 61 investigations into alleged anti -
competitive practices, of which 39 were initiated ex officio . Penalties were imposed on 52  operators, 
mainly for absolute monopolistic practices (50 operators) in the beer production, petroleum refinery, 
 
199 Articles 49, 282 -284, 295 and 298.  
200 Executive Decree No. 8 -A of 22 January 2009 and Executive Decree No. 46 of 23  June 2009.  
201 Articles 36 and 56 of Law No. 45, as amended by Law No. 34 of 2 August 2016; and Articles  35, 46, 
47, 81, 100, 115 and 127 of Law No. 45, as amended by Law No. 14 o f 20 February 2018.  
202 Information provided by the authorities and by ACODECO. Viewed at: 
https://www.acodeco.gob.pa/view.php?arbol=2&sec=3&pagi=0.  
203 Article 2 of Law No. 45 of 31 October 2007.  
204 Article 5 of Executive Decree No. 8 -A of 22 January 2009.  
205 Markets leaders and cartel founders are not eligible (Article 104 of Law No. 45 of 31  October  2007).  
206 Article 130 of Law No. 45 of 31 October 2007; Article 31 of Executive Decree No. 8 -A of 
22 January  2009; and ACODECO's Resolution No. A -064-15 of 10 July 2015 (Guide to the Programme to Waive 
or Reduce Penalties); and ACODECO. Viewed at: https://www.acodeco.gob.pa/clemencia.php.  
207 Article 19 of Law No. 45 of 31 October 2007.  WT/TPR/S/421 /Rev.1  • Panama  
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  advertising services, laundry and ironing, and customs brokerage sectors; two appeals were lodged 
(Table 3.16).  
Table  3.16 Competition statistics, 2014 -21 
 2014  2015  2016  2017  2018  2019  2020  2021  
Investigations initiated  8 12 11 8 10 7 3 2 
Absolute monopolistic 
practices  6 11 7 3 3 3 0 1 
Relative monopolistic 
practices  2 1 4 5 7 4 3 1 
Ex officio  8 6 8 5 4 5 2 1 
At the request of parties  - 6 3 3 6 2 1 1 
Practices penalized  16 0 0 0 17 1 0 18 
Absolute monopolistic 
practices  16 0 0 0 16 0 0 18 
Relative monopolistic 
practices  0 0 0 0 1 1 0 0 
Appeals lodged  0 0 0 0 1 1 0 0 
Economic concentrations  1 6 4 2 4 3 2 0 
Authorized  1 5 3 2 3 3 2 0 
Authorized subject to 
conditions  0 1 1 0 1 0 0 0 
Rejected  0 0 0 0 0 0 0 0 
Source:  ACODECO. Viewed at: http://www.acodeco.gob.pa/acodeco/view.php?arbol=4&sec=17&pagi=0.  
3.151.   Under Law No. 45, economic concentrations are defined as mergers, acquisitions and, more 
generally, any takeover of control by one economic operator from another. There is no obligation in 
Panama to notify an economic concentration to ACODECO ex ante  or ex post ; notification is 
voluntary. However, once the economic concentration has been notified to ACODECO and authorized 
by the organization, it cannot be contested. Although this provision se ems like an incentive to notify 
ADODECO, it is not. Concentrations that are not notified may be contested only for a period of three 
years.208 
3.152.   Economic concentrations notified to ACODECO may be denied if they violate competition. 
Nevertheless, those that vi olate competition, including through the effects referred to in Article  21 
of the Law, may be accepted if ACODECO considers that these effects are offset by efficiency 
gains.209 ACODECO may also impose certain operating conditions to remedy any anti -competi tive 
effects of the economic concentration.210 
3.3.4.2   Price controls  
3.153.   The Constitution (in Article  284) allows the prices of goods (especially basic goods) and 
services of any kind to be controlled. Law No. 45 stipulates that, generally, price controls should be 
exceptional measures imposed when there are distortions in the reference markets. The controls 
should be implemented temporarily (for an initial period of six months that is renewable). In 
principle, they may be used only for goods with import tariffs above 40%. For hydrocarbons, 
petroleum products and basic goods, however, prices may be regulated irrespective of the tariff 
level.211 
3.154.   During the period under review, Panama continued to regulate the prices of liquid fuels 
(petrol and diesel). In 2014, it began t o regulate the price of liquefied petroleum gas (LPG) and the 
price of goods in the basic basket. On each occasion, the control was initially imposed as a temporary 
measure (for six months), but was extended because the original circumstances that gave ris e to 
the control still existed. The prices of the aforementioned goods therefore remain regulated as of 
2021. According to the authorities, the prices are still regulated to ensure that consumers have 
access to basic foods and LPG, which is widely used to cook. Fuel prices are still regulated because 
 
208 Articles 21, 25 and 26 of Law No. 45 of 31 October 2007.  
209 The efficiency gains m entioned in the legislation improvements are better production or marketing 
systems; technical or economic progress; improvements to the competitiveness of an industry; and 
contributions to consumer interests (Article 22 of Law No. 45 of 31 October 2007).  
210 Article 25 of Executive Decree No. 8 -A of 22 January 2009.  
211 Articles 199 -201 of Law No. 45 of 31 October 2007.  WT/TPR/S/421 /Rev.1  • Panama  
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  distortions still exist in this market. Prices are published in executive decrees issued by the 
Ministry  of the President's Office (liquid fuels and LPG) and by MICI (basic basket).  
3.155.   The Secretariat of Energy ca ps liquid fuel retail prices based on their location. The price is 
reviewed every 14 days, taking into account changes in import parity prices, transport costs and 
profit margins.212 When there are large fluctuations in world prices, the frequency of price reviews 
may be reduced to less than 14 days to properly reflect those fluctuations. This occurred in 2021, 
when it was announced that prices would be reviewed every seven days.213 The Secretariat of Energy 
also sets wholesale and retail prices for LPG cylinders. These prices are set on a per -unit basis for 
each province.214 LPG cylinder retail prices are subsidized.215 
3.156.   In 2014, MICI started to set maximum consumer prices for certain products in the basic 
basket.216 Maximum consumer prices are set as the "world price plus a tariff or the domestic price", 
whichever is the lower, plus a "reasonable overall profit" margin. The maximum retail price is set 
per unit. MICI also sets a 10% mark up for products that do not require refrigeration and 15% for 
those that do. The Price Adjustment Commission, set up in 2014, reviews the maximum consumer 
price at the request of one of the parties or ex officio .217 
3.157.   The prices set by MICI are used throughou t the country, except in the province of Darién 
and on the islands, where they are set by the Price Adjustment Commission. According to the 
authorities, however, the Commission has not set prices in these places since 2014.  
3.158.   In 2014, price regulations were in place for 22 of the products in the basic basket. This 
number was reduced during the period under review, and since 2019 only 14 products have prices 
that are regulated: powdered milk, white loaf bread, babilla  (thick flank), beefsteak, ground meat, 
whole Panama chicken, premium -grade rice, yellow onions, Indian yam, domestically produced 
potatoes, domestically produced tomatoes (plum or 3x3), cassava, processed yellow cheese, and 
sausages containing meat.218 As of 2021 (September), the prices of these 14  products were subject 
to controls.219 ACODECO monitors the selling price of the other products that form the basic basket. 
Retailers must inform ACODECO of price increases at least five days in advance.  
3.159.   ACODECO also monitors the selling price of certain me dicines.220 Pharmacies must update 
their prices each month, which, since 2020, they do through ACODECO's website.221 In 2020, to 
ensure access to the goods needed during the pandemic, MICI set the markup or selling price for 11 
types of basic personal hygien e, cleaning and consumer products, including masks and disposable 
gloves, antibacterial products and alcohol for external use. For example, the selling price of 
disposable face masks must not have a markup of more than 15%; for the other products, the 
markup must not exceed 23%. Price controls were initially introduced for a period of three months, 
which was extended for another six months. This measure was still in place  in September 2021 .222  
3.160.   Electricity tariffs (section 4.2) and passenger land transport t ariffs are still regulated in 
Panama.  
 
212 Information provided by the authorities; Executive Decree No. 20 of 25 January 2013; and Executive 
Decree No.  284 of 24 May 2021 (last price -regulation extension).  
213 Secretariat of Energy. Viewed at: https://www.energia.gob.pa/precios -de-combustibles -disminuyen -
entre -un-28-y-16/. 
214 Executive Decree No. 558 of 23 July 2014; Executive Decree No. 283 of 24 May 2021 (most recent 
price-regulation extension); and information provided by the authorities.  
215 Information provided by the authorities.  
216 Executive Decree No. 165 of 1 July 2014; and Executive Decr ee No. 26 of 7 January 2021 (most 
recent price -regulation extension).  
217 The Price Adjustment Commission is formed by the Minister for Trade and Industry, the Minister for 
Agricultural Development and the Minister for Economy and Finance.  
218 Decree No.  97 of 1 July 2019; and information provided by the authorities.  
219 Executive Decree No. 165 of 1 July 2014, as amended by Executive Decree No.  97 of 1 July 2019.  
220 Article 98 of Law No. 1 of 10 January 2001.  
221 Article 5 of Ministry of Health Resolution No. 774 o f 7 October 2019.  
222 Information provided by the authorities; Executive Decree No. 114 of 13 March 2020; and Executive 
Decree No.  89 of 30 June 2021 (the most recent price -regulation extension).  WT/TPR/S/421 /Rev.1  • Panama  
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  3.3.5   State trading, state -owned enterprises and privatization  
3.161.   Panama has notified the WTO that it does not have any State trading enterprises within the 
meaning of Article  XVII of the GATT,223 and that it has not had any since 2019.  
3.162.   Since the previous review, there have been no substantial changes to the number or the 
functions of state -owned and semi -public enterprises in Panama (Table 3.17).  
Table  3.17 Public and semi -public enterprises, 2014 and 2021  
(%) 
Enterprise  State holding  
2014a State holding  
2021  
Public enterprises    
Panamanian Maritime Authority  100.00  100.00  
National Bingos  100.00  100.00  
Civil Aviation Authority  100.00  100.00  
National Water Supply and Sewerage Company  100.00  100.00  
Agricultural Marketing Institute  100.00  100.00  
Empresa de Generación Eléctrica, S.A.(EGESA)  100.00  100.00  
Mercados Nacionales de la Cadena de Frío, S.A.  100.00  100.00  
Metro de Panamá, S.A.  100.00  100.00  
Transporte Masivo de Panamá, S.A.  100.00  100.00  
National Welfare Lottery  100.00  100.00  
Colón Free Zone  100.00  100.00  
Panama -Pacific Area Agency  100.00  100.00  
Household Waste Collection Authority  100.00  100.00  
Semi -public enterprises    
AES Panamá, S.A. (La Estrella, Los Valles and Bayano hydroelectric power 
stations)  50.39  50.39  
Empresa de Distribución Eléctrica Metro -Oeste (EDEMET)  48.24  48.2 
Empresa de Distribución Eléctrica Chiriquí (EDECHI)  49.00  49.00  
Elektra Noreste S.A. (ENSA)  48.25  48.25  
Empresa de Generación Bahía las Minas  49.00  49.00  
Cable & Wireless Panamá, S.A.  49.00  49.00  
Enel Fortuna  49.90  49.90  
Energía y Servicios de Panamá, S.A.  47.96  47.96  
Panama Ports Company  10.00  10.00  
Petroterminal de Panamá, S.A.  50.00  50.00  
Other state entities    
Aeropuerto internacional de Tocumen, S.A.  100.00  100.00  
Empresa de Transmisión Eléctrica, S.A.  100.00  100.00  
Empresa Nacional de Autopista, S.A.  100.00  100.00  
a WTO Document WT/TPR/S/301/Rev.1 of 14 October 2014.  
Source:  Information provided by the authorities; WTO document WT/TPR/S/301/Rev.1 of 14  October  2014; 
and Law No. 176 of 13 November 2020, Title IV, Chapter I, Article 166.  
3.163.   The Directorate of Investment, Conc essions and Risks of the State (DICRE), established in 
2009, is responsible for assessing how semi -public enterprises operate and perform.224 In 2020, 
DICRE's functions were expanded to include participation on the boards of directors of incorporated 
state-owned enterprises, semi -public enterprises and subsidiaries (with a right to speak); previously, 
it participated only in semi -public enterprises. In addition, DICRE is now in charge of administering 
public trusts that do not issue debt where MEF participat es as the settlor.225 In 2020, DICRE 
evaluated the performance of 10 semi -public enterprises in the electricity, telecommunications and 
transport sectors. These enterprises have total assets of PAB  6,297 million and employ more than 
9,000 workers. Since 201 4, they have contributed PAB  1,111.54 million to the State in dividends. 
The process for evaluating other public enterprises is mandated in Decree No. 605 of 23 November 
2020.  
 
223 WTO documents G/STR/N/15/PAN, G/STR/N/16/PAN, G/STR/N/17/PAN  and G/STR/N/18/PAN of 
10 June 2020.  
224 Executive Decree No. 110 of 4 August 2009.  
225 Executive Decree No. 605 of 23 November 2020.  WT/TPR/S/421 /Rev.1  • Panama  
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  3.3.6   Government procurement  
3.164.   Law No. 22 of 27 June 2006 and its implementing Regulatio ns226 govern the procurement of 
goods, services and works by public entities and enterprises, except for purchases by the Panama 
Canal Authority (ACP) and the Social Insurance Fund (CSS), which are subject to separate 
procurement regulations.227 Procurement for public -private partnership projects is regulated by Law 
No. 93 of 19 September 2019. Panama periodically reviews Law No. 22. Following each review, it 
publishes a single harmonized text containing a complete version of the updated legislation; the 
version currently in force is the Single Text of 7 September 2020. Since the previous review in 2014, 
Panama substantially revised Law No. 22 in 2016, 2017 and 2020.228 
3.165.   Panama participates as an observer in the Committee on Government Procurement 
established un der the plurilateral Agreement on Government Procurement.  
3.166.   Panama's government procurement system has undergone various changes since 2014, 
including the adoption of new procurement methods and thresholds, new conditions for employing 
those methods, and pre ferences awarded to certain types of companies. Furthermore, the authorities 
state that they have removed bureaucracy from the procurement process; promoted social and 
environmentally responsible procurement; introduced the use of bid bonds for tenders wor th more 
than PAB  500,000; introduced a 15 -day period for the contract to be signed once it has been 
awarded; introduced provisions to protect the State from artificially low bids; and approved the 
Integrity Pact (i.e. provisions to make the procurement pro cess more transparent).  
3.167.   In Panama, each entity carries out its government procurement processes. The 
Directorate -General of Government Procurement (DGCP) regulates and monitors procurement 
processes and manages the electronic government procurement system known as PanamaCompra. 
Since 2021, it has been mandatory to use this system whenever it is technically possible to do so.229 
Also since 2021, the DGCP has been working to standardize general aspects of procurement 
processes, remove potentially "excessive" b ureaucracy and develop a government procurement 
guide for economic operators.230 To improve transparency, it also created the Government 
Procurement Digital Observatory in 2021 to disseminate information on government procurement 
and to provide a digital ch annel through which the public could lodge complaints.231 
3.168.   Foreign nationals may participate in government procurement processes in Panama and are 
accorded the same treatment as Panamanian nationals, provided that they do not originate from a 
State that imposes discriminatory restrictions on Panama. Law No. 22 requires all bidders to be 
given equal treatment in the procurement process.232 Nevertheless, in 2020 Panama introduced 
measures that favour local providers in certain procurement processes. For inst ance, for works 
contracts worth up to PAB  5 million, the procuring entity may invite bids only from domestic 
companies.233 Furthermore, since 2020, local businesses and MSMEs have been given a 5% margin 
of preference in minor contracting.234  
3.169.   Methods for pro curing goods, services and works that existed in Panama are minor 
contracting, various modalities of tenders, the exceptional procurement procedure and the special 
procurement procedure, the latter having been added in 2017 (Table 3.18). Since the previous  
review, two tender modalities have been abolished because they were deemed "ineffective and 
bureaucratic": abbreviated tendering in 2018 and best value tendering with separate evaluation 
in 2020. In general, all bidders may participate in a tender, but bi dders can be preselected when so 
 
226 Executive Decree No. 439 of 10 September 2020.  
227 Procurement by the CSS is governed by the Regulation governing Chapter IV, on Procurement of 
Works, Provision of Goods and Provision of Services (Resolution No. 38.491 -2006-JD of 21  February  2006). 
Viewed at: http://www.css.gob.pa/normasreglamentos.html . 
228 The amendments are in Law No. 153 of 8 May 2020, Law No. 61 of 27 September 2017 and Law 
No. 12 of 19 May 2016.  
229 Articles 70 and 72 of Executive Decree No. 439 of 10 September 2020; and Law No.  153 of 
8 May 2020.  
230 Information provided by the authorities.  
231 Article 38 of the Single Text of 7 September 2020; and Law No. 153 of 8 May 2020.  
232 Article 25 of the Single T ext of 7 September 2020.  
233 Article 11 of the Single Text of 7 September 2020.  
234 Articles 12 and 57 of the Single Text of 7 September 2020.  WT/TPR/S/421 /Rev.1  • Panama  
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  required by the complexity and technical characteristics of the project.235 Since 2020, bidders may 
also be preselected in tenders for goods intended for people living in multidimensional poverty.236 
Law No. 22 does not indicate which procurement method is preferred.  
Table  3.18 Government procurement methods used between 2014 and 2021  
 Thresholds (PAB)  Contractor selection criteria  
2014 - 
17 2017 -20 From 
2020  
Minor 
contracting  ≤ 30,000  ≤ 30,000  ≤ 50,000  The cheapest quotation is selected.  
Tendering      
Open tendering  > 30,000  > 30,000  > 50,000  The lowest bid is selected.  
Best value 
tendering  > 30,000  > 100,000  > 500,000  Several criteria are evaluated (technical, 
economic, administrative and financial). A 
score is awarded for each criterion. The bid 
with the highest score is selected.  
Price is one of the criteria (but is not the 
deciding factor). Since 2017, the price mus t 
not score fewer than 40 points or more 
than 49 points (out of 100); previously, it 
had to score no fewer than 30 points and 
no more than 50 points.  
Best value 
tendering with 
separate 
evaluation  Any amount  > 100 
million  Abolished  Similar to best value tendering, but 
technical and economic bids are evaluated 
separately.  
Abbreviated 
tendering  > 30,000  Abolished  - Similar to open tendering or best value 
tendering, as determined by the procuring 
entity, but the time limits for completing 
the procure ment were shorter. This method 
was used only for urgent or social 
purchases.  
Tendering under a 
framework 
agreement  Goods and 
services: 
any 
amount; 
works: 
250,000  Goods and 
services: 
any 
amount; 
works: 
250,000  Goods, 
services 
and works: 
any 
amount  Contra ctors included in the Virtual Store 
(known as the Electronic Catalogue until 
2020) are selected. For inclusion in the 
Virtual Store, the lowest bid is selected.  
Reverse auction  Any amount  Any amount  Any 
amount  The lowest bid compared with the reference 
price set by the procuring entity is selected.  
Exceptional 
procurement 
procedure  Any amount  Any amount  Any 
amount  The supplier is selected directly.  
Special 
procurement 
procedure  Did not exist  Any amount  Any 
amount  The supplier is selected directly.  
Source:  WTO Secretariat, based on Law No. 153 of 8 May 2020 and Law No. 61 of 27 September 2017.  
3.170.   During the period under review, the thresholds that determine which procurement method 
is used were raised twic e – once in 2017 and once in 2020. Since 2020, tendering under a framework 
agreement can be used to award contracts for public works irrespective of the value of the contract; 
previously, this method was allowed only for contracts worth no more than PAB 25 0,000.  
3.171.   Until 2020, procuring entities could use the exceptional procurement procedure, which 
allowed them to select the supplier directly if there was not enough time to organize a selection 
process or when there was only one supplier of the good or servic e being procured.237 Since 2020, 
if the contract exceeds PAB 300,000, regardless of the circumstances, the procuring entity must 
request three bids.238 In addition, depending on the amount, purchases must be approved by one 
 
235 Article  65 of the Single Text of 7 September 2020.  
236 Information provided by the authorities. Multidimensional pove rty is measured by simultaneously 
looking at people's deprivation in several areas, such as education, housing, basic services, health and labour 
(Ministry of Social Development (2020), Índice de Desarrollo Social . Viewed at: https://www.mides.gob.pa/wp -
content/uploads/2020/09/IPM_Digital -9.pdf).  
237 Article 79 of the Single Text of 7 September 2020.  
238 Information provided by the authorities.  WT/TPR/S/421 /Rev.1  • Panama  
- 88 - 
  of three different entities: the D GCP239 (up to PAB  300,000), the National Economic Council (between 
PAB 300,000 and PAB 3 million) or the Cabinet Council (over PAB 3 million). Contracts awarded must 
also be countersigned by the Office of the Comptroller -General of the Republic.240  
3.172.   The spec ial procurement procedure, introduced in 2017, is also used for direct purchases. 
This method is used in particular to hire legal services for up to PAB  3 million for lawsuits in foreign 
courts, including in international courts of arbitration. Contracts a warded through the special 
procurement procedure must also be endorsed by the Office of the Comptroller -General of the 
Republic.241 In March 2020, in response to the pandemic, the Government authorized the use of the 
special procedure to procure goods, serv ices and works for a period of 18 months and a maximum 
of PAB 50 million.242 
3.173.   In 2020, the method most frequently used for government procurement, which amounted 
to PAB 5,394.5 million, was best value tendering with separate evaluation (Table 3.19). During t he 
period under review, however, best value tendering was, in general, the most commonly used 
method in Panama. In 2020, due to the pandemic and adverse climatic events, two procurement 
methods were introduced to deal specifically with the emergency: envir onmental emergency 
procurement and COVID -19 roundtable procurement (Table 3.19).  
Table  3.19 Government procurement indicators, 2014 -20 
  2014  2015  2016  2017  2018  2019  2020  
Total (PAB million)  2,810.6  2,817.4  4,694.7  4,433.6  3,324.0  2,595.2  5,394.5  
By method  (% of total)  
Minor contracting  8.0 11.2 5.9 6.6 9.8 11.1 4.1 
Open tendering  4.7 12.2 10.8 11.2 13.9 11.5 5.6 
Best value tendering  40.7 27.6 54.6 41.2 40.1 20.7 19.6 
Best value tendering with 
separate evaluation  0.9 3.4 n.a. n.a. 2.6 6.8 46.5 
Abbreviated best value tendering  7.1 9.9 4.9 4.2 0.5 n.a. n.a. 
Abbreviated tendering by price  3.9 8.8 3.7 2.5 1.0 n.a. n.a. 
Purchases from a catalogue  5.4 5.1 3.5 4.7 4.9 4.9 1.6 
Auction  1.1 0.3 0.1 0.2 0.4 0.3 - 
Single tendering  12.5 9.3 7.4 8.1 1.5   
Special procedure  n.a. n.a. n.a. n.a. 0.2 0.6  
Exceptional procedure      10.1 12.0 5.4 
Environmental emergency 
procurement  n.a. n.a. n.a. n.a. n.a. n.a. 0.1 
COVID -19 roundtable 
procurement  n.a. n.a. n.a. n.a. n.a. n.a. 10.7 
Social Insurance Fund (Law No. 
51) 14.5 6.8 8.4 13.6 12.3 26.4 5.4 
IDB open tendering  0.8 5.1 0.6 7.5 2.5 3.7 0.6 
World Bank open tendering  0.4 0.3 - 0.2 0.1 1.9 0.3 
By type of purchase  (% of total)  
Goods  30.0 29.9 23.5 28.6 30.1 43.5 17.8 
Services  56.7 19.2 14.8 18.7 24.2 25.7 16.1 
Works  8.0 45.8 58.2 48.0 40.7 25.6 64.5 
Other (consultancy services)  5.4 5.1 3.5 4.7 5.0 5.2 1.6 
n.a. Not applicable (i.e. the method does not exist or is no longer used).  
- Negligible (i.e. a very small percentage that is close to 0.0%).  
Source:  Information provided by the authorities.  
3.174.   The Panama Canal Authority (ACP) has its own Procurement Regulations and uses its own 
Internet tendering system. During the period under review, several amendments were made to the 
Regulations in respect of the government procurement procedures used by the ACP.243  
 
239 From 2014 to 2017, government procurements were approved by MEF (Law No. 61 of 
27 September  2017).  
240 Article 2.6 of the Single Text of 7 September 2020.  
241 Article 84 of the Single Text of 7 September 2020.  
242 Cabinet Resolution No. 11 of 13 March 2020.  
243 The Procurement Regulations (Agreement No. 24 of 4 October 1999) have undergone several 
changes since 2014, through Ag reement No. 285 of 24 November 2015, Agreement No. 322 of 
22 January  2018, Agreement No. 331 of 25 September 2018, Agreement No. 338 of 17 January 2019, 
Agreement No.  350 of 29 August 2019, Agreement No. 354 of 19 November 2019 and Agreement No.  363 of WT/TPR/S/421 /Rev.1  • Panama  
- 89 - 
  3.175.   During much of the period under review, the ACP used five procurement methods 
(Table  3.20). Several changes were made during the period under review: since 2015, restricted 
procurement has been the sole method used for ship chartering contracts (previously, any method 
could be used); in 2018, the streamlined procurement method used for cont racts of PAB  1,000 to 
PAB 100,000 was abolished; in the same year, the threshold for using the tendering method was 
also changed (from PAB  100,000 to PAB 1,000); and since 2018, it is prohibited to contract external 
auditing services from the same supplier  on two consecutive occasions (unless authorized to do so 
by the Board of Directors). In 2019 and 2020, the Procurement Regulations were also amended, 
including the introduction of new reasons for not allowing participation in the procurement process. 
According to the Procurement Regulations, the preferred method must be tendering, and more 
specifically, open tendering on the basis of the lowest price.244 According to the authorities, the ACP 
does not maintain any reservations or preference margins for domes tic suppliers.  
Table  3.20 Government procurement methods used by the ACP in 2021  
Method  Threshold  Contractor selection criteria  
Until 2018  After 2018  
Quotations (minor 
procurement)  < PAB 1,000  < PAB 
1,000  The cheapest quotation is selected. However, "low -
value" purchases are purchased directly, at the retail 
price, in shops (whether physical or digital) 
established in Panama.  
Streamlined 
procurement  > PAB 1,000  
< PAB 
100,000  Repealed  The lowest bid is selected.  
Tendering    
Open tendering on the 
basis of the lowest price  
> PAB 
100,000  > PAB 
1,000  The lowest bid is selected.  
Negotiated tendering  Various criteria (technical and economic) are 
evaluated. The bid that best meets the evaluation 
criteria is selected.  
Negotiated tendering 
based on the lowest price  The lowest bid is selected.  
Negotiated tendering 
based on the best value  The bid offering the best value for money is selected.  
Negotiated tendering 
based on the lowest price 
in a reverse auction  The lowest bid compared with the reference price set 
by the ACP is selected.  
Two-stage open tendering  In the first stage, participants are assessed and 
rated; in the second stage, the lowest bid is selected.   
Non-negotiated best value 
tendering  A points system is defined for the technical and 
economic criteria. The bid achieving the highest score 
is selected.  
Restricted procurement  Any amount  Any amount  The contractor is selected directly.  
Agreements on the 
basis of price lists  Any amount  Any amount  Contractors are selected that are included on annual 
price lists.  
Source:  ACP Procurement Regulations.  
3.176.   3.176. According to the Procurement Regulations, the preferred method must be tendering, 
and more specifically, open tendering on the basis of the lowest price.245 Between 2014 and 2019, 
however, the methodology that the ACP used most frequently was negotiated tendering, which, 
since 2020, has been conducted mainly through agreements based on price lists. In 2021, the ACP  
used this method for 40% of its purchases (Table 3.21).  
Table  3.21 ACP government procurement indicators, 2014 -21  
 2014  2015  2016  2017  2018  2019  2020  2021  
Total (PAB million)  639.7  440.5  340.7  461.4  436.0  424.1  214.5  189.0  
Percentage (%)          
Quotations (minor 
procurement)  0.4 0.4 0.4 0.3 0.3 0.4 1.0 1.0 
Streamlined 
procurement  11.7 13.3 13.8 8.3 9.8 n.a. n.a. n.a. 
 
26 March  2020. Viewed at: https://micanaldepanama.com/nosotros/sobre -la-acp/fundamentos -
legales/reglamentos -del-canal/.  
244 Article 70 of the ACP Procurement Regulations.  
245 Article 70 of the ACP Procurement Regulations.  WT/TPR/S/421 /Rev.1  • Panama  
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   2014  2015  2016  2017  2018  2019  2020  2021  
Tendering          
Open tendering on the 
basis of the lowest price  17.7 13.7 9.6 6.4 15.2 16.5 28.1 34.1 
Negotiated tendering  67.0 61.9 31.0 59.6 19.7 47.4 24.7 18.4 
Two-stage open tendering  n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 
Non-negotiated best 
value tendering  1.0 0.5 3.1 4.4 1.7 1.3 1.0 0.1 
Restricted 
procurement   0.05 20.8 2.17 28.6 15.5 10.2 6.3 
Agreements on the 
basis of price lists  2.1 10.2 21.2 18.9 24.6 18.9 35.1 40.0 
n.a. Not applicable.  
Source:  Information provided by the authorities.  
3.3.7   Intellectual property rights  
3.177.   Intellectual property rights in Panama are protected by the Constitution246 and by Law No. 
35 of 10 May 1996 (industrial property), Law No. 63 of 5 October 1997 (new plant varieties) and 
Law No. 64 of 10 October 2012 (copyright and related rights). The new implementing Regulations 
of Law No. 35 were enacted in 2017.247 Panama also  protects the intellectual property rights of 
indigenous peoples.248 It has ratified 12 WIPO treaties, including the Marrakesh Treaty, which 
entered into force in 2017.249 In addition, Panama is a party to the International Convention for the 
Protection of N ew Varieties of Plants.  
3.178.   The authorities responsible for intellectual property are the Directorate -General for Industrial 
Property Registration (DIGERPI) and the National Copyright Directorate (DNDA). DIGERPI is part of 
MICI and is responsible for industri al property. The DNDA used to be part of MICI but was transferred 
in 2019 to the Ministry of Culture.250  
3.179.   Since 2014, there have been no substantial changes to the requirements and conditions for 
the protection of intellectual property rights in Panama (Tab le 3.22). One of the main changes made 
to facilitate trademark registration was the introduction of online applications in 2020. To facilitate 
procedures, DIGERPI also has a database of patents, trademarks and plant varieties registered in 
the country.251  
Table  3.22 Main features of the protection of intellectual property rights, 2021  
 Type of 
protection  Requirements to 
obtain protection  Observations  Term of protection  
Inventions  Patents  The invention must be 
novel, must involve an 
inventive step and must 
have industrial 
applicability.  No second -use patents 
are granted.  20 years from the 
date on which the 
application was filed. 
For pharmaceuticals, 
an extension to 
protection may be 
reques ted to 
compensate for 
delays to the 
examination of the 
application.  
Utility models  Registration  The utility model must 
be novel and have 
industrial applicability.  Utility models that do 
not differ significantly 
from existing utility 
models may not be 
registered.  10 years from the 
date on which the 
application was filed  
 
246 Article  53 of the Political Constitutio n states that "every author, artist or inventor enjoys exclusive 
ownership of his or her work or invention for a period of time and in such a manner as may be prescribed by 
law." 
247 Executive Decree No. 85 of 4 July 2017 repealed Executive Decree No. 7 of 1 7 February 1998.  
248 Law No. 20 of 25 June 2000.  
249 WIPO. Viewed at: https://www.wipo.int/treaties/en/ShowResults.jsp?country_id=136C . 
250 Law No. 90 of 15 August 2019 amended Chapter I of Title XII of Law No. 64 of 10 October 2012.  
251 DIGERPI. Viewed at: https://consulta.digerp i.gob.pa/ . WT/TPR/S/421 /Rev.1  • Panama  
- 91 - 
   Type of 
protection  Requirements to 
obtain protection  Observations  Term of protection  
Industrial 
designs  Registration  The registration must be 
novel and have 
industrial applicability.  The Locarno 
Classification is used 
(although Panama is 
not a party to the 
Locarno Agreement).  10 years from the 
date on which the 
application was filed, 
renewable for five 
years, but industrial 
designs are granted 
automatic protection 
for three years from 
their first disclosure 
in Panama  
Manufacturing 
and business 
secrets  n.a. Confidential information 
that confers a 
competitive or economic 
advantage vis-à-vis third 
parties  Automatically 
protected  As long as the 
information remains 
confidential  
Trademarks  Registration  Signs, words or 
combinations of the two 
that distinguish one 
product or service from 
another  All types of trademarks 
can be registered. The 
Nice Classification is 
used (although 
Panama is not a party 
to the Nice 
Agreement).  10 years from the 
date on which  the 
application was filed. 
Protection may be 
renewed indefinitely 
for periods of the 
same length.  
Geographical 
indications (GIs) 
and appellations 
of origin (AOs)  Registration  For GIs, quality, 
reputation and other 
characteristics are 
attributable principally 
to the geographical 
origin; for AOs, they are 
attributable exclusively 
or essentially to the 
geographical origin.  Foreign GIs/AOs can 
be registered. The use 
of foreign GIs /AOs to 
identify wines and 
spirits is not prevented 
if such use began more 
than 10 years before 
15 April 1994, or less 
than 10 years before 
that date if such use 
was done in good faith.  For as long as the 
requirements based 
on which the 
protection was 
conferred are met  
New plant 
varieties  Plant 
breeder's 
right The new variety must be 
novel, distinctive, 
uniform and stable.  Farmers may be 
permitted to use the 
crop resulting from the 
cultivation of a 
protected variety for 
breeding purposes.  For trees and vines, 
25 years from the 
date on which the 
plant breeder's right 
was granted; for 
other species, 20 
years from that date 
No extensions  
Copyright and 
related rights  n.a. Making or publication of 
a work  Automatically 
protected  Life of the author 
plus 70 years; for 
anonymous or 
pseudonymous 
works, 70 years 
from the year of 
disclosure; for 
audiovisual works, 
collective works and 
computer programs, 
70 years from their 
first publication or 
their completion  
n.a. Not applicable.  
Source:  WTO Secretariat.  
3.180.   Parallel imports are not prohibited in Panama, as the international exhaustion of industrial 
property rights is recognized.252 However, the right holder may lodge an appeal.  
 
252 Article 19 of Law No. 35 of 10 May 1996, as amended by Article 9.2 of Law No. 61 of 
5 October  2012; and Article 100.1 of Law No. 35 of 10 May 1996.  WT/TPR/S/421 /Rev.1  • Panama  
- 92 - 
  3.181.   For patents, Law No. 35 allows compulsory licences to be granted,253 but Panama has never 
granted them.  
3.182.   In Panama, it is not necessary to obtain copyright protection for a work to be pr otected, but 
registration is recommended as proof that a work exists.254 Copyright societies must apply for an 
operating licence from the DNDA before they may perform certain tasks, such as collecting and 
distributing economic rights.255 Six such societies a re approved in Panama. Imports of copyright -
protected goods are not prohibited. However, anyone who imports a copyright -protected good in 
parallel cannot exploit it except for the purpose for which the importation was authorized.256 
3.183.   During the period under review, almost all patent applications were filed by non -residents, 
and most patents were granted to non -residents (Chart 3.4). The low number of patents granted to 
Panamanian nationals might be because there are relatively few inventions, despite incentiv es to 
promote development and invention, such as the City of Knowledge. This is in contrast to the number 
of trademark registration applications filed by Panamanian nationals and the number of registrations. 
Although both numbers are lower than for foreign  nationals, the figures show that residents of 
Panama do use the protection system. Trademark registration is typical of countries in which there 
is a lot of business activity, as is the case for Panama.  
Chart 3.5 Industrial property data, 2014 -20 
 
Source:  WIPO statistics. Viewed at: 
https://www.wipo.int/ipstats/en/statistics/country_profile/p rofile.jsp?code=PA ; and information 
provided by the authorities.  
3.184.   To safeguard intellectual property rights, goods may be inspected and seized at the border 
both in the national customs territory and in the ZLC. Inspections are carried out ex officio , at th e 
request of the right holder or by court order. ANA's Intellectual Property Directorate implements 
border controls irrespective of the product's final destination. When goods enter the ZLC, however, 
the Zone's Intellectual Property Department, which has t he same powers as ANA over goods entering 
(or exiting) the ZLC, has the authority to inspect or seize goods.257 The Higher Prosecution Service 
Specializing in Intellectual Property and IT Security Offences, which operates under the Office of the 
Public Pros ecutor, carries out inspections and seizures in the domestic market.  
 
253 Article 58 -A of Law No. 35 of 10 May 1996, added by Law No. 61 of 5 October 2012.  
254 MICI. Vie wed at: https://www.mici.gob.pa/direccion -general -de-derecho -de-autor/preguntas -
frecuentes . 
255 Articles 134, 136 and 138 of Law No. 64 of 2012.  
256 Article 9.2 of Law No. 61 of 10 May 1996.  
257 Information provided by the authorities; Article 23.17 of Decree -Law No. 1 of 13  February  2008; 
and ANA. Viewed at: https://www.ana.gob.pa/w_ana/index.php/organisation/plataformas -unidades/unidades -
de-seguridad -y-control/propiedad -intelectual . 
050100150200250300350400
2014 2015 2016 2017 2018 2019 2020Patent applications
Residents Non-residents050100150200250300
2014 2015 2016 2017 2018 2019 2020Patents awarded
Residents Non-residents
0246810
2014 2015 2016 2017 2018 2019 2020(Thousands)Trademark registration applications
Residents Non-residents0246810
2014 2015 2016 2017 2018 2019 2020(Thousands)Registered trademarks
Residents Non-residentsWT/TPR/S/421 /Rev.1  • Panama  
- 93 - 
  3.185.   There are no safe -harbour clauses in Panamanian administrative law.  
3.186.   In 2014, the value of goods seized at the border and in the domestic market was PAB 31.2 
million. This figure declined  over the following years, reaching PAB 13.6 million in 2019 (Table 3.23). 
According to the authorities, of the total goods seized in 2014 and 2021, 30% were footwear, 20% 
were clothing and imitation jewellery, 15% were electronics, and the rest were toys,  handbags, 
medicines, cosmetics and cigarettes.  
Table  3.23 Value of goods seized for infringement of intellectual property rights, 2014 -20 
 2014  2015  2016  2017  2018  2019  2020  
c.i.f. value (PAB million)  31.2 16.1 25.6 23.7 20.0 13.6 6.1 
Source:  Data provided by the authorities.  WT/TPR/S/421 /Rev.1  • Panama  
- 94 - 
  4  TRADE POLICY BY SECTOR  
4.1  Agriculture, Forestry and Fisheries  
4.1.1   Characteristics, objectives and institutional framework  
4.1.  Agriculture's contribution to GDP (including livestock farming, forestry and fisheries) remained 
relatively steady during the review period (2.4% in 2020 compared to 2.2% in 2014), as did its 
relative contribution to GDP. However, the rate of growth in the sector varied considerably, primarily 
as a result of extreme weather events such as droughts, excess rainfall, excess winds, flooding and 
landslips, all of which have adversely affected food, nutrition and water security.1 Although the 
agricultural sector is small in terms of its contribution to GDP, it is very important for socioeconomic 
development because it employs over 14% of the workfo rce in rural areas (Table  4.1). 
Table 4.1 Main indicators for the agricultural sector, 2014 -20 
 
2014  2015  2016  2017  2018  2019  2020  
Contribution to GDP (% at current prices)  2.2 2.1 2.1 1.9 1.9 1.9 2.4 
Real growth rate (%, at constant prices)   -0.8 0.8 3.6 1.2 3.6 9.9 3.0 
 Fisheriesb 0.8 0.6 0.5 0.5 0.4 0.3 0.4 
Employment (% of the total working population)         
 Agriculture, livestock, hunting, forestry, 
fisheries, and related service activitiesb 15.7 14.7 15.4 14.5 14.2 14.4 14.1 
Agricultural sector, WTO definition         
Exportsb        
Values (USD  millions)  387 537 322 323 339 417 403 
Share in total exports (%)  47.0 77.3 50.0 49.0 51.0 27.7 23.4 
Growth rate (%)   -4.2 38.7  -40.0 0.30 4.9 39.0  -3.5 
Five most important products, by HS chapter (% of 
total agriculture)         
 08. Edible fruit and nuts; peel of citrus fruit 
or melons  38.8 26.1 39.0 39.2 38.3 39.0 42.5 
 02. Meat and edible meat offal  1.0 5.0 7.6 8.4 8.1 10.5 10.0 
 15. Animal or vegetable fats and oils and their 
cleavage products  7.1 3.1 5.6 7.1 9.5 21.5 1.3 
 17. Sugars and sugar confectionery  7.2 4.0 10.8 7.4 9.0 6.4 7.0 
 09. Coffee, tea, maté and spices  6.3 4.5 7.8 7.4 5.6 6.4 6.1 
Importsb        
Values (USD  millions)  1,629  1,649  1,523  1,755  1,902  1,864  1,731  
Share in total imports (%)  11.8 13.5 3.0 13.8 14.4 14.5 21.2 
Growth rate (%)  1.8 1.2  -8.0 15.2 8.4  -2.0  -7.3 
Five most important products, by HS chapter (% of 
total agriculture)         
 21. Miscellaneous edible preparations  11.6 12.2 12.8 12.6 12.0 12.5 12.6 
 10. Cereals  10.7 10.3 11.7 8.4 11.7 9.6 12.3 
 19. Preparations of cereals, flour, starch or 
milk 10.9 11.4 12.5 10.8 10.4 10.6 11.1 
 22. Beverages, spirits and vinegar  11.4 11.8 12.3 10.3 10.0 11.2 10.6 
 23. Residues and waste from the food 
industries  11.5 10.2 11.4 10.0 10.0 9.3 10.1 
Agricultural trade balance (USD  millions)  -1,242  -1,112  -1,201  -1,432  -1,563  -1,447  -1,328  
Gross production value (USD  millions, at constant 2007 prices)  
Agriculture, livestock, hunting and forestry  .. .. 1,473  1,494  1,557  1,660  .. 
Cultivation of grain crops  .. .. 136 130 135 143 .. 
Cultivation of vegetables, roots and tubers  .. .. 75 82 73 77 .. 
Cultivation of banana  .. .. 79 91 94 204 .. 
Cultivation of other fruits and nuts  .. .. 63 48 45 46 .. 
Other crops, nes  .. .. 135 134 133 135 .. 
Animal breeding and hunting  .. .. 866 882 951 922 .. 
 Bovine cattle  .. .. 234 222 241 243 .. 
 Swine  .. .. 148 152 171 162 .. 
 Poultry  .. .. 273 282 307 299 .. 
 Other animals  .. .. 14 13 13 13 .. 
 Raw milk  .. .. 77 80 78 69 .. 
 Eggs .. .. 83 90 93 95 .. 
 Other animal products  .. .. 11 9 9 8 .. 
 
1 National Climate Change Plan for the Agricultural Sector in Panama, Summary. Viewed at: 
https://www.mida.gob.pa/ direcciones/direcciones_nacionales/unidad -ambiental/resumen -del-plan-nacional -de-
cambio -clim-tico.html . WT/TPR/S/421 /Rev.1  • Panama  
- 95 - 
   
2014  2015  2016  2017  2018  2019  2020  
Agricultural service activities  .. .. 40 39 40 40 .. 
Forestry, logging and related service activities  .. .. 73 78 79 79 .. 
.. Not available.  
a Includes agriculture, livestock, hunting and forestry.  
b Third quarter of 2020.  
Source:  INEC; and Comtrade database.  
4.2.  During the review period the most important agricultural products were cereals, pulses, roots 
and tubers, followed by bananas, which are among the leading export items. However, staple grains, 
roots and tubers, are among the crops identified by the Ministry of Agricultural Development (MID A) 
as the products with the greatest economic impact in terms of production, consumption and food 
security because they are essential items in the basic basket; indeed, some of them (rice, maize, 
potatoes and beans) have been declared to be sensitive produ cts as a result.2 Stock -breeding is also 
among the top activities and meat, like bananas, is one of the most significant export products.  
4.3.  Panama is a net importer of agricultural products. However, the country's exports of 
agricultural products (WTO defin ition) are important nonetheless, accounting for 51% of total 
exports in 2018, although that share declined in 2020 owing to the health crisis and increased copper 
exports (Table  4.1). As in 2014, the leading exports in 2020 were fruits followed by meat an d edible 
offal. The main export markets for agricultural products are the same as in 2014: the EU, which 
received 44.6% of total exports in 2020; and the United  States, which received 14.4%.  
4.4.  The Ministry of Agricultural Development (MIDA) is the entity res ponsible for formulating and 
implementing agricultural policy in Panama.3 In 2019 however, an agricultural cabinet was 
established to design a more inclusive agricultural policy involving ministers from various 
departments in order to provide a better ser vice to domestic producers.4 In addition to public 
entities, the other groups involved in drawing up plans, programmes and projects are private bodies, 
trade unions, associations and communities.  
4.5.  The main objectives of agricultural policy are: to create a  competitive, participatory and 
sustainable agricultural sector; to ensure food security by helping to lower the cost of the basic food 
basket; to improve the social and economic situation of the rural population; and to access 
international markets. MIDA is also responsible for sanitary and phytosanitary protection through 
the National Directorate of Animal Health (DINASA), the National Directorate of Plant Health (DNSV) 
and the Executive Directorate of Agricultural Quarantine (DECA) (section  3). Where for eign trade is 
concerned, MIDA recommends the adoption of tax policies and trade measures that are conducive 
to the production and marketing of products and inputs.  
4.6.  MIDA is responsible for implementing policy in the sector, in accordance with the National 
Agricultural Development Plan. Other sectoral planning instruments include the National Climate 
Change Plan for the Agricultural Sector in Panama and the National Plan for Family Farming in 
Panama. Launched in 2019, the main aim of the National Climate Chan ge Plan for the Agricultural 
Sector in Panama is to adopt sustainable production methods and practices in order to reduce carbon 
emissions.5 The National Plan for Family Farming in Panama, which was issued in 2020, sets out a 
series of measures to improve  the quality of life of families engaged in family farming, such as 
facilitating access to credit, education, technical assistance and training, and implementing 
marketing strategies to sell the end product.6 MIDA has an Agricultural Marketing Institute ( IMA) 
whose role is to implement the marketing policies formulated by the Ministry and to support the 
domestic producers in marketing their products in order to grow and develop the agricultural sector.  
4.7.  During the review period, MIDA continued to provide di rect and indirect technical assistance 
and financial support, equipment, inputs and training, chiefly through the national extension scheme, 
 
2 Law No.  26 of 4  June 2001.  
3 Law No.  12 of 25  January  1973.  
4 The cabinet is attended by the President of the Republic and the Ministers of Agricultur al Development, 
Education, Health, Environment, Social Development, the Economy and Finance, and Trade and Industry.  
5 Resolution No.  OAL 059-ADM-2019 of 10  June 2019; and information viewed at: 
https://www.mida.gob.pa/direcciones/direcciones_nacionales/un idad-ambiental/resumen -del-plan-nacional -de-
cambio -clim-tico.html.  
6 Law No.  127 of 3  March  2020.  WT/TPR/S/421 /Rev.1  • Panama  
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  via MIDA programmes and projects such as the Livestock Development Programme, the Agricultural 
Conversion Programme , the Incentive Programme for the Domestic Production of Grain and Other 
Crops7 and the Price Compensation Scheme. In addition, MIDA has promoted various programmes 
in the domestic primary sector, such as those establishing seals for Panamá EXPORTA , Panamá 
Bioseguro  and Panamá Orgánico , which point to modernized production methods an d the integration 
of Panamanian export products into very demanding international markets.  
4.1.2   Policy instruments  
4.1.2.1   Measures affecting imports  
4.8.  The agricultural sector receives greater tariff protection than other sectors. During the period 
2013-21, the average tariff applied to agricultural products (WTO definition) rose from 13.7% to 
15.3%, and it continues to be substantially higher than the average tariffs applied to non -agricultural 
products (5.3% in 2021). Dairy products have the highest average tariff at 4 3%, followed by animals 
and animal products (30.1%) and sugar and confectionery (23.4%) (Table  A3.1).  
4.9.  Upon accession to the WTO, Panama bound its entire Tariff Schedule at rates ranging from 0% 
to 260%. For agricultural products (WTO definition), bound tar iffs range from 0% to 260%. The 
agricultural products that were bound at the highest rate were meat and edible meat offal (260%) 
(three lines in HS  0207), dairy products (155.7%) (six lines in HS  0402), and sugar and 
confectionery (144%) (three lines in HS  1701).  
4.10.   Panama uses tariff rate quotas for the major agricultural products, which are distributed using 
non-automatic licensing (NAL). The licences are awarded by the Tariff Quota Licensing Commission 
through negotiating sessions for the relevant quota at the National Commodities Exchange (BAISA).8 
Under its WTO commitments, Panama uses tariff rate quotas for a number of agricultural products 
(rice, pig meat, poultry meat, potatoes, dairy products, beans and tomatoes). The duties applied 
within these quota s range from 0% to 15%, while out -of-quota rates range from 15% to 260% 
(Table  A3.2). The use of quotas varies according to domestic market needs. In 2019 and 2020, the 
rice quota was fully utilized, and take -up of the tomatoes quota was high. Use of the q uota for pig 
meat in 2019 was 93.5% but fell in 2020 to 73.3%, while use of the potato quota rose substantially 
from 46.8% in 2019 to 81.7% in 2020 (Table  A3.2).  
4.11.   In addition to the tariff quotas negotiated under the WTO and in trade agreements, Panama 
also uses scarcity quotas for sensitive products.9 During the review period, Panama opened scarcity 
quotas for rice,10 onion11 and uncooked tomato paste or pulp.12 A pre -requisite for participating in 
these calls for tenders was for importers to comply with c ommitments to purchase raw materials or 
the same or like goods, produced domestically.13 For imports of raw materials, importers also had 
to establish that they had sufficient installed capacity to process the volume and type of product for 
which the impor t licence was sought. The percentage of the import quota assigned to an importer 
was equal to the percentage of the domestic product purchased. For raw materials for the 
agro-industry, the Tariff Quota Licensing Commission was able to adjust the volume by up to 10% 
on the basis of installed capacity, need for use and the quota allocated over the three preceding 
years.14 The authorities indicated that the Commission had not used this power.  
 
7 Law No.  107 of 21  November  2013.  
8 Resolution No.  5 of 18 November 1998.  
9 The sensitive products are pig meat, poultry meat, dairy  products, potatoes, toma to concentrate, 
beans, maize and rice (Law No.  26 of 4  June 2001). In addition, for quota purposes, coffee, onions and sugar 
have been declared to be sensitive products (Cabinet Decree No.  25 of 16  July2003).  
10 Cabinet Decree No.  9 of 27  March 2012.  
11 Cabinet Decree No.  35 of 31  October 2017. Viewed at: 
https://www.gacetaoficial.gob.pa/pdfTemp/28399_B/GacetaNo_28399b_20171101.pdf . 
12 Cabinet Decree No.  26 of 22  September 2015; Cabinet Decree No.  24 of 25  July 2019; Cabinet 
Decree No.  38 of 20  September 2018 and Cabinet Decree No.  27 of 29  July 2020.  
13 Resolution No.  02-05 of 10 June 2005.  
14 Resolution No.  4-2011 of 2 February 2011.  WT/TPR/S/421 /Rev.1  • Panama  
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  4.12.   Over the period 2014 -20, Panama did not use the WTO special agricult ural safeguard.15 
However, during that time, Panama initiated a number of investigations under the special agricultural 
safeguard mechanism provided for in the Trade Promotion Agreement between Panama and the 
United  States, resulting in the imposition from  2018 of (special agricultural) safeguard measures for 
beef, whole milk powder, cheeses and yoghurt.16 In addition, in 2019, Panama notified the initiation 
of a preliminary investigation into safeguards concerning imports of pig meat, which was 
subsequentl y dropped.17 
4.13.   Panama may impose import prohibitions or restrictions when necessary in order to, inter alia , 
implement rules and regulations related to the marketing of products intended for international 
trade.18 Consequently, an import NAL is currently (2021) required to import roasted coffee 
(a sensitive product) from any country with which Panama does not have a preferential agreement.19 
Moreover, Panama uses non -tariff measures in the agricultural sector to, inter alia , protect public 
health and plant and animal health.  
4.14.   A prior phytozoosanitary import licence is required for agricultural products, otherwise the 
products will be returned to their place of origin or destroyed. Depending on the circumstances, an 
export permit may also be required for such products. During the period 2014 -20, Panama prohibited 
the import of certain products (plants, propagating material and plant material of musaceae and 
heliconias, pigs and parrots) on phytozoosanitary grounds (fun gi, African swine fever and highly 
pathogenic avian influenza). During the review period, five concerns were raised before the 
WTO Committee on Sanitary and Phytosanitary Measures regarding Panama's measures. The 
concerns relate to the restrictions imposed  on the import of products of animal and plant origin in 
general and in relation to specific products (beef and poultry meat, potatoes and onions), and to the 
delays in renewing authorizations for plants of fishery and livestock enterprises.20 In that conn ection, 
WTO consultations have been requested regarding measures relating to the importation of certain 
products (DS599).21 
4.1.2.2    Measures affecting exports  
4.15.   During the period 2014 -20, Panama notified the WTO that it had not granted any export 
subsidies for agri cultural products.22 
4.16.   Panama continues to use the Agricultural Exports Promotion Certificate (CEFA) to promote 
agricultural exports, and the Agricultural and Agro -Industrial Promotion and Modernization 
Programme (PROMAGRO) was established in 2013 to improve the sector's productivity, 
competitiveness and development by providing direct financial assistance by way of the Production 
Promotion Certificate (CFP).23 
4.17.   Introduced in 2009 to promote non -traditional exports, CEFA did not undergo substantial 
alteration during the review period;24 however, the products it covers have changed. CEFA is a 
document issued by the Ministry of the Economy and Finance (MEF) that can be used to pay all taxes 
(except municipal taxes).25 The value of a CEFA corresponds to a p ercentage of the reference value 
per unit of exported product. In 2018, following the increase in marketing costs (packing, packaging, 
transportation and internal freight costs), this share rose from 10% or 15% to 20% for almost all 
 
15 WTO documents G/AG/N/PAN/30 of 27 June 2014, G/AG/N/PAN/34 of 7  April 2015, G/AG/N/PAN/37 
of 31 March 2016, G/AG/N/PAN/42 of 13  April 2017, G/AG/N/PAN/45 of 17  May 2018, G/AG/N/PAN/48 of 
16 May 2019, G/AG/N/PAN/53 of 9  June 2020 and G/AG/N/PAN/56 of 17  May 2021.  
16 DGDC. Viewed at: 
https://www.mici.gob.pa/direccion -general -de-defensa -comercial/investigaciones -salvaguardia . 
17 Resolution No.  003 of 3  May 2019 and WTO document G/SG/ N/6/PAN/2 of 14  May 2019; Resolution 
No. 004 of 2019 and WTO document G/SG/N/9/PAN/1 of 19  November 2019.  
18 Constitution of the Republic and Law No.  23 of 15  July 1997.  
19 Cabinet Decree No.  25 of 30  March 2021.  
20 WTO SPS Information Management System. View ed at: http://spsims.wto.org/ . 
21 The products concerned include strawberries; dairy products; beef, pork and poultry products; fish 
food; fresh pineapples; plantains and bananas. The case is at the consultation stage (11 January 2021) 
(DS599).  
22 WTO document G/AG/N/PAN/57 of 17  May 2021.  
23 Law No.  105 of 21  November 2013.  
24 Law No.  82 of 31  December 2009; and Executive Decree No.  65 of 25  March 2010.  
25 Chapter  II of Law No.  82 of 31  December 2009.  WT/TPR/S/421 /Rev.1  • Panama  
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  the products it covered . The products covered by CEFA can be changed annually on the basis of the 
findings of a public consultation.26 In 2014, around 250  products came under CEFA; in 2021, the 
number had increased to over 300. The products covered by CEFA include oil; meat and meat 
products of swine, chicken and cattle; eggs, milk and other dairy products; and fruits and vegetables 
(pineapples, plantains, watermelons, yams, cashew nuts, cassava and pumpkins).27 
4.18.   Products that are not covered by CEFA may secure similar benefits un der PROMAGRO in the 
form of the CFP. The National Commission for Agricultural and Agro -Industrial Promotion and 
Modernization, attached to MIDA, stipulates the eligible products and the amount of assistance.28 
Like a CEFA, the CFP can be used to pay any do mestic tax except municipal taxes. The value of the 
CFP is equivalent to the estimated average percentage cost of the packaging material, packing, and 
domestic transport and freight.29 The list of CFP products and values may be updated or amended, 
where th e Commission deems necessary, by means of a public consultation mechanism30 that must 
be approved by the Executive.31 Between 2014 and 2018, 38  products were eligible for a CFP, 
including fruit and fruit juices, tubers and other vegetables, cane honey and farmed shrimp.32 
However, according to the data provided by the authorities, the programme covered only exporters 
of papaws (papayas) (HS  0807.20), watermelons (HS  0807.11), pineapples (HS  0804.30) and 
pasteurized pineapple juice and concentrate (HS  2009.4 1-HS 2009.49), melons (HS 0807.19), 
pumpkins (HS  709.93), chillies (HS  0709.60), yams (HS  0714.30), cane honey in drums 
(HS 1702.90) and farmed shrimps (HS  0306.17). Since 2018, the number of products that qualify 
for a CFP has fallen; in 2021, only export ers of melon, pineapple, watermelon and pumpkin were 
eligible. In practice, throughout the period 2014 -21, the only exporters who used the programme 
were those exporting products within these four categories.33 
4.1.3   Domestic support measures  
4.19.   Panama notified the  WTO that the domestic support granted to agriculture during the period 
2014-20 covered: research, extension and advisory services; pest and disease control programmes; 
training services; inspection services; marketing and promotion services; infrastructur al services; 
and assistance programmes for natural disaster relief or structural adjustment. Only the latter 
programmes provide financial assistance through credit programmes at preferential interest rates, 
or in the form of non -repayable direct assistance , for damage caused by natural disasters or to 
finance investment in technology.34 The amount of support rose between 2014 and 2018 and then 
declined. It peaked in 2018 at PAB  149 million, 64.7% of which was used to access general services 
(Table  4.2). 
Table 4.2 Domestic support for agriculture, 2014 -20 
(USD thousands and %)  
Support allocation  2014  2015  2016  2017  2018  2019  2020  
Values (USD thousands and %)         
Research  1,260  6,237  6,794  7,058  6,947  6,947  6,947  
Pest and disease control  9,059  16,446  17,256  15,193  13,840  5,568  12,096  
Training services  6,152  2,743  2,231  1,034  748 569 480 
Extension and advisory services  8,723  4,713  6,668  4,404  1,736  1,540  539 
Inspection services  1,063  2,306  2,274  1,501  698 1,252  265 
Marketing and promotion services  9,603  13,356  13,061  5,304  3,545  3,609  3,610  
Infrastructural services  14,654  18,040  15,056  10,748  14,581  14,069  1,815  
Other general services  11,008  4,729  8,445  81,695a 96,870  60,941  60,219  
 
26 Law No.  82 of 31  December 2009.  
27 MICI. Viewed at: 
https://www.mici.gob.pa/uploads/media_ficheros/2019/07/2/comercio -exterior/exportaciones/cefa/requisitos -
y-documentos/lista -de-productos -no-tradicionales -para-la-exportacion -del-sector -agropecuario -sujeto -a-cefa.x
lsx. 
28 Executive Decree No.  46 of 16 April 2014; Executive Decree No.  1 of 13  January 2015.  
29 Article  23 of Law No.  105 of 21  November 2013.  
30 Article  12 of Executive Decree No.  46 of 16  April 2014.  
31 Article  3 of Executive Decree No.  1 of 13  January 2015.  
32 Executive Decree No.  46 of 16  April 2014 and Resolution No.  002 of 21  January 2015.  
33 Information provided by the authorities.  
34 Special Contingency Credit Fund (Law No.  24 of 4  June 2001); National Emergency Plan (Cabinet 
Resolution No.  214 of 10  December 2010 and WTO document G/AG/N/PAN/33 of 13  March 2015); Agricultural 
Conversion Programme (Law No.  25 of 4  June 2001); and Agric ultural Competitiveness Programme (Cabinet 
Resolution No.  117 of 11  September 2006).  WT/TPR/S/421 /Rev.1  • Panama  
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  Support allocation  2014  2015  2016  2017  2018  2019  2020  
Payments for relief from natural 
disasters  2,818  1,513  1,312  2,360  2,500  3,229  1,624  
Structural adjustment assistance 
provided through investment aids  8,360  15,965  8,787  10,394  8,249  24,633  4,176  
Total  72,700  86,047  81,885  139,692  149,713  122,356  91,771  
Shares (% of total)         
Research  1.7 7.2 8.3 5.1 4.6 5.7 7.6 
Pest and disease control  12.5 19.1 21.1 10.9 9.2 4.6 13.2 
Training services  8.5 3.2 2.7 0.7 0.5 0.5 0.5 
Extension and advisory services  12.0 5.5 8.1 3.2 1.2 1.3 0.6 
Inspection services  1.5 2.7 2.8 1.1 0.5 1.0 0.3 
Marketing and promotion services  13.2 15.5 16.0 3.8 2.4 2.9 3.9 
Infrastructural services  20.2 21.0 18.4 7.7 9.7 11.5 2.0 
Other general services  15.1 5.5 10.3 58.5 64.7 49.8 65.6 
Payments for relief from natural 
disasters  3.9 1.8 1.6 1.7 1.7 2.6 1.8 
Structural adjustment assistance 
provided through investment aids  11.5 18.6 10.7 7.4 5.5 20.1 4.5 
Information provided by the authorities.  
Source:  WTO notifications G/AG/N/PAN/31 of 27  June 2014, G/AG/N/PAN/36 of 10  April 2015, 
G/AG/N/PAN/39 of 14  April 2016, G/AG/N/PAN/41 of 13  April 2017, G/AG/N/PAN/47 of 14  June 
2018, G/AG/N/PAN/50 of 27  May 2019, G/AG/N/PAN/54 of 11  June 2020, and G/AG/N/PAN/58 o f 
27 May 2021.  
4.20.   Established in 2013, the Incentive Programme for the Domestic Production of Grain and Other 
Crops seeks to increase domestic production of grains and other crops so as to ensure food security 
through an incentive -based system.35 MIDA contin ues to operate the scheme.36 Technical criteria 
are in place to establish the volume of production by crop, and that volume is used to determine 
whether an incentive needs to be granted or assess whether an incentive is effective.37 
4.21.   The incentive was set u p to support producers (rice, onion, beans, maize, potatoes, beans 
tomatoes (for processing), sorghum, soya) and seed breeders (rice, maize, beans (Box  4.1). The 
authorities report that, to date, no other products have been included in the scheme, and none  of 
those provided for in law have been excluded. The Programme provides for differentiation in the 
incentive allowed for each product. For rainfed rice, the farmer may apply for a bonus of PAB  500/Ha, 
while for irrigated rice, the amount is double. The in centive for maize and bean producers is PAB  500 
while for sorghum, it is PAB  300, and for soya, PAB  1,000. The Programme also provides for a bonus 
(PAB 2,500) for farmers growing potatoes or onions using certified seed and irrigation.38 
Box 4.1 Support arrangements by product  
Rice 
Rice without irrigation/rainfed  
PAB 500 for every hectare under certified seed  
PAB 2 per quintal productivity bonus for producers with a yield per hectare equal to or greater than 
100 quintals  
Rice under irrigation  
PAB 1,000 for every additional hectare under certified seed  
PAB 2 per quintal productivity bonus for producers with a yield per hectare equal to or greater than 
150 quintals  
Maize  
Maize without irrigation  
PAB 500 for every additional hectare sown by the producer  
 
35 Law No.  107 of 21  November 2013 and WTO document G/AG/N/6/PAN/38 of 13  April 2016.  
36 Executive Decree No.  65 of 29  April 2014.  
37 Resolution No.  331 of 7  January 2015.  
38 Viewed at: http://www.fao.org/in -action/agronoticias/detail/es/c/512865/ . WT/TPR/S/421 /Rev.1  • Panama  
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  PAB 2 per quintal productivity bonus for producers with a yield per hectare equal to or greater than 97  quintals 
under the mechanized rainfed system  
Maize under irrigation  
PAB 1,000 for every additional cultivated and/or incorporated hectare under certified seed  
PAB 2 per quintal productivity bonus for producers with a yield per hectare equal to or greater than 
120 quintals under irrigation  
Beans  
PAB 500 for every additional hectar e under cultivation  
PAB 2 per quintal productivity bonus for producers with a yield per hectare equal to or greater than 28  quintals 
under irrigation  
Creole beans and pigeon peas  
PAB 3 per quintal productivity bonus for producers with a yield per hectare equal to or greater than 17  quintals 
for creole beans and 28  quintals for pigeon peas  
Sorghum  
PAB 300 for every additional hectare sown by the producer  
PAB 1 per quintal productivity bonus for producers with a yield per hectare equal to or grea ter than 75  quintals  
Soya  
PAB 1,000 for every additional hectare planted  
Potatoes and onions  
PAB 2,500 for every additional hectare under certified seed and irrigation  
PAB 5 per quintal productivity bonus for every quintal of potatoes and onions for producers with a yield per 
hectare equal to or greater than 650  quintals  
Tomatoes for processing  
PAB 1 per quintal productivity bonus for every quintal produced and sold to processing companies for 
producers with a yield per hectare equal to o r greater than 1,000  quintals  
Producers of seeds of rice, maize and beans  
PAB 500 for every additional hectare under cultivation  
PAB 3 per quintal productivity bonus  
Producers of rice seed under irrigation  
PAB 1,000 per additional hectare under cultivation  
PAB 3 per quintal productivity bonus  
Source:  Law No.  107 of 21  November 2013.  
4.22.   Between 2014 and 2020, Panama had price compensation schemes – also notified to the WTO 
– for tomatoes (for processing) in 2014 , and for rice ,39 milk40 and maize41 during  the period 
2015-20.42 In 2021, MIDA and the rice farmers reached an agreement for 2021 -22 to raise price 
compensation by PAB  2, to PAB  9.5, to be defrayed by the State.  
4.23.   In 2017, MIDA established "agri -food chains" as a tool to facilitate the market ing of 
agricultural products by encouraging the involvement of all groups with an interest in the matter, 
from producers to consumers. Legally constituted agri -food chains are run by committees that follow 
up work plans and competitiveness agreements in ar eas such as research and innovation, technology 
transfer, finance and insurance, marketing and infrastructure. In July 2020, there were 11  agri-food 
 
39 Law No.  17 of 22  February 2018 and Resolution No.  OAL-110-ADM-2021 of 19  July 2021.  
40 Resolution No.  OAL-004-ADM -2021 of 14  January 2021 and Resolution No.  OAL-041-ADM-2021 of 
March  2021.  
41 Resolution No.  OAL-255-ADM-2020 of 21  December 2020.  
42 WTO documents G/AG/N/PAN/31 of 27  June 2014, G/AG/N/PAN/36 of 10  April 2015, G/AG/N/PAN/39 
of 14 April 2016, G/A G/N/PAN/41 of 13  April 2017, G/AG/N/PAN/47 of 14  June 2018, G/AG/N/PAN/50 of 
27 May 2019, G/AG/N/PAN/54 of 11  June 2020, and G/AG/N/PAN/58 of 27  May 2021.  WT/TPR/S/421 /Rev.1  • Panama  
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  chains covering the following products: rice; coffee; bovine meat; pork and its by -products; 
vegetables; mi lk (bovine); maize; potatoes and onions; bananas; beans and pigeon peas; yucca 
and yams. As a result of this initiative, a national agreement was established  in 2018 through the 
Milk (bovine) Agri -Food Chain, between milk producers (grade  C), industrial pr oducers and the 
Government in order to provide price and market stability so as to encourage the use of domestically -
produced milk.43 Accordingly, the "direct price differential payment" for milk (grade  C), which 
Panama notified to the WTO, is directly rel ated to the competitiveness agreement drawn up by the 
Milk Agri -Food Chain – the body that sought to establish a payment of up to PAB  0.10 for each litre 
of milk sold to processing and marketing plants. A technical committee was also set up parallel to 
the Milk (grade  C) Agri -Food Chain comprising members of the Asociación Nacional de Ganaderos  
(ANAGAN) and focused primarily on assisting domestic cheese -makers (27 of which are responsible 
for manufacturing 90% of domestic production) and promoting the purch ase of dairy products for 
the State's social programmes.  
4.24.   In 2018, Panama declared rice to be a food security crop, as it is the main product in the 
basic food basket. Consequently, a number of measures were adopted to support rice production 
including: (a)  a subsidy of PAB  7.50 for every quintal of paddy rice, whether dirty or wet, produced 
and sold, subject to review every three years; (b)  exemption from all taxes on inputs used in rice 
cultivation;44 and (c)  a 40% reduction in the cost per litre of diesel  fuel and the cost of lubricants 
used in production. MIDA, in the guise of the Rice Agri -Food Chain, was directed to certify the 
purchase, milling and packing services used for the domestic product purchased, and the Agricultural 
Marketing Institute (AMI) attached to MIDA was directed to procure any remaining rice not 
purchased by domestic industry for use in the food security programme. In addition, in 2018, a 
charge of PAB  0.5 was imposed  for every quintal of rice imported under scarcity quotas. The 
proceeds from the charge will be used to finance technical assistance programmes aimed at producer 
organizations involved in the rice production chain and contributions to the Latin American Reserve 
Fund (FLAR).45 
4.25.   Under the 2001 Agricultural Conversion Programme, which was temporarily suspended during 
the review period in 2019, direct financial assistance was provided by way of reimbursement of a 
given percentage of investments to modernize agricultural activities, including activities related  to 
environmental protection,46 direct transfers to rural producers or rural workers' organizations, and/or 
soft loans (until 2015).47 Direct financial assistance is currently provided only to producers who 
invested prior to the temporary suspension, which  was enacted on 31  July 2019; since then, no new 
applications have been received. To illustrate the scope of the Programme, between July 2017 and 
March 2018, the amount of direct financial assistance awarded totalled approximately 
PAB 5.8 million, benefiti ng 112  producers.48 As a result of the suspension, in 2020, only 
20 producers were in receipt of assistance, which totalled PAB  275,414.59 and was used for animal 
husbandry (18  producers), agro -industry (one) and the production of vegetables in greenhouses  
(one).  
4.26.   The special regime for the establishment of companies operating and developing agri -food 
clusters was introduced in 2021 to promote investment in agricultural activities so as to drive the 
development of value chains and technology transfer. Anothe r aim of the regime is to promote the 
forestry sector, marine products and the production of raw materials for the pharmaceutical industry. 
Companies that hold the licence for companies operating and developing agri -food clusters or that 
operate within an agri-food cluster benefit from a five -year exemption from tariffs, taxes and fees 
on building materials, equipment, machinery, vehicles and furniture. Raw materials, 
semi-manufactured goods or intermediate products and other inputs are subject to a prefere ntial 
 
43 Viewed at: https://mida.gob.pa/noticias_id_5411.html.  
44 In principle, inputs must be included in th e official list that MIDA is required to publish annually. 
However, according to the authorities MIDA has not so far published any official list because Law No.  17 of 
22 February  2018 has not yet been implemented in respect of this particular area.  
45 FLAR is a public -private partnership established in 1995 that seeks to improve the competitiveness 
and sustainability of rice production systems.  
46 Eligible activities are: cattle -breeding and dairy -cattle farming; sheep and goat farming; bee -keeping; 
agro-industry, cultivation of vegetables in greenhouses; cultivation of fruit, coffee, bananas, pineapples and 
papayas; organic farming; and fish farming in continental waters (information provided by the authorities).  
47 Law No.  25 of 4  June 2001; Law No.  44 of 15  June 2015; and Executive Decree No.  105 of 
28 March  2016.  
48 Viewed at: https://www.mida.gob.pa/upload/documentos/informenacion_2017 -2018.pdf.  WT/TPR/S/421 /Rev.1  • Panama  
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  tariff of 3%. Companies that hold a licence for companies operating and developing agri -food clusters 
have legal stability.49  
4.27.   The Agricultural Development Bank (BDA), a state bank set up to facilitate finance for 
agricultural activity, awards financ ial assistance at preferential rates through various credit 
programmes.50 The interest rates vary by programme and range between 0% and 4%. Over the 
period 2014 -21, the BDA granted loans to 13,000  producers, a disbursement of around 
PAB 293 million.51  
4.28.   Developing the agricultural sector has been one of the National Bank of Panama's (BNP) main 
objectives. In 2020, the BNP had the largest portfolio of loans to the agricultural sector of all banking 
institutions, with a market share of 33.8%. The total sum of agricultural loans at 31  December  2020 
was PAB  611.7  million, a slight drop of 1.6% on the figure for 2019, as a result of a fall in loans to 
the livestock sector.52 
4.29.   In order to promote access to credit in the agricultural sector, the BNP offers medium -and 
long-term credit facilities that charge lower rates of interest than the other banks in the domestic 
banking system and are tailored to sectoral needs based on the goal the finance seeks to achieve, 
for example crop rehabilitation and improvements, or sup plementary investment for animal 
production and purchasing. Additionally, the loan period is customized to each operation's production 
cycle and cash flow. In 2020, the Bank implemented the "0/20 Vision Sustainable Production" 
strategy, which calls produce rs within the same area to a meeting to promote the use of tools and 
technologies that would improve their farm management and mitigate threats from pests and climate 
change. Moreover, as a result of the pandemic, the terms of some types of loans to the ag ricultural 
sector were increased; for example, from 15 to 20  years for the purchase of a farm, and from 
12 to 15 years for livestock purchases. In 2020, the BNP signed an agreement with the Agricultural 
Insurance Institute, a state entity that provides cro p and livestock insurance for a range of products 
and additional insurance for machinery and transportation of products.53 The aim of the agreement 
is to streamline procedures for granting credit to the agricultural and agro -industrial sector for 
activitie s insured by the Institute.  
4.2   Mining and Energy  
4.2.1   Electricity  
4.30.   The electricity sector is governed by Law No.  6 of 3  February 1997 (Single Text of 5  July 
2021) and its implementing regulations (Executive Decree No.  22 of 19  June 1998).54 
4.31.   The National Energy Sec retariat (SNE) formulates and implements energy policy in 
cooperation with the Ministry of the Environment so as to ensure reasonable use of water,Panama's 
chief source of power generation. In 2016, Panama adopted the National Energy Plan (PEN) 2015 -50, 
which defines the objectives for the sector's development, namely: universal access, uninterrupted 
supply, reasonable and efficient use of power, and energy transition.55 The National Public Service 
Authority (ASEP) regulates the electricity market.  
 
49 Law No.  196 of 8  February 2021.  
50 They are: the Agro -Solidarity Programme, the Livestock Replenishment Programme , the Programme 
supporting the production of fruit crops for export (using "precision farming"), the Women Agro -Entrepreneur 
Programme, the Programme for Sustainable Production in the Regions, the Mi Primer Crédito Agropecuario  
programme and the Climate Ch ange Adaptation and Mitigation Programme.  
51 BDA. Viewed at: https://www.bda.gob.pa/primera -pagina/ . 
52 BNP. Viewed at: https://www.banconal.com.pa/images/nuestro -
banco/memorias/Memoria_Anual_2020.pdf . 
53 The crops for which agricultural insurance is provided are: chillies, rice for sale and for seed, bananas, 
coffee, sugar cane, onion, citric fruits, lettuce, maize, melon, otoe (new cocoyams), oil palms, potatoes, 
pineapples, beans, watermelon and tomatoe s. Livestock insurance is available for poultry, cattle, buffalo, 
goats, equine animals, sheep and swine.  
54 During the review period, Law No.  6 was amended (chiefly) so as to incorporate provisions on 
consumer protection (Law No  6 of 3  February 1997, as am ended by Laws No.  67 of 9  December 2016, No.  2 of 
6 February 2018, No.  194 of 31  December 2020 and No.  209 of 22  April 2021).  
55 PEN 2015 -50. Viewed at: http://www.energia.gob.pa/plan -energ etico-nacional/ . WT/TPR/S/421 /Rev.1  • Panama  
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  4.32.   Foreigne rs may participate in the generation, distribution and marketing of electricity and 
have a controlling stake in companies supplying these services.56 The state -owned Empresa de 
Transmisión Eléctrica S.A.  (ETESA) continues to have a monopoly on power transm ission.57 The 
State is also involved in generation, distribution and marketing through state -owned companies and 
joint ventures (Table  4.3). 
Table 4.3 State -owned and joint ventures in the electricity sector, 2021  
Branch  Business  State shareholding 
(%) 
Generation  Panama Canal Authority (ACP)  100.00%  
Empresa de Generación Eléctrica S.A.  (EGESA)  100.00%  
AES Panamá S.A.  50.39%  
Enel Fortuna  49.90%  
Bahía Las Minas Corp.  49.90%  
Energía y Servicios de Panamá S.A.  (ESEPSA)  47.96%  
Transmission  Empresa de Transmisión Eléctrica  (ETESA)  100.00%  
Distribution and 
marketing  Elektra Noreste S.A.  (ENSA)  48.25%  
Empresa de Distribución Eléctrica Metro Oeste S.A.  (EDEMET)  48.24%  
Empresa de Distribución Eléctrica Chiriquí S.A.  (EDECHI)  49.90%  
a The ACP generates its own power.  
Source:  National Energy Secretariat. Viewed at: 
https://www.energia.gob.pa/mdocs -posts/descripcion -del-sector -electrico -panama -3/. 
4.33.   All operators, whether Panamanian or foreign, must meet the same requirements  in order to 
operate in the electricity sector; the requirements have not been changed since 2014. The 
ASEP awards licences (for 40  years, renewable) to power plants, except for hydro - and geothermal 
plants, for which it awards concessions (50  years, renew able).58 For hydroelectric plants, an 
environmental impact assessment must also be made by the Ministry of the Environment before a 
concession for water use can be awarded. The concession is for an indefinite period and requires the 
concessionaire to carry out wat er conservation works.59 ASEP also grants concessions (15  years, 
renewable) to distribution companies that also allow them to undertake marketing. In Panama, only 
distribution companies may market electricity to regulated clients (clients whose demand is l ess than 
100 kW). The territory is divided into three distribution and marketing areas, each with one 
operator.60 
4.34.   The National Interconnected System (SIN) comprises 30  power plants, one transmission 
company and three distribution and marketing companies. S IN's customers are large clients whose 
demand exceeds 100  kW; all other customers are "regulated clients". The National Dispatch Centre 
(CND), operated by ETESA, is responsible for power dispatch. The whole of Panama is connected to 
SIN except for Darién p rovince, where electricity is produced using stand -alone systems.61 
4.35.   Anti-competitive practices in all sectors of the economy, including electricity, are regulated 
by Law No.  45 of 31  October 2017 (section  3.3.4). Additionally, Law No.  6 restricts combinati ons of 
activities in the sector (Table  4.4). The Authority for Protection of the Consumer and Defence of 
Competition (ACODECO) investigates anti -competitive practices, assisted by ASEP.62 ASEP is 
responsible for implementing Law No.  6 in respect of mergers  and acquisitions.63 
 
56 In Panama power generation, transmission, distribution and marketing are public utilities. The 
Constitution provides that foreigners may not own more than 49% of the capital of a business that provides 
services of this nature unless othe rwise provided in law. Law No.  6 authorizes majority foreign ownership of 
companies in the electricity sector (Article  34). 
57 Article  35 of Law No.  6 of 3  February 1997 (Single Text of 5  July 2021).  
58 Articles  45 and  49 of Law No.  6 of 3  February 1997(Sing le Text of 5  July 2021); and ASEP. Viewed at: 
https://www.asep.gob.pa/?page_id=12866 . 
59 Article  35 of Decree -Law No.  35 of 22  September 1966; Executive Decree No.  70 of 27  July 1973; 
and Law No. 41 of 1  July 1998.  
60 Articles  47, 51 and 78 of Law No.  6 of 3  February 1997 (Single Text of 5  July 2021).  
61 PNE 2015 -50. 
62 Article  86, paragraph16, of Law No.  45 of 31  October 2007.  
63 Executive Decree No.  279 of 14  November 2006.  WT/TPR/S/421 /Rev.1  • Panama  
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  Table  4.4 Limits on combinations of activities in the electricity sector  
Businesses  Generation  Distribution and marketing  
Generation 
(Article  58) Control of another generation company is 
prohibited where by so doing both 
companies would supply more than 25% 
of consumption  A power generator may not control a 
distribution and/or marketing company  
Transmission 
(Article  72) May not participate in power generation  May not participate in distribution and 
marketing  
Distribution and 
marketing 
(Article  83) Not permitted to control a generation 
company if by so doing the 15% threshold 
of equivalent aggregate capacity in the 
area of distribution would be exceeded  Not permitted to control another 
distribution and/or marketing company 
where by so doing they would provide 
services to more than 50% of regulated 
clients  
Source:  Law No.  6 of 3  February 1997 (Single Text of 5  July 2021).  
4.36.   The electricity tariffs for regulated  customers are themselves regulated. ASEP determines the 
methodology by which ETESA (transmission) and the distribution and marketing companies set the 
tariffs, which may also be subject to floors and ceilings (maximum and minimum rates) and may be 
adjuste d every six months in the event of fluctuations in international oil prices. ASEP must also 
approve all the tariffs.64 Large clients may purchase electricity directly either from generating 
companies at an agreed price, or from distribution and marketing c ompanies at the regulated tariff; 
however, they may not purchase electricity directly from ETESA.65 
4.37.  Electricity tariffs were subsidized between 2014 and 2020. The subsidies were in the form of a 
discount for certain consumers and of financial transfers for  distribution and marketing companies. 
Discounts were provided to the agricultural sector (5%), pensioners and the disabled (25%, only to 
people consuming up to 600  kWh), political parties (50%) and the Panamanian Red Cross (100%). In 
2020, the full amount  of the discounts was PAB  40.1 million; the amount of the discount provided to 
the agricultural sector represented 10.7% of the total.66 During the review period, the transfers made 
to distribution and marketing companies were channelled through three fund s administered by ASEP: 
(1) the Tariff Stabilization Fund (FET), established in 2004 and in place until 2024; (2)  the Energy 
Compensation Fund (FACE), established in 2011 and wound up in 2016;67 and (3)  the Western Tariff 
Fund (FTO), established in 2015 an d in place until 2021. The FET subsidizes the tariff for clients that 
consume no more than 300  kWh per month,68 whereas the FTO subsidizes the tariff for customers of 
EDECHI, the distribution company operating in western Panama. Additionally, between April  2020 and 
March 2021, consumers eligible for the FET were awarded "one -off" discounts of 30% and 50% of their 
invoiced amount, depending on their power consumption.69 In 2020, state transfers amounted to 
PAB 254.5  million (Table  4.5). Moreover, in order to offset technical and commercial losses, in 2014, 
the State awarded subsidies to two generating companies: the state -owned company AES Panamá  
(PAB 28.8 million) and the joint venture Enel Fortuna  (PAB 19 million).70 
Table  4.5 State support for electricity distribution and marketing companies, 2014 -21 
(PAB millions)  
 2014  2015  2016  2017  2018  2019  2020  2021 
(Q2)  Total  
FET 53.9 43.3 21.7 32.0 121.5  176.3  223.4  69.3 741.4  
FACE 275.2  14.3 n.a. n.a. n.a. n.a. n.a. n.a. 289.5  
FTO n.a. 8.7 29.7 33.7 31.2 33.5 31.1 8.4 176.3  
Total  329.1  66.3 51.4 65.7 152.7  209.8  254.5  77.7 1,207.2  
n.a. Not applicable.  
Note:  The figures for the FET for 2020 and 2021 include the "one -off" discounts.  
Source:  ASEP, Informe de Aportes del Estado a Clientes del Sector Eléctrico . Viewed at: 
https:/ /www.asep.gob.pa/?page_id=12697 . 
 
64 Articles 93 -95 of La w No.  6 of 3  February 1997 (Single Text of 5  July 2021); and ASEP. Viewed at: 
https://www.asep.gob.pa/?page_id=12682 . 
65 Articles  6 and  72 of Law No.  6 of 3  February 1997 (Single Text of 5  July 2021).  
66 Laws No.  2 of 20  March 1986, No.  6 of 16  June 1987, No.  134 of 31  December 2013, and No.  11 of 
21 June 1979; and ASEP. Viewed at: https://www.asep.gob.pa/?page_id=12697 . 
67 Cabinet Resolution No.  2 of 5 January 2016.  
68 Until 2017, the tariff for clients consuming up to 500  kWh/month was subsidized.  
69 ASEP. Viewed at: https://www.asep.gob.pa/?page_id=12697 . 
70 ASEP. Viewed at: https://www.asep.gob.pa/?page_id=12697 . WT/TPR/S/421 /Rev.1  • Panama  
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  4.38.   Additionally, a cross subsidy continues to be in place for subsistence consumptio n (100  kWh 
or less). Up to 0.6% of the amount invoiced to customers who consume more than 500  kWh per 
month goes towards covering the 20% maximum discount on the price of subsistence consumption. 
The amount of the cross subsidy was PAB  4.3 million in 2020 (PAB 4.8 million in 2014).71 
4.39.   With the exception - since 2016 - of operators of plants generating up to 10  MW, all operators 
pay a contribution to the Rural Electrification Fund. The contribution amounts to 1% of net profit 
and, for co -generators and self -generators, 1% of annual gross income.72  
4.40.   Power consumption in Panama rose from 7,347  GWh in 2014 to 8,097  GWh in 2020. In order 
to ensure the electricity supply, Panama increased the installed capacity of SIN (from 2,709  MW to 
4,128  MW) and that of the tra nsmission and distribution networks, and took measures to reduce 
technical and commercial losses. Panama is a net exporter of electricity.73 The country participates 
in the Regional Electricity Market (MER), which enables all generating companies incorpora ted in 
Panama to sell their output with no restrictions on volume. The Empresa Propietaria de la Red  (EPR), 
owned by ETESA and other Central  American transmission companies, holds a 25 -year renewable 
concession to operate the regional transmission network in Panama .74 
4.41.   Conventional sources have historically accounted for the bulk of power generation in Panama. 
However, diversification in the energy matrix began in 2014 and, since then, the use of renewable 
sources to generate power has risen (Figure  4.1). Currently, the primary sources used are wind and 
solar energy; biomass is used chiefly in farming.75 The rise in the use of clean or renewable sources 
may reflect the incentives that Panama offers to promote the use of technologies that help to reduce 
the impact of climate change and dependency on imported fuel (Table  4.6). According to the 
authorities, the value of the incentives granted during the review period is not available.  
Chart 4.1 Power generation by source, 2014 -21 
 
Note:  Data for first half of 2021.  
Source:  ASEP statistics. Viewed at: https://www.asep.gob.pa/?page_id=12922 . 
 
 
71 ASEP. Viewed at: https://www.asep.gob.pa/?page_id=12697 . 
72 Article  87 of Law No.  6 of 3  February 1997, as amended by Article  1 of Law No.  67 of 
9 December  2016; and the Rural Electrification Office. Viewed at: https://www.oer.gob.pa/.  
73 Biannual statistics from ASEP. Viewed at: https://www.asep.gob.pa/?pag e_id=12922 . 
74 Article  45 of Law No.  6 of 3  February 1997 (Single Text of 5  July 2021); ASEP. Viewed at: 
https://www.asep.gob.pa/?page_id=12866 ; and  ETESA. Viewed at: 
https://www.etesa.com.pa/es/nuestra -empresa . 
75 International Renewable Energy Agency (IRENA) (2018), Renewables Readiness Assessment: 
Panama , Abu Dhabi. Viewed at: https://www.irena.org/ -
/media/Files/IRENA/Agency/Publication/2018/May/IRENA_RRA_Panama_2018_En.pdf . 
WT/TPR/S/421 /Rev.1  • Panama  
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  Table  4.6 Incentives for clean or renewable power generation, 2014 and 2020  
Legal basis  Project  Description  
Law No.  45 of 
4.8.2004  Construction, operation and 
maintenance of power plants 
running on hydroelectric 
power or renewable or clean 
energy  Exemption from tariffs on equipment and spare parts  
25% tax credit applicable to income tax (IR)  
Law No.  42 of 
20.4.2011  Construction, operation and 
maintenance of power plants 
running on biomass  Exemption from tariffs for machinery and inputs for a 
period of 10  years from when the plant first becomes 
operational  
Exemption from Tax on the Transfer of Movable 
Property and the Provision of Services (ITBMS) for 
imported machinery and inputs purchased on the 
domestic market, for a period of 10 years from when 
the plant first becomes operational  
Exemption from IR for a period of 10  years from when 
the plant first becomes operational  
Law No.  44 of 
25.4.2011  Construction and operation 
of wind farms  Exemption from tariffs on equipment and spare parts  
Exemption from ITBMS for imported equipment and 
parts purchased on the domestic market  
5% tax credit applicable to income tax (IR)  
Law No.  41 of 
2.8.2012  Construction, operation and 
maintenance of power plants 
running on natural gas  Exemption from tariffs on equipment and spare parts  
5% tax credit applicable to income tax (IR)  
Law No.  37 of 
10.6.2013  Construction, operation and 
maintenance of solar power 
stations and/or farms  Exemption from tariffs on equipment and spare parts  
Exemption from ITBMS for imported equipment and 
parts purchased on the domestic market  
5% tax credit applicable to income tax (IR)  
Source:  Secretariat of Energy. Viewed at: 
https://www.energia.gob.pa/mdocs -posts/descripcion -del-sector -electrico -panama -3/. 
4.3  Manufacturing  
4.42.   The contribution of manufacturing to GDP varied during the revi ew period. In 2014, it was 
5.9% and then rose to more than 6% during the period 2015 -17, before falling back to 5.9% in 
2018 and continuing to decrease (Table  4.7). During the review period, real growth in manufacturing 
fell because of the significant cont raction in 2020 caused by the health crisis, although employment 
remained steady at around 7.5% of the total workforce. During the review period, flows of FDI rose 
from USD  2,110  million in 2014 to USD  3,306  million in 2019, representing 5.7% of total FDI that 
year. 
Table  4.7 Main indicators in the manufacturing subsector, 2014 -20 
 
2014  2015  2016  2017  2018  2019  2020  
Contribution to GDP (% at current prices)a 5.9 6.4 6.2 6.1 5.9 5.7 5.7 
Real growth rate (%, at constant prices)a 3.5 3.4 1.1 2.6 1.0 -1.1 -22.0 
Employment (% of the total working 
population)  7.4 7.7 7.3 7.3 7.6 7.5 .. 
Memorandum:  construction (%)  14.6 16.1 16.9 17.9 18.3 17.9 10.9 
Trade (WTO definition)         
Exportsb        
Values (USD millions)  681 608 481 527 518 525 1,541  
Share in total exports (%)  66.6 66.6 62.2 64.7 63.7 60.4 81.1 
Growth rate (%)  1.3 -10.7 -20.8 9.4 -1.6 1.3 193.4  
Five most important products, by HS 
chapter (% of total manufacturing)         
26. Ores, slag and ash  0.0 0.0 0.0 0.0 0.0 0.0 69.2 
03. Fish and crustaceans, molluscs and 
other aquatic invertebrates  24.4 25.5 28.7 25.4 21.2 15.4 4.9 
44. Wood and articles of wood; wood 
charcoal  7.8 6.1 7.3 9.3 10.4 9.2 2.4 
71. Pearls, precious stones, precious 
metals; imitation jewellery; coin  5.6 3.3 3.4 6.7 7.2 9.9 2.2 
76. Aluminium and articles thereof  4.1 4.6 6.2 5.6 5.1 7.1 2.2 
Importsc        
Values (USD  millions)  9,459  8,970  8,519  9,110  9,125  8,968  5,562  
Share in total imports (%)  69.0 74.0 72.9 71.6 69.0 69.9 68.0 WT/TPR/S/421 /Rev.1  • Panama  
- 107 - 
   
2014  2015  2016  2017  2018  2019  2020  
Growth rate (%)  4.8 -5.2  -5.0 6.9 0.2 -1.7 -38.0 
Five most important products, by HS 
chapter (% of total manufacturing)         
84. Nuclear reactors, boilers, machinery 
and mechanical appliances  16.8 14.6 15.4 16.1 16.4 13.7 14.1 
30. Pharmaceutical products  3.6 5.2 6.1 5.9 6.8 7.8 11.2 
85. Electrical machinery and equipment; 
sound and/or image recorders and 
reproducers  10.4 10.9 10.5 11.9 10.0 10.8 10.5 
87. Motor vehicles, tractors  12.6 14.2 15.5 13.5 12.8 12.2 9.1 
39. Plastics and articles thereof  4.6 4.7 4.9 5.0 4.9 4.6 5.7 
Manufacturing trade balance 
(USD millions)  -8,778  -8,362  -8,038  -8,583  -8,607  -8,443  -4,022  
.. Not available.  
a Third quarter 2020.  
b Includes exports and re -exports from the Colon Free Zone.  
c Includes imports from the Colon Free Zone.  
Source:  INEC; and UNSD Comtrade database.  
4.43.   Panama is a net importer of manufactures, which account for almost 70% of all imports, chief 
among them electrical equipment and machinery. The share of pharmaceutical products rose in 2020 
because of the health crisis. Until 2019, the most important export item in the industrial sector was 
fishery -related products. However, in 2020, exports of copper ores increased significantly following 
the entry into o peration of an open -cast mine, rising to 69.2% of manufacturing exports.  
4.44.   The average tariff applied in the manufacturing sector (WTO definition of non -agricultural 
products) is relatively low. In 2021, it was 5.3%, lower than the figure for 2013 (6.4%). T he 
manufactures with the highest average tariff are fish and fish products (12.5% in 2013 and 11.1% 
in 2021) and clothing (10.7% in both 2013 and 2021) (Table A3.1).  
4.45.   In 2021, both applied and bound tariffs ranged from 0% to 81%. The products bound at the 
81% rate are two tariff lines related to salt (HS heading  2501). Comparing the applied MFN tariffs 
in 2021 with the bound tariffs, and taking into account only the lines that are strictly comparable in 
view of the change in nomenclature, there are a number of manufactures (nine tariff lines and three 
sub-lines) in which the MFN applied tariffs of Panama exceed the bound rates (section  3.1.4.2).  
4.46.   The principal objective of the Directorate -General of Industry (DGI) at the Ministry of 
Trade  and Industry (MICI) i s to develop industry through supportive policies, strategies and 
programmes that foster industrial innovation so as to achieve greater diversification in the domestic 
production base, industrial linkages and link -ups with international markets.76 
4.47.   The DGI' s duties include oversight, inspection and administration of the programmes and 
incentives established in 2009 under the Law on Industrial Development, such as the National 
Industrial Competitiveness Programme (PNCI), the Official National Industry Registe r and the 
Industrial Promotion Certificate (CFI) (section  3.2.4).77 The purpose of the PNCI as amended in 2017 
is to implement a national industrial development policy that drives productivity and 
competitiveness, increases investment and promotes changes in the structure of production that 
generate greater added value. The CFI offers incentives to all companies operating in the 
agro-industrial and manufacturing sectors and to those engaged in obtaining and processing raw 
materials in fisheries, agriculture , forestry or other sectors. Under the CFI, companies receive a 40% 
refund on any investment they make, for example, in management systems, quality and 
environmental protection, and in training human resources. Companies registered with the RIN 
qualify for  a preferential tariff of 3% on raw materials, semi -manufactures or intermediate products, 
machinery, equipment, spare parts, containers and packaging. The Law on Industrial Development 
also provided for the establishment of the Single Window for Industry to centralize the procedures 
that public entities require industry and agro -industry to perform.  
 
76 Law No.  76 of 23  November 2009.  
77 Law No.  76 of 23  November 2009; Law No.  25 of 23  May 2017; and Executive  Decree No.  37 of 
10 April 2018.  WT/TPR/S/421 /Rev.1  • Panama  
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  4.48.   Panama also has several horizontal and sectoral regimes to promote foreign investment, 
including free -zone regimes, initiatives such as the City of Knowledge, the special regime for the 
establishment and operation of multinational business headquarters (SEM regime), the special 
regime for the establishment and operation of multinational companies providing 
manufacturing -related services (EMMA regime) since 2020,  andthe special regime for the 
establishment of companies operating and developing agri -food clusters since 2021 (sections 
2 and 3).78 
4.49.   The duties of the MICI include collating statistics in order to conduct economic analyses and 
assessments; however, as in  2014, no surveys have been conducted to measure the effects that 
incentives have on manufacturing performance.  
4.4  Services  
4.4.1   Financial services  
4.4.1.1   General features  
4.50.   Panama has a large and important financial sector relative to the size of its economy. The 
sector accounted for 7.5% of real GDP in 2020 and its contribution to total employment was 2.5% 
(Table 1.1). Panama's financial services sector comprises banks (including development banks), 
savings and credit cooperatives and associations, finance companies, ins urers, pension funds, 
leasing companies, securities companies and remittance companies. Banks account for more than 
three quarters of financial sector assets (Table 4.8).  
Table 4.8 Structure of the Panamanian financial system, 2020  
Financial entity  Number  Assets (USD 
million)  Supervisory body  
Banks  69 157,101  Banking Supervisory Authority of Panama 
(SBP)   Official banks  2 20,829  
General licence  40 113,111  
International licence  16 23,160  
Agency licence  10 n.a. 
Cooperatives  .. 2,316  Panamanian Autonomous Cooperative 
Institute  
Savings and loan associations  3 48 National Mortgage Bank  
Insurers  54 3,530  Insurance Supervisory Authority  
Pension funds  3 643  Securities Market Supervisory Authority  
Development banks     
National Mortgage Bank  1 1.9 National Mortgage Bank  
Agricultural Development Bank  1 398  Agricultural Development Bank  
Finance companies  191  2,016  Ministry of Trade and Industry (MICI)  
Leasing companies  24 578  MICI  
Securities companies  174  3,988  Securities Market Supervisory Authority  
Remittance companies  17 72.1  MICI  
Pawnbrokers  178  9.7 MICI  
.. Not available.  
n.a. Not applicable.  
Source:  Information provided by the authorities.  
4.4.1.2   Banks and other financial institutions  
4.4.1.2.1   Features of the market  
4.51.   Panama's banking sector continued to show a good degree of soundness and high levels of 
capitalization and liquidity during the period under review, despite the adverse effects of the 
COVID -19 pandemic. According to info rmation provided by the authorities, in 2021 the financial 
system remained resilient and maintained a sound overall position, with capital and liquidity levels 
above regulatory minimums. The authorities attribute this to provisioning and capital buffers, a s well 
as banks' increased capitalization of profits, which were the main factors in maintaining solvency in 
 
78 Executive Decree No.  4 of February 2021 and Law No.  159 of 31  August 2020.  WT/TPR/S/421 /Rev.1  • Panama  
- 109 - 
  the midst of the crisis.79 As of June 2021, the Panamanian banking sector (known as the International 
Banking Centre or CBI) held assets totalling USD 128,984 million, a year -on-year decrease of 0.1%, 
but 30% higher than the USD 97,928 million reported in the previous report (for 2013).80 Financial 
intermediation activities accounted for about 7.5% of GDP in 2020 and 2.5% of employment.  
4.52.   In June 2021,  liquid assets reached a balance of USD 25,063 million, which was bolstered 
during most of 2020 to weather the health crisis. CBI deposits in June 2021 came to 
USD 95,301  million, representing positive growth during the crisis, underpinned by the expansion  of 
demand and savings deposits.  
4.53.   As of 31 July 2021, the Panamanian banking sector (CBI) comprised 68 banks 
(compared  to 92 in 2013): two were official banks (National Bank of Panama and Savings Bank), 40 
held a general  licence (51 in 2013), 16 with an international licence (17) and 10 with an agency 
licence  (14). Of the banks with a general licence, 15 were Panamanian privately -owned banks and 
53 were foreign -owned banks. All the banks with an international licence were foreign banks.81 As 
of the same d ate, three banks were in voluntary liquidation proceedings and four in compulsory 
liquidation proceedings.  
4.54.   The Panamanian banking system exhibits high solvency, liquidity and profitability ratios and 
has weathered the negative effects of the COVID -19 pande mic relatively comfortably (Table 4.9). 
In June 2021, the CBI's risk -weighted equity/assets ratio (capital adequacy ratio) was 16.2%, 
including capital requirements for credit, market and operational risks under Basel III, well above 
the regulatory minimum  of 8%. While the COVID -19 pandemic has negatively impacted banks' ability 
to generate income, sensitivity analyses conducted by the Banking Supervisory Authority show that 
the solvency and liquidity of the banking system have not been affected. This is du e to the strict 
application of prudential regulations, such as risk -based loan provisioning and capital requirements, 
which has contributed to the relatively robust financial position of banks, in spite of the crisis.  
4.55.   Likewise, the monthly average liquidit y of the domestic banking system was 62.2%, above 
the 30% required by law. As the authorities have indicated, in terms of legal liquidity, most banks 
maintain higher levels than before the start of the pandemic, a reflection of a comprehensive 
strategy to safeguard asset quality, build reserves and expand liquidity. This increase was 
implemented through an increase in funding, chiefly from deposits, but also from financing, both 
from the local interbank market and from credit lines from correspondent banks.82 The authorities 
have also noted that Panamanian banks have historically managed balanced funding structures, 
supported by relatively diversified and stable deposit bases. Banks in Panama have maintained 
ample liquidity levels since before the pandemic, partly because banks increased their liquidity 
buffers following the implementation of the Liquidity Coverage Ratio (LCR) agreement (see below). 
The authorities consider that the LCR and high -quality liquid asset requirements are particularly 
important giv en the absence of a central bank and deposit insurance, which is why they remained 
in place during the COVID -19 pandemic.83 
4.56.   Despite the crisis caused by the pandemic, asset quality remained at more than acceptable 
levels, since the share of non -performing plus past -due loans in the total loan portfolio is only 2% 
and has declined considerably since 2014 (2.5%). However, the crisis has adversely affected 
profitability ratios: at the end of 2020, the CBI's return on assets (ROAA) was 0.9%, compared 
to 1.6% in December 2019, while return on equity (ROE) was 6.4% (12.2% in December 2019). 
 
79 Banking Supervisory Authority of Panama (2021). Informe de Actividad Bancaria,  May 2021. Viewed at: 
https://www.superbancos.gob.pa/superbancos/documentos/financiera_y_estadistica/reportes_estadisticos/202
1/05/IAB -0521.pdf . 
80 Banking Supervisory Authority of Panama (2021). Informe de Actividad Bancaria,  June 2021. Viewed at: 
https://www.super bancos.gob.pa/superbancos/documentos/financiera_y_estadistica/reportes_estadisticos/202
1/06/IAB -0621.pdf . 
81 Online information from the SBP. Viewed at: 
http://www.superbancos.gob.pa/es/reportes_estadisticos.  
82 Banking Supervisory Authority of Panama (2021) . Informe de Actividad Bancaria,  June 2021. Viewed at: 
https://www.superbancos.gob.pa/superbancos/documentos/financier a_y_estadistica/reportes_estadisticos/202
1/06/IAB -0621.pdf . 
83 Banking Supervisory Authority of Panama (2021). Informe de Actividad Bancaria,  June 2021. Viewed at: 
https://www.superbancos.gob.pa/superbancos/documentos/financiera_y_estadistica/reportes_estadisticos/202
1/06/IAB -0621.pdf . WT/TPR/S/421 /Rev.1  • Panama  
- 110 - 
  The first months of 2021 saw an improvement in yields, with ROAA rising to 1.0% and ROE at 7.9% 
for the CBI in June (Table 4.9).  
Table 4.9 Panama's domestic banking system and International Banking Centre: 
liquidity, capital adequacy and profitability indicators, 2014 –21 
(%) 
Indicator  Nov. 
2014  Dec. 
2015  Dec. 
2016  Dec. 
2017  Dec. 
2018  Dec. 
2019  Dec. 
2020  June 
2021  
Domestic banking system          
Liquidity ratio (monthly 
average)  60.3 59.1 60.0 57.1 57.1 56.8 62.7 62.2 
Return on average assets 
(ROAA)  1.5 b 1.5 1.3 1.6 1.6 1.4 0.8 1.0 
Return on equity (ROE)  14.6 14.1 12.0 13.5 13.4 11.8 6.4 8.7 
Non-performing + past -due 
portfolio/Total domestic 
portfolio  2.4 2.7 2.6 2.7 2.8 2.5 2.4 2.2 
International Banking 
Centre          
Capital adequacy ratio 
a(solvency)  14.3 15.2 15.2 16.1 16.0 15.2 15.9 16.4c 
Return on average assets 
(ROAA)  1.5b 1.4 1.3 1.6 1.7 1.6 0.9 1.0 
Return on equity (ROE)  14.0  13.4 11.9 12.9 13.2 12.2 6.4 7.9 
Non-performing + past -due 
portfolio/Total domestic 
portfolio  2.5 2.5 2.4 2.5 2.6 2.3 2.2 1.9 
a The legal minimum is 8%.  
b Return on assets (ROA).  
c In March 2021.  
Source:  Banking Supervisory Authority of Panama, Reportes Estadísticos , various years; online information 
viewed at : http://www.superbancos.gob.pa/es/reportes_estadisticos_hist . 
4.57.   In June 2021, the CBI recorded cumulative net profits of USD 617.9 million, down 5.7% from 
June 2020. This is mainly due to a decline in portfolio interest income (associated with the credit 
slowdown), as well as to outlays related to the creation of loan -loss provisions. However, while net 
interest income declined by 12.3% and has yet to regain the levels seen at the start of the pandemic, 
the decline in general expenses ( -1.7%) and the slower generation of reserves against credit risk  
(-16.1%) have contri buted to an improvement in banks' cumulative net profits to June 2021. The 
CBI's results are largely the outcome of a significant contraction in income by an internationally 
licensed foreign banking entity, as dividend payments from its subsidiaries were d eferred.  
4.58.   After a period of rapid expansion between 2013 and 2019, flows of new bank lending plunged 
in 2020 as a result of the pandemic. At the end of the first half of 2021, new loan flows started to 
recover. Cumulative new lending from January to June 20 21 by banks amounted to 
USD 7,797.6  million, an increase of 5.7% compared to June 2020. However, the balance of the 
credit portfolio granted by banks was USD 54,226 million, 1.8% less than in June 2020. This was in 
response to the overall economic contract ion. The CBI's total non -performing loan ratio (+30 days) 
stood at 3.3% in June 2021.84  
4.4.1.2.2   Legal framework  
4.59.   The Banking Supervisory Authority of Panama (SBP), established in 1998, is the regulator 
and supervisor of the banking sector and fiduciary activities; its powers include issuing licences, 
ensuring that the banks maintain appropriate solvency and liquidity ratios, developing banking 
regulations, imposing sanctions and supervising bank liquidation proceedings. In accordance with 
Article  4 of th e Banking Law, the SBP has exclusive authority to regulate and supervise banks, the 
banking business and other entities and activities assigned to it by other laws.  
 
84 Banking Supervisory Authority of Panama (2021). Informe de Actividad Bancaria,  June 20 21. Viewed at: 
https://www.superbancos.gob.pa/superbancos/documentos/financiera_y_estadistica/reportes_estadisticos/20 2
1/06/IAB -0621.pdf . WT/TPR/S/421 /Rev.1  • Panama  
- 111 - 
  4.60.   The main objective of the SBP is to ensure the soundness and efficiency of the banking 
system. To that end, the SBP must carry out the inspections ordered by the Banking Law, by the 
Board of Directors and those it deems necessary or prudent. For that purpose, the SBP maintains a 
macroprudential and microprudential supervisory framework. Macropru dential supervision aims to 
prevent and mitigate systemic risks that may threaten financial stability, in order to ensure the 
soundness of the financial system as a whole. Microprudential supervision focuses on the soundness 
of individual banking instituti ons and is governed by a risk -based approach.85 
4.61.   The main legal instrument is Decree -Law No. 2 of 22 February 2008, as amended and 
consolidated into a single text by Executive Decree No. 52 of 30 April 2008 (Banking Law). Other 
instruments include Decree -Law No. 2 -2008, which amends Decree -Law No. 9 of 1998 (in force since 
25 August  2008); Law No. 179 of 16 November 2020, which regulates the financial leasing of real 
estate and introduces other provisions; Law No. 130 of 31 December 2013, which establishes t he 
prudential regulatory framework for microfinance institutions and amends provisions contained in 
Law No. 10 of 2002, which establishes rules on the microfinance system; Law No.  129 of 
31 December  2013, which promotes access to credit and modernizes the system of secured 
transactions through mortgages on movable property, and issues other provisions; Law No.  135 of 
31 December 2013, which amends Law No. 24 of 2002 regulating the information service relating 
to the credit history of consumers or clients; L aw No. 81 of 2009 (Credit Card Law); and Law No.  24 
of 2002 (Credit History Law) and the amendment thereto by Law No.  14 of 2006.  
4.62.   Executive Decree No. 52 of 2008 introduced important amendments to the Banking Law that 
strengthened the powers of the SBP by consolidating its supervision of all bank operations, including 
those of subsidiaries and branches, foreign operations, and those of financial conglomerates. In 
addition, it was established that minimum capital requirements had to be calculated on a 
risk-weighted basis, and capital adequacy and liquidity requirements were extended to banks with 
an international licence under the home supervision of the SBP.  
4.63.   Since its last trade policy review (2014), Panama has amended the legal framework of the 
financial se ctor to bring it into line with international supervisory standards, increase transparency, 
prevent tax evasion, build the capacity of the supervisory authority and protect customers. One of 
the main amendments was introduced by Law No. 70 of 2019, which u pdates the Panamanian tax 
system in order to establish tax evasion as a predicate offence for money laundering. Several laws 
were also introduced on prevention of money laundering, financing of terrorism and financing of the 
proliferation of weapons of mas s destruction (Box 4.2).  
Box 4.2 Laws on prevention of money laundering, financing of terrorism and financing of 
the proliferation of weapons of mass destruction  
• Law No.  47 of 2013, which adopts a custody regi me applicable to bearer shares, as amended by Law 
No. 18 of 2015.  
• Law No.  10 of 2015, which amends and adds an article to the Criminal Code (terrorism and financing 
of terrorism).  
• Law No.  11 of 2015, which issues provisions on international legal ass istance in criminal matters.  
• Law No. 23 of 2015, which adopts measures to prevent money laundering, financing of terrorism and 
financing of the proliferation of weapons of mass destruction, and issues other provisions, as amended 
by Law No. 21 of 2017.  
• Law No.  70 of 2019, which amends the Criminal Code and establishes other provisions. This Law 
incorporates tax evasion into the legal system of the Republic of Panama as a criminal offence and 
predicate offence for money laundering.  
• Executive Decree  No. 363 of 2015, which regulates Law No. 23 of 27 April 2015 adopting measures to 
prevent money laundering, financing of terrorism and financing of the proliferation of weapons of mass 
destruction, and issuing other provisions.  
• Executive Decree No. 587  of 2015, which regulates the preventive freezing developed in Title VI of Law 
No. 23 of 27 April 2015 adopting measures to prevent money laundering, financing of terrorism and 
financing of the proliferation of weapons of mass destruction, and issuing othe r provisions.  
The aforementioned laws can be viewed at:  https://www.superbancos.gob.pa/es/prev -cont-op-
il/regimen/leyes .  
 
85 Information from the SBP. Viewed at: https://www.superbancos.gob.pa/es/marco -supervision . WT/TPR/S/421 /Rev.1  • Panama  
- 112 - 
  Source:  Information provided by the authorities.  
4.64.   The Banking Supervisory Authority keeps banking regulation rules up to date through 
resolutions and banking agreements. The regulations impl emented during the period under review 
include those relating to asset classification, capital adequacy, market risk, corporate governance, 
external auditors, prevention of misuse of banking services, and the appointment, functions and 
duties of the compli ance officer (Box 4.3). A number of regulations linked to the COVID -19 pandemic 
were also introduced during the period under review.  
Box 4.3 Banking agreements concluded between 2013 and 2021  
1. Agreements on r isk management  
• Agreement No. 4 -2013 and the amendments thereto: provisions on credit risk management and 
administration.  
• Agreement No. 1 -2015 and the amendments thereto: set out capital adequacy rules applicable to 
banks and banking groups.  
• Agreem ent No 3 -2016 and the amendments thereto: establish rules for the determination of credit -
risk- and counterparty -risk-weighted assets.  
• Agreement No 2 -2018 and the amendments thereto: establish provisions on liquidity risk management 
and short -term liqui dity coverage ratio.  
2. Prevention agreements for banks  
• Agreement No. 4 -2015, as amended in 2018, establishing the procedure for the registration of bearer 
share custodians.  
• Agreement No. 5 -2015 and the amendments thereto: prevention of misuse of services provided by 
other entities under the supervision of the Banking Supervisory Authority.  
• Agreement No. 7 -2015: catalogue of warning signs for the detection of suspicious transactions related 
to money laundering, financing of terrorism a nd financing of the proliferation of weapons of mass 
destruction.  
• Agreement No. 9 -2015, as amended in 2017: punitive administrative procedure in the area of 
prevention.  
• Agreement No. 10 -2015 and the amendments thereto: prevention of misuse of banking  and fiduciary 
services.  
• Agreement No. 6 -2016, which establishes guidelines for management of risk relating to the prevention 
of money laundering, financing of terrorism and financing of the proliferation of weapons of mass 
destruction, which may arise in connection with new products and new technologies.  
• Agreement No. 7 -2016, which establishes guidelines for the prevention of money laundering, financing 
of terrorism and financing of the proliferation of weapons of mass destruction in cross-border 
correspondent banking relationships offered by local correspondent banks.  
• Agreement No. 2 -2017 and the amendment thereto: update the provisions on funds transfers.  
3. Prevention agreements for other supervised financial entities  
• Agreeme nt No. 1 -2018, which establishes the process of registration of money remittance companies 
with the Banking Supervisory Authority in relation to the prevention of money laundering, financing of 
terrorism and financing of the proliferation of weapons of mas s destruction.  
• Agreement No. 2 -2018, which establishes the process of registration of exchange houses with the 
Banking Supervisory Authority in relation to the prevention of money laundering, financing of terrorism 
and financing of the proliferation of weapons of mass destruction.  
• Agreement No. 3 -2018, which develops the concept of inspection of other supervised financial entities.  
• Agreement No. 4 -2018, which establishes guidelines for the prevention of misuse of services provided  
by money remittance companies.  
• Agreement No. 5 -2018, which establishes guidelines for the prevention of misuse of services provided 
by exchange houses.  
• Agreement No. 1 -2019, which establishes a catalogue of warning signs for the detection of suspici ous 
transactions related to money laundering, financing of terrorism and financing of the proliferation of 
weapons of mass destruction for money remittance companies and exchange houses.  WT/TPR/S/421 /Rev.1  • Panama  
- 113 - 
  The above -mentioned agreements can be viewed at: https://www.superbancos.gob.pa/es/leyes -y-
reg/acuerdos - 
Source:  Information provided by the authorities.  
4.65.   The banking regime in Panama is fairly open. The SBP grants three types of licences to engage 
in the banking business in or from Panama, depending on the type of activities to be carried out. 
The three types of licences are:  
• General licence: allows banking inside or outside Panama (transactions that are 
completed, conducted or have effects abroad); may be granted to Panamanian banks 
and to foreign banks established in Panama through subsidiaries or branches. The 
minimum capital requirement is PAB 10 million. This type of licence authorizes the bank 
that holds it to carry out any type of banking activ ity authorized by the Banking 
Supervisory Authority of Panama.  
• International licence: allows transactions that are completed, conducted or have effects 
abroad to be undertaken from an office established in Panama, and for such other 
activities as the Sup ervisory Authority authorizes to be carried out; it is granted to 
banks with headquarters abroad that have a physical presence in Panama, which are 
not allowed to engage in transactions in the Panamanian market, but are allowed to 
acquire Panamanian domest ic public debt via the Panamanian securities market. The 
minimum capital requirement is PAB 3 million, of which PAB 250,000 must be held as 
collateral in one of the two official banks.  
• Agency licence: allows foreign banks to set up a representative offic e in Panama and to 
carry out such other activities as the Supervisory Authority authorizes, but does not 
authorize them to carry out any banking operations in Panama; there is no minimum 
capital requirement. This licence authorizes the bank to manage banki ng operations 
conducted from an office physically located in Panama. Representative offices are 
required always to include the term representative office in all their activities.  
4.66.   Foreign banks must have authori zation or no objection from their foreign supervisory body to 
apply for a licence to engage in banking in or from Panama or to apply for a representative office. 
Banks  with a general or international licence can set up as subsidiaries or branches. Branches 
in Panama and establishments abro ad may be opened without a licence, but only after the SBP has 
been notified and has given its approval. There are no restrictions on the number of branches that 
can operate. Foreign banks are accorded national treatment in terms of the activities in which  they 
can engage in Panama, in accordance with the type of licence they have been granted. There  are no 
restrictions on the participation of foreign capital in banks established in Panama, neither are there 
any nationality requirements or restrictions appl icable to the board members or  directors of a bank. 
However, the Banking Law stipulates that branches of foreign banks must appoint at least two 
general agents who reside in Panama, at least one of whom must be  a Panamanian national.  
4.67.   According to Executive  Decree No. 52 of 30 April 2008, in order to obtain a banking licence, 
in addition to meeting the requirements concerning minimum capital, whose origin must be clearly 
determinable, the bank's corporate governance policies must be submitted, as must a busi ness plan 
that demonstrates its viability. Agreement No. 3 -2001 (5  September  2001), as amended by 
Agreement No. 2 -2006, establishes the criteria and requirements for obtaining a banking licence. 
The basic requirements are economic and moral solvency, a com pliant corporate governance 
structure, and that the capital is not represented, either in whole or in part, by bearer shares. Other 
requirements vary, depending on whether the legal person  in question is organized in accordance 
with Panamanian or foreign l aw. The application approval process takes between six months and a 
year, depending on the type of licence sought.  
4.68.   The Banking Law also contains capital adequacy ratio requirements for general -licence or 
international -licence banks whose home supervisor i s the SBP. Those entities must maintain capital 
funds equivalent to at least 8% of their total assets and off -balance -sheet transactions, weighted 
according to their risks.86 They must also hold primary capital equal to no less than 6% of their 
risk-weighted off -balance sheet assets and operations representing a contingency. In addition, both 
 
86 Article 70 of Executive Decree No. 52 of 30 April 2008.  WT/TPR/S/421 /Rev.1  • Panama  
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  types of banks must hold a minimum balance of liquid assets equivalent to 30% of thei r total gross 
domestic and foreign deposits; this ratio is 20% for banks that maintain a quarterly average of 
interbank deposits of more than 80% of their total deposits.87 The authorities indicated that, while 
the provision allows this, in practice, no ba nk has applied it and the preference is to maintain a 
minimum balance of 30%. In addition, general -licence banks must hold assets in Panama equivalent 
to a percentage of their local deposits determined by the SBP, which is the same for all banks and 
must n ot exceed 100%.88 In July 2021, the percentage was 60%.89 A bank's capital reserves cannot 
be reduced without the prior authorization of the SBP.  
4.69.   According to the Banking Law, banks are not allowed to use their shares as collateral for loans 
they grant or to grant loans to a single natural or legal person if the value of the loan exceeds 25%  of 
their capital, or 30% where loans to another bank are concerned. A bank may not own shares or 
holdings in non -banking or finance -related companies whose value exceed s 25% of the bank's 
capital funds. Restrictions are also applied to prevent the concentration in related parties of 
unsecured loans or loans secured with collateral other than deposits granted by the bank and entities 
constituting a banking group with it t o related parties, which, in aggregate, may not exceed 25% of 
the funds.90 Banks with an international licence for which the SBP is the home supervisor are subject 
to the same restrictions.  
4.70.   To counter the adverse effects of the COVID -19 pandemic, Law No.  156 of 30  June 2020 
("Moratorium Law") was enacted, establishing, with retroactive effect from 1 March 2020, a 
moratorium on loans granted by banks, cooperatives and finance companies, both public and private, 
until 31 December 2020. Since then, the morator ium was extended until 30 June 2021 initially, and 
then until 31 December 2021. To implement the moratorium, the SBP adopted several banking 
agreements (Box 4.4). According to the Law, banks may not increase interest rates or apply 
surcharges or any other interest for non -payment or late payment on the modified loans established 
by the Law. Once the moratorium period has expired, the banks, in agreement with the debtor, must 
establish the necessary mechanisms to update their commitments. To that end, Agreem ent 
No. 002-2021 of 11 June 2021 was approved, establishing the parameters and guidelines that will 
be applicable to modified loans. Agreement No. 2 -2020 was amended by Agreement No.  9-2020, 
which established a special provision requirement to cover the ri sk of modified loans (category 
"Modified Special Mention"). This provision must be equal to the International Financial Reporting 
Standards (IFRS) provision or a generic provision equal to 3% of the gross balance of the modified 
loan portfolio, including a ccrued uncollected interest and capitalized expenses, whichever is higher.  
 
87 Article 73 of Ex ecutive Decree No.  52 of 30  April 2008 and SPB Agreement No.  4 of 2008.  
88 Article 78 of Executive Decree No. 52 of 30 April 2008.  
89 Agreement No. 014 -2019: Viewed at: 
https://www.superbancos.gob.pa/superbancos/documentos/leyes_y_regulaciones/acuerdos/2019/Acuerdo_14 -
2019.pdf . 
90 Articles 95, 99 and 96, respectively, of Executive Decree No.  52 of 30  April 2008. Banks and the 
owner of bank shares in which the banking group is consolidated are prohibited from: (a) granting unsecured 
loans or credit facilities in favour of any of the ir employees, the total amount of which exceeds the annual 
salaries, wages and other emoluments accruing to the employee concerned; (b) granting loans or credit 
facilities, on terms and conditions of cost and term more favourable than those customary in th e market for 
the type of transaction concerned, to its managers, officers and employees, or any natural or legal person 
owning 5% of the shares of the bank or of the owner of bank shares in which the banking group is 
consolidated, and any person forming an  economic group with the aforementioned; (c) granting, directly or 
indirectly, unsecured credit facilities exceeding 5% of its capital funds or loans secured by collateral other than 
deposits exceeding 10% of its capital funds, in favour of: (i) one or mor e of its directors or any natural or legal 
person directly or indirectly owning 5% or more of the shares of the bank or of the owner of banking shares in 
which the banking group is consolidated, be they granted jointly or severally; (ii) any legal person o f which one 
or more of its directors is a director or officer or a guarantor of the loan or credit facility; (iii) any legal person 
or association of persons, in which the bank or the owner of banking shares in which the banking group is 
consolidated, or o ne or more of its directors or officers, holds individually or jointly a significant interest, a 
preponderant influence or, in any case, an ownership interest exceeding 20% in the respective legal person; 
and (iv) its managers, officers, employees and thei r spouses, except in the case of mortgage loans for their 
principal residence or secured personal loans, granted in accordance with established staff schemes.  WT/TPR/S/421 /Rev.1  • Panama  
- 115 - 
  Box 4.4 Loan modification agreements concluded by banks to mitigate the effects of the 
COVID -19 pandemic  
• Agreement No. 2 -2020 of 16 Ma rch 2020, which establishes additional, exceptional and temporary 
measures for compliance with the provisions contained in Agreement No. 4 -2013, and allows banks to 
modify the originally agreed conditions of corporate and consumer loans, in order to provid e financial 
relief to customers whose ability to pay is impaired by the situation resulting from the COVID -19 
pandemic.  
• Agreement No. 3 -2020 of 26 March 2020, which specifies and makes more flexible the modifications 
that may be accepted by the debtor by any means or modality.  
• Agreement No. 7 -2020 of 14 July 2020, which extends until 31 December 2020 the period for banks 
to assess the loans adversely affected by the situation caused by the COVID -19 pandemic and make 
the appropriate modifications. It  also establishes that such loans will keep the risk classification 
registered upon the entry into force of Agreement No. 2 -2020, until the SBP establishes the criteria for 
classification and determination of the provisions that will be applied to the modi fied loans.  
• Agreement No. 9 -2020 of 11 September 2020 amends Agreement No. 2 -2020 to establish, inter alia , 
the treatment of modified loans and define the constitution of the corresponding provisions to protect 
the interest of depositors and preserve financial stability.  
• Agreement No. 13 -2020 of 21 October 2020, amending Agreement No. 2 -2020, in order to establish 
an additional term –until 30 June 2021 – for banks to grant financial relief measures on modified loans 
in the banking system.  
Agreement No.  002-2021 of 11 June 2021 "establishing the parameters and guidelines that will be applicable 
to modified loans". The amendments to the banking regulations envisage several measures, including 
the following:  
- For those loans to which banks mad e modifications according to the parameters contained in Agreement No. 
2-2020, and whose debtors are in compliance with the originally agreed terms and conditions (prior to 
the financial relief measures as a result of the COVID -19 pandemic), the provisions  set forth in 
Agreement No. 4 -2013 on credit risk shall apply and they will be classified in the normal category. 
They shall be excluded from the category of modified loans.  
- Loans that as of 30 June 2021 are classified in the modified special mention cat egory may be reinstated 
under the scope of application of Agreement No. 4 -2013, after complying with its new terms and 
conditions, and provided that they show proof of meeting consecutive payments over the six -month 
period in accordance with the payment pl an agreed with the client. In these cases such loans may be 
classified in the normal category.  
- Loans that as of 30 June 2021 are classified in the modified special mention category, whose new terms and 
conditions included grace periods on capital and/or interest or others, and that are still under that 
modality, will remain classified in the modified special mention category  
until the agreed grace period is fulfilled. Such loans may be reinstated under the scope of application of 
Agreement No.  4-2013 afte r fulfilling with the terms and conditions set out in the previous paragraph.  
- Loans restructured in accordance with Agreement No. 4 -2013, the terms and conditions of which the bank 
has modified and which are up to date in their payments, will keep the cl assification they had at the 
time of their modification and will no longer be considered modified loans.  
- Loans restructured in accordance with Agreement No. 4 -2013, the terms and conditions of which the bank 
has modified and which have defaulted on these  new terms, will be reinstated in accordance with the 
guidelines of Agreement No. 4 -2013 and will be classified on the basis of the category in which they 
were before the modification, and shall be added the corresponding days of arrears. Likewise, they 
shall maintain the provision equivalent to the provision originally constituted under Agreement No. 4 -
2013 or the provision constituted in accordance with Agreement No. 2 -2020, whichever is greater.  
- Loans classified as substandard, doubtful and loss that w ere modified in accordance with Agreement No. 2 -
2020 and met their payments during the first half of 2021, shall keep the classification they had at the 
time of their modification. Likewise, they shall maintain the provision equivalent to the provision 
originally constituted under Agreement No. 4 -2013 or the provision constituted in accordance with 
Agreement No. 2 -2020, whichever is greater. The provisions of Agreement No. 4 -2013 shall be 
applicable to these loans and, consequently, they shall no longer be considered modified loans.  
- Loans classified as substandard, doubtful and loss that were modified from 1 January 2021 onwards in 
accordance with Agreement No. 2 -2020 and defaulted partially or totally on their payments during the 
first half of 2021 shall be reinstated in accordance with Agreement No. 4 -2013.  
Source:  SPB. Information viewed at: https://www.superbancos.gob.pa/es/leyes -y-reg/acuerdos -. 
4.71.   In June 2021, the SBP issued two rules on credit -risk management relating to the process by 
which modified loans are managed. These rules are expected to have a significant impact on both 
risk classi fication of banks' loan portfolios and provisioning. Restructuring of modified loans is 
allowed from 1 July until 30 September 2021, provided that the new terms and conditions meet 
financial viability criteria and that the debtor demonstrates that they hav e the ability to pay and 
commit to catch up on overdue amounts. Restructured modified loans may not involve the successive WT/TPR/S/421 /Rev.1  • Panama  
- 116 - 
  implementation of several restructuring measures. The periods without debt service, i.e. principal 
and/or interest payments, may not exceed, for the same credit facility, six months for consumer 
loans and 12 months for corporate loans, subject to the debtor's ability to pay. As a result of this 
agreement, banks registered 490,412 clients with modified loan operations as of June 2021, wi th 
balances of USD 15,968.76 million.91 
4.72.   Cabinet Decree No. 23 of 19 August 2020 created the "Special Banking Stimulus Fund" to 
promote the economic reactivation of the banking system, meet temporary liquidity needs of private 
general -license banks, and gra nt credit facilities to productive sectors in order to stimulate the 
country's economic growth and mitigate the adverse effects of the pandemic.92 The purpose of this 
trust, with a total value of PAB 1 billion, is to provide loans for three to five years to provide additional 
liquidity to general -license banks that need it. The BNP, in consultation with the SBP, administers 
the Fund's resources, act ing as a second -tier bank to provide credit facilities for banks to lend funds 
to productive sectors, thereby supporting their economic recovery and stimulating the country's 
growth (section 1.2.3).93  
4.73.   As noted in the report for the previous review, there is no bank deposit insurance in Panama. 
This has not changed during the period under review. However, there are provisions in the Banking 
Law stipulating that preference be given to the payment of deposits of up to PAB 10,000 per person 
in cases of compuls ory liquidation.94 In August 2021, 96% of the deposits in SBN banks were 
recording balances of less than PAB 10,000.  
4.74.   Panama has a wide range of non -bank financial intermediaries, particularly trust companies 
(44, apart from banks, as of July 2021), whose t rust assets totalled USD  25,244  million as of 
March  2021.95 
4.75.   Law No. 4 of 17 May 1994 and the amendments thereto, including Law No.  46 of 
16 June 2017, regulated by Executive Decree No. 29 of 8 August 1996, requires that in the interest 
rates of personal an d local commercial loans greater than PAB 5,000 granted by banks and finance 
institutions, the sum equivalent to 1% per annum on the same amount that serves as the basis for 
the calculation of interest be included and withheld. Under the Law, 50% of these amounts go to the 
National Treasury for the payment of the preferential tranches foreseen in the preferential mortgage 
loans, 12.5% is remitted to the Agricultural Development Bank, 12.5% to the Ministry of Agricultural 
Development, 5% to the Agricultural Insurance Institute and the remaining 20% to the Special 
Interest Compensation Fund (FECI), administered by the SBP, the Banking Supervisory Authority of 
Panama. This Law also establishes the system of preferential interest rates for the agricultural secto r 
and the agro -industrial sector exporting non -traditional products and provides that they will be 
entitled to a discount on the interest rate agreed with the lending bank or financial institution for 
loans of up to PAB 500,000.  
4.76.   Banks are required to pay, for services provided by the SBP, a banking regulation and 
supervision fee. Banks are subject to annual payment of the fee at the following rates: (a)  banks 
with a general licence: PAB 30,000 plus an amount equivalent to PAB 35 for each PAB 1 million or 
fraction thereof of total assets, up to a maximum amount of PAB 100,000; (b)  banks with an 
international licence: PAB 15,000; and (c) banks with an agency licence: PAB 5,000. The amount of 
the fee must be related to the costs incurred by the SPB to perform i ts functions in accordance with 
its budget. The SPB has the power to increase or decrease the amount of the applicable fee.  
 
91 Banking Supervisory Authority of Panama (2021). Informe de Actividad Bancaria,  June. Viewed at:  
https://www.superbancos.gob.pa/superbancos/documentos/financiera_y_estadistica/reportes_estadisticos/202
1/06/IAB -0621.pdf. 
92 Circular No. SBP -DR-0260-2020, 19 August 2020. Viewed at: 
https://superbancos.gob.pa/superbancos/documentos/leyes_y_ regulaciones/circulares/2020/circular_260 -
2020.pdf?v=1.02 . 
93 National Bank of Panama (2020), Memoria Anual 2020 . Viewed at: 
https://www.banconal.com.pa/images/ nuestro -banco/memorias/Memoria_Anual_2020.pdf . 
94 Articles 161 and 167 of Executive Decree No. 52 of 30 April 2008.  
95 Information from the SBN. Viewed at: 
https://www.superbanc os.gob.pa/es/fiduciarias/estadisticas/otros . WT/TPR/S/421 /Rev.1  • Panama  
- 117 - 
  4.4.1.3   Insurance  
4.4.1.3.1   Features of the market  
4.77.   In June 2021, Panama's insurance market comprised 23 insurance companies.96 Of those, 
11 were domes tically -owned and 12 were foreign -owned. There were also four reinsurance 
companies; three managers of reinsurance, six captive insurers; six managers of captive insurers; 
29 insurance adjusters; and one insurance brokers' portfolio manager. In June  2021, 
2,791  insurance brokers' licences had been granted to natural persons and 393 to legal persons. In 
addition, 13  reinsurance brokers' licences had been granted. The market is led by two 
Panamanian -owned companies which together hold 40.9% of the market; the se are followed by 
two foreign -owned companies and a branch of  a foreign company; together these five companies 
control 74.3% of the market. These same five companies held 57.1% of the equity in June 2021.97 
4.78.   The total value of the insurance premiums writte n in 2021 was PAB 761  million. By branch of 
insurance, the largest portfolios are those for motor vehicles and health, which together account for 
one third of total premiums. The net worth of the 23 insurance companies, in June 2021, was 
PAB 1,481.8 millio n. In June 2021, insurance company assets totalled PAB 3,535.6  million, while 
liabilities amounted to  PAB 2,053.8  million, which gave a general solvency ratio of 1.7. 
Insurance  generated a net profit of PAB 71.8  million as of 30 June 2021.98 
4.4.1.3.2   Legal framewor k 
4.79.   The Panamanian Insurance and Reinsurance Supervisory Authority (SSRP), which reports to 
the Ministry of Trade and Industry and was created by Law No. 55 of 20 December 1984, is the body 
responsible for the regulation, supervision, monitoring and oversigh t of companies, entities and 
individuals engaged in insurance and reinsurance in Panama. Law No. 59 of 29 July 1996 gave the 
SSRP greater autonomy to adequately supervise and oversee the insurance sector. The SSRP is 
responsible for regulating companies or  entities that operate in any branch of the insurance business 
and in reinsurance; it also regulates captive insurers in Panama and any activity provided for in Law 
No. 12 of 2012, which repealed Law No. 59 of 1996, regulates insurance activity and introdu ced 
other provisions; Law No. 63 of 19 September 1996, which regulates reinsurance operations and 
companies engaged in that activity, and Law No. 60 of 29 July 1996, which regulates the activities 
of captive insurance companies.99 
4.80.   The main law in the area of insurance is Law No. 12 of 3 April 2012, which repealed the former 
Insurance Law (Law No. 59 of 29 July 1996); also in force are the Law on captive insurers 
(Law No. 60 of 29 July 1996) and other provisions. During the period under review, Panama update d 
the regulatory framework on insurance to tighten control and supervision of the sector. The main 
legal amendments include: Law No. 68 -2016 of 13 December 2016, which regulates basic mandatory 
traffic accident insurance; Law No. 65 -2016 of 9 December 2016 , which amends an article in Law 
No. 12 of 2012;Law No. 68 of 13 December 2016, which regulates basic mandatory traffic accident 
insurance; Law No. 21 of 10 May 2017, which establishes the rules for the regulation and supervision 
of trust funds and the tru st business, and issues other provisions; Law No. 26 of 23 May 2018, which 
amends an article in Law No. 68 of 2016 regulating basic mandatory traffic accident insurance; 
Law No. 70 of 31 January 2019 on tax evasion; and Executive Decree No. 578 of 13 Novem ber 2014, 
which adopts the Strategic Framework for Financial Management of Disaster Risks.100 
4.81.   Apart from laws, insurance is also governed by resolutions and decisions adopted by the 
Board  of Directors of the SSRP on aspects such as the pricing, auditing rul es for insurance 
companies, procedures for dealing with complaints, registration of foreign reinsurers not  established 
in Panama, administrative sanctions, and regulation of the profession of insurance broker and of 
 
96 Information provided by the Panamanian Insurance and Reinsurance Supervisory Authority (SSRP). 
Viewed at: https://superseguro s.gob.pa/sujetos -regulados/companias -de-seguros/ . 
97 Information from the SSRP. Viewed at: https://superseguros.gob.pa/wp -content/uploads/DES -R-TO-
06-2021.pdf . 
98 Information  provided by the authorities.  
99 Information from the SSRP. Viewed at: https://superseguros.gob.pa/sobre -nosotros/ . 
100 Information from the SSRP. Viewed at: https://superseguros.gob.pa/legal/leyes -y-
decretos/#1601853734507 -324770c3 -0bcd. WT/TPR/S/421 /Rev.1  • Panama  
- 118 - 
  brokerage companies. The SSRP also puts out circulars, which mainly deal with technical aspects of 
the insurance business.  
4.82.   The main resolutions issued by the SSRP in recent years include Resolution No.  007-2012 of 
30 July 2012, whereby the Board of Directors of the Panamanian Insurance and Reins urance 
Supervisory Authority adopted its rules of procedure; Resolution No.  37-2014 of 27  November  2014 
adopting the necessary limits and guidelines for the preparation and presentation of reports that 
must be submitted by insurers; Resolution No. 25 -2016 of 22 June 2016, by which the Board of 
Directors of the Insurance and Reinsurance Supervisory Authority outlines its policy, goals and 
objectives; Resolution No. 58 -2017 of 19 December 2017, which establishes the parameters for the 
submission of the Liquid ation Board report; Resolution No. 018 -2020 of 23  March  2020, which 
considers the outstanding balances of net retained premiums receivable, generated by agreements 
and amendments to the terms and conditions of insurance policies, which will be considered f or the 
assessments of solvency margins, liquidity and investment reserve balance; and Resolution 
No. JD-013-2021 of 7 April 2021, which extends the effects of Resolution No.  JD-018 of 
23 March  2020 until 31 December 2021.  
4.83.   To conduct insurance business in P anama, a licence issued by the SSRP must be obtained. 
A licence is required for the three branches of insurance: personal insurance (life, accident, health, 
etc.), general insurance (motor vehicle, fire, transport, etc.) and bond insurance (contract 
perfor mance, payment and  other bonds). Moreover, authorization is required for opening and closing 
branches in Panama and branches or agencies abroad. Insurers may set up as limited companies 
formed in Panama, or as branches of foreign companies. There are no re strictions on the participation 
of foreign capital in insurance companies established in Panama, or on the number of foreign insurers 
or branches of foreign companies that can operate in the country.  
4.84.   In addition to the general requirements set out in Artic le 40 of Law No.  12 of 3  April 2012, in 
order to obtain a licence, branches of foreign companies must produce the document authorizing 
the establishment of the branch in  Panama, which must be authenticated, together with a certificate 
from the supervisory authority of the country of origin, stating that the  parent company is duly 
established in that country and that it has operated there in a state of total solvency for at least 
five years. Authorization to operate a  branch in Panama is restricted to those areas of activity in 
which the company is  engaged in its country of origin.  
4.85.   A minimum cash capital requirement of PAB 5 million applies to all insurers. In addition, they 
must set up technical reserves on their liabilities, which must at all times be backe d by eligible 
assets, which vary according to the type of risk, as well as reserves for statistical deviations and 
catastrophic risks. They must also maintain in Panama a legal reserve with the equivalent of  20% 
of their net profits until that reserve reac hes PAB 2  million and thereafter with 10% until it  reaches 
50% of the paid -up capital.101 Furthermore, at least 50% of technical reserves and capital must be 
invested in  Panama in eligible assets; i.e. in bonds issued or guaranteed by the State, in credit 
instruments issued by banks authorized by the SBP, or in credit and capital instruments issued 
by companies registered with the SMV, and within the limits laid down for each type of asset. 
The remaining 50% of the reserves can be invested in international c apital markets in instruments 
with at least a BBB - international investment rating granted by a rating agency recognized 
by the SSRP.  
4.86.   SSRP authorization is required prior to marketing model policies and bonds. Premium tariffs 
are set out in a technical not e –which must accompany any policy submitted to the SSRP for 
authorization – and are approved after validation by the actuarial department of the SSRP.  
4.87.   Insurance companies must pay a 2% tax on premiums received net of cancellations on policies 
issued in the country. Premiums received net of cancellations for fire insurance are subject to an 
additional tax of 5%. Persons who take out such insurance are subject to this tax. In addition, 
insurance  premiums are subject to an insurance consumption tax of 5%, e xcept those for fire 
insurance, life  insurance with surrender values and agricultural insurance.102 Motor vehicle insurance 
premiums are also subject to a 1% tax. In 2020, PAB 56.1 million was collected in insurance 
 
101 Articles 206, 207, 208 and 213 of Law No.  12 of 3  April 2012.  
102 Articles 63 and 64 of Law No.  12 of 3 April 2012.  WT/TPR/S/421 /Rev.1  • Panama  
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  consumption tax; PAB 26.6 million in the 2% premium tax; PAB 7.5 million in fire premiums and 
PAB 2.6 million in motor insurance tax.103 
4.88.   The SSRP regulates and issues licences for other supervised activities such as those of 
insurance brokers, insurance adjusters, insurance managers, and insurance  sales agents, agencies 
and executives. To  qualify for an insurance broker's licence, it is necessary to be a Panamanian 
citizen domiciled in  Panama or a naturalized foreigner who has held a letter of naturalization for 
three years. The shares of legal per sons acting as insurance brokers must initially belong to eligible 
insurance brokers and at least 49% of the shares of a legal person with an insurance brokerage 
licence must be  held by Panamanian insurance brokers.104 The profession of insurance sales agen t 
is reserved for Panamanian citizens.105 These activities are also subject to the payment of annual 
fees. Insurance adjusters and/or damage inspectors pay an annual fee of PAB 500 if they are natural 
persons and PAB 1,000 if they are legal persons. Insuran ce sales agents pay an annual fee of 0.25% 
of the commission income received during the previous year, with a minimum of PAB 100 and a 
maximum of PAB 5,000. Insurance sales agencies pay an annual fee of 0.50% of the commission 
income received during the pr evious year, with a minimum of PAB 500 and a maximum of PAB  5,000.  
4.89.   Law No.  12 of 2012 allows insurers to use alternative marketing channels to offer their 
products, through banks, finance companies and trading companies. To that end, the Law establishes 
minimum parameters for  marketing contracts, together with the risk categories that can be 
marketed through these alternative channels.106 
4.90.   The SSRP also regulates and supervises reinsurance activity, which is regulated by Law No.  63 
of 19 September  1996 "governing reinsurance operations and companies engaged in this activity". 
Reinsurers can  set up as limited companies or as branches of foreign companies. Where foreign 
companies are concerned, they must produce the document authorizing t he establishment of the 
branch in  Panama and a certificate from the supervisory authority of the country of origin, stating 
that the  foreign company is duly established in that country and has operated there in a state of 
total solvency for a minimum of fi ve years.107 Companies authorized to engage in reinsurance 
activities must  appoint at least two general agents, both resident in Panama and of whom 
one must be a Panamanian national. Companies that apply for authorization to engage in 
reinsurance activities  must put  up a minimum capital of PAB 1  million in cash in Panama. Branches 
of foreign companies must deposit it in cash. Reinsurers must maintain technical reserves equivalent 
to at least 35% of the net premiums written. Of these reserves, 65% must be inv ested in Panama.  
4.91.   In order to obtain a reinsurance broker's licence, a paid -up share capital of not less than 
PAB 100,000 must be held and proof provided of having made a guarantee deposit in the National 
Bank of Panama of the sum of PAB 150,000, in cash, g overnment debt instruments or securities, or 
in bonds for the same amount issued by an insurance company duly authorized to operate in 
Panama.108 
4.92.   The taxes on reinsurance premiums covering risks situated in Panama are the same as  those 
applied to insurance premiums. Reinsurance premiums covering risks situated abroad are  not liable 
to tax, nor are profits from the reinsurance of foreign risks. Reinsurance brokers pay directly to the 
SSRP an annual fee of 0.50% of the income from commissions or fees received during the previous 
year, with a minimum of PAB 1,000 and a maximum of PAB 20,000. Foreign  reinsurance companies 
can offer reinsurance services to companies domiciled in Panama provided they are enrolled in the 
Register of Foreign Reinsurers not establishe d in Panama, created by Decision No.  4 of 
13 December  2012. The same applies to foreign reinsurance brokerage companies. As of June  2021, 
80 foreign reinsurance companies and 26 foreign reinsurance brokers had applied for registration.  
4.93.   The SSRP also regula tes the activity of captive insurers, which are companies which from an 
office established in Panama engage exclusively in insuring or reinsuring individual or specific foreign 
risks previously authorized by  the SSRP. Law No.  60 of 29  July 1996 governs the  activities of captive 
 
103 Information from the SSRP. Viewed at: https://superseguros.gob.pa/estadistica -
financiera/impuestos -sobre -primas -de-seguros/#1602165275188 -40b7a13a -d7b0. 
104 Article 181 of Law No. 12 of 03 April 2012.  
105 Article 56 of Law No. 12 of 03 April 2012.  
106 Articles 52 and 53 of Law No.  12 of 3 April 2012.  
107 Article 18 (paragraphs 2 and 10) of Law No.  63 of 19  September  1996.  
108 Law No.  63 of 19 September 1996.  WT/TPR/S/421 /Rev.1  • Panama  
- 120 - 
  insurers and requires them to maintain a physical office in Panama. These insurers can apply for 
licences to offer their services to Panamanian and foreign companies in general insurance and to 
cover long -term risks. Captive insurers  that engage in general lines of insurance must have an 
authorized and paid -up share capital of not less than PAB 150,000; and if they are involved in 
long-term risk or both areas, the paid -up registered capital must not be less than PAB  250,000. The 
paid-up capital must consist of unencumbered assets held at all times in Panama. Captive insurers 
must pay the SSRP a one -time annual fee of PAB 2,000 for financial analysis services, certifications 
and evaluations of insurance and reinsurance programmes, and o ther related services.109 Premiums 
and profits derived from captive insurers' activities are not subject to tax.  
4.4.1.4   Securities market  
4.94.   As of July 2021, the Panamanian securities market consisted of 444 legal entities regulated 
and supervised by the Securities M arket Supervisory Authority of Panama (SMV), including 
249 issuers, 62 securities companies, 50 investment advisers, 44 investment companies and 
three  private pension and retirement fund managers.110 The SMV also governs 
the Panamanian  Stock Exchange ( Bolsa  de Valores de Panamá , S.A.), one  securities exchange and 
nine credit -rating agencies. The main issuers on the securities market are banks, insurance 
companies, investment funds and private capital companies. The  main securities issued are debt 
instruments , with shares being issued only to a limited extent. In July 2021, the total amount of 
securities registered with the SMV was USD 1,280 million, with USD  2,935  million pending 
registration.111 The amount issued in 2020 was USD 6,804 million.112 
4.95.   The Securitie s Market Supervisory Authority of Panama (SMV), created by Law No.  67 of 
1 September  2011, published in the Official Journal No. 26.863 -A of 2 September 2011, is the 
securities market regulator. The SMV is an autonomous state body with its own legal person ality, its 
own assets and the capacity to manage them, administrative, budgetary and financial independence, 
and exclusive authority to regulate and supervise issuers, investment companies, intermediaries and 
other participants in the securities market. Th e mission of the SMV is to promote, regulate and 
supervise the activities of the securities market, ensuring the protection for investors through the 
application of high standards of regulation and oversight.113 
4.96.   The main law regulating the Panamanian securi ties market is the Single Text of the Securities 
Market Law, which includes Decree -Law No. 1 of 8 July 1999 and the amendments thereto, as well 
as Title II of Law No. 67 of 1 September 2011 and the amendments introduced by Law No.  12 of 
2012 and Law No. 56  of 2012. Law No. 67 of 2011 modified the structure of the regulator and 
changed it from the National Securities Commission to the Securities Market Supervisory Authority 
with a superintendent and a board of directors; the securities market official degree  was created; 
and other amendments were made to the provisions of Decree -Law No. 1 of 1999, resulting in the 
Single Text of the Securities Market Law. Subsequently, Law No. 23  of 27 April 2015 adopted  
measures to prevent money laundering, financing of terr orism and financing of the proliferation of 
weapons of mass destruction, while Law No. 66 of 2016 introduced changes to the Single Text. Other 
laws governing the securities market include Law  No. 10 of 16  April 1993 establishing incentives for 
setting up f unds for retirement, pensioners, pensions and other benefits and Law  No. 18 of 
23 April 2015 amending Law No. 47 of 2013 and adopting a custody regime applicable to bearer 
shares. Law No. 47 of 6 August 2013 created a custody regime for bearer shares.  
4.97.   Articles 14, 30 and 331 of the Single Text of the Securities Market Law were amended by Law 
No. 23 of 2015 to include the power of the Securities Market Supervisory Authority to require any 
person, whether natural or legal, to submit information or documents n ecessary for the purposes of 
effective supervision or investigation or in order to share said information or documents with foreign 
securities market supervisory authorities or entities with which the SMV has signed reciprocal 
cooperation agreements or are  party to multilateral memoranda of understanding. In cases where 
the SMV requests banking information, it will be sought through the Banking Supervisory Authority. 
 
109 Law No.  60 of 29 July 1996.  
110 Information provided by the authorities.  
111 Information provided by the authorities and SMV (2021), Boletín Trimestral , April –June. Viewed at: 
https://supervalores.gob.pa/files/Boletin/2021/Boletin -Abril-Junio-2021.pdf . 
112 SMV (2020), Gestión 2020 y Proyecciones 2021 . Viewed at: https:/ /supervalores.gob.pa/wp -
content/uploads/2021/03/Presentacion -Rendicion -de-Cuentas -SMV-2020.pdf . 
113 Information from the SMV. Viewed at: https://supervalores.gob.pa/quienes -somos/ . WT/TPR/S/421 /Rev.1  • Panama  
- 121 - 
  Law No. 66 of 2016 amended the registration and supervisory fees, included the figure of "c entral 
counterparty" and "infrastructure provider", and made changes to the clearing and settlement 
system in the securities market.  
4.98.   Other legal instruments governing the securities market include: (a) Executive Decree 
No. 126 of 16  May 2017, as amended by  Executive Decree No. 58 of 18 June 2019, which regulates 
the sanctioning procedure contained in the Securities Market Law and the procedure for punishing 
non-compliance with Law No. 23 of 27 April 2015, which adopts measures to prevent money 
laundering, t he financing of terrorism and the financing of the proliferation of weapons of mass 
destruction; (b)  Executive Decree No. 408 of 16 December 2016, which establishes the guidelines 
applicable to the exchange of information between the Banking Supervisory Au thority and the 
Securities Market Supervisory Authority; (c) Executive Decree No. 76 of 17 July 2003, which adds 
paragraph  5 to Article  2 of Executive Decree No. 147 of 4 May 1966, relating to the resignation of 
directors and officers of companies with sec urities registered with the National Securities 
Commission and those companies that have obtained a licence granted by said Commission; and 
(d) Executive Decree No.  45 of 16 December 1977, which regulates corporations registered with the 
National Securitie s Commission, incorporated under the laws of the Republic of Panama with one 
thousand or more shareholders, with offices and full -time employees in the Republic of Panama, and 
with investments in the Republic of Panama for amounts of at least PAB 1 million . 
4.99.   In addition, the Single Text of the Securities Market Law has been developed through 
agreements adopted by the SMV from 2000 to date. The main agreements include Agreement 
No. 2-2010 governing the registration of securities; Agreement No. 2 -2011 governin g securities 
companies; Agreement No. 1 -2015 governing investment advisors; Agreement No.  5-2004 
governing investment companies and investment managers; Agreement No. 7 -2003 governing 
self-regulatory organizations; and Agreement No. 6 -2015 governing AML/CF T-related issues.114 
4.100.   Participation in the securities market requires obtaining a licence from the SMV and 
submission to  its supervision and control. Ratings agencies are subject to prior registration. The SMV 
also grants licences and keeps a register of securities brokers, pri ncipal directors and investment 
analysts, who must pass an examination to obtain the corresponding licence. The SMV is responsible 
for regulating the activities of the securities market, establishing the capital requirements for 
investment funds, supervisi ng private pension and retirement schemes and  imposing administrative 
penalties for breaches of the law. The public offering of securities issued by private and semi -public 
companies requires the  prior authorization of the SMV.  
4.101.   Requirements for full membe rship of the Stock Exchange include having a licence as a 
securities company and, inter alia , being a legal person; representing one's capital stock with 
registered shares, which must be issued in favour of natural or legal persons; having the authorized 
and paid -in capital stock as established from time to time by the Board of Directors, which shall not 
be less than the minimum total capital required by the SMV for securities companies; engaging 
exclusively in the securities company business and other rela ted activities permitted by the 
Securities Market Law, with the exception of banking; having qualified personnel duly authorized by 
the SMV to engage in activities; and having the infrastructure, equipment, organizational structure, 
internal procedures and  technological and accounting systems necessary to comply with the 
obligations and operational requirements of a brokerage firm.115 
4.102.   The Panamanian Stock Exchange (Latinex) has two types of members: (a)  full members, 
which are the securities firm that own a broker's office; and (b) remote operators, which are foreign 
securities firms, duly authorized to operate in a jurisdiction recognized by the SMV and have 
authorization to operate remotely from the recognized jurisdiction in stock exchange trading systems 
in Panama. The cumulative Latinex trading volume as of December 2020 was USD  8,125.7  million, 
of which USD 5,673.1 million was in the primary market, USD 2,058.7 million in the secondary 
market, and USD 393.9 million in repurchases. Of the total amount tra ded in 2020, only 
USD 193 million was in shares in the secondary market; the remainder was in bonds, bills and other 
 
114 These agreements  can be viewed at: https://www.supervalores.gob.pa/reglamentacion/acuerdos . 
115 Panamanian Stock Exchange, Internal Rules. Viewed at: https://www.latinexbolsa.com/es/wp -
content/uploads/2013/05/Reglamento -BVP-TEXTO -FINAL -2018-2.pdf. WT/TPR/S/421 /Rev.1  • Panama  
- 122 - 
  securities.116 The cumulative trading volume as of July 2021 was USD 5,082 million, of which 
USD 3,449  million was in the primary market, US D 1,571 million in the secondary market, and 
USD62  million in repurchases. Of the total amount traded as of July 2021, USD 276 million was in 
shares in the secondary market.117 
4.103.   All securities listed on the Stock Exchange, public offerings of securities by i ssuers and shares 
of issuers domiciled in Panama with  50 or more shareholders that are effective owners of at least 
10% of the issuer's paid -up capital must be registered with the SMV. Capital gains derived from the 
disposal of securities as  a result of th e acceptance of a public offering generate a tax of 10%.  
4.104.   The SMV has memoranda of understanding on consultations and technical assistance with 
various foreign regulatory bodies.118  
4.4.2   Telecommunications  
4.105.   The telecommunications market is of great importance to Panama. As a connecting bridge 
for seven submarine cables, the country has become a hub for the international fibre -optic network. 
Panama is also involved in the development of the regional fibre -optic network.119 As a result, 
since 2014, Internet usage –particularly fixed service – has increased (Table 4.10). Between 2014 
and 2020, the number of mobile telephony users fell from 6.9 to 5.7 million, reflected in a drop in 
the penetration rate from 176% to 133% (Table 4.10). According to the authoritie s, this decline was 
the result of a readjustment of the number of users by one of the operators, as well as the reduced 
use of prepaid cards, which, nonetheless, continue to be used by 90% of users.  
Table 4.10 Telecommunications sector indicators, 2014 –20 
  2014  2015  2016  2017  2018  2019  2020  
Fixed telephony         
Number of subscriptions  600,722  630,029  652,816  662,588  728,379  649,156  616,698  
Per 100 inhabitants  15.4 16.2 16.2 16.1 17.5 15.4 14.4 
Mobile telephony         
Number of subscriptions 
(thousands)  6,906  5,742  5,142  5,280  5,722  5,826  5,709  
Per 100 inhabitants  176.5  144.4  127.4  128.8  137.6  138.1  133.1  
Internet         
Number of fixed 
broadband subscriptions  310,065  316,168  429,931  441,163  540,220  535,631  562,413  
Per 100 inhabitants  7.9 8.0 10.7  10.7  12.9  12.7  13.3 
Number of mobile 
broadband subscriptions 
(thousands)  .. 2,802  2,387  2,867  3,306  3,369  3,436  
Other indicators         
Revenue (PAB million)  1,057.1  1,062.1  962.5  1,087.0  1,111.5  1,056.5  1,121.2  
Investments (PAB million)  340.4  275.0  241.5  310.8  322.8  275.7  270.2  
.. Not available.  
Source:  Information provided by the authorities.  
 
116 Information from Latinex. Viewed at: 
https://www.latinexbolsa.com/biblioteca/Volumen%20Mensual% 20de%20Negociacion/2021/21 -
07%20Volumen%20Mensual%20de%20Negociaci%C3%B3n.pdf.  
117 Information provided by the authorities.  
118 The SMV is currently a signatory to memoranda of understanding with the following entities at the 
international level: International Organization of Securities Commissions (IOSCO) Multilateral Memorandum of 
Understanding concerning Consultation and Cooper ation and the Exchange of Information, Appendix A; 
National Securities and Stock Market Commission of the State of Ukraine; Colombian Financial Supervisory 
Authority; Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico; National 
Banking and Securities Commission of Mexico; National Banking and Insurance Commission of Honduras; 
National Securities Market Commission of Spain; Supervisory Authority for the Financial System of El Salvador; 
General Supervisory Authority for Se curities of Costa Rica; Securities Market Self -Regulator of Colombia; 
Financial Market Commission of Chile; Autorité des Marchés Financiers de Québec , Canada; and National 
Securities Commission of Argentina.  
119 News item dated 14 November 2019, Office of th e President of the Republic . Viewed at : 
https://www.presidencia.gob.pa/Noticias/Con -inversion -millonaria -Google -ratifica -a-Panama -como -hub-digital -
de-la-region ; and Central American Telecommunications Network (REDCA ). Viewed at : 
http://www.redcasiepac.com/ . WT/TPR/S/421 /Rev.1  • Panama  
- 123 - 
  4.106.   The main objective of Panama's telecommunications policy continues to be to ensure 
universal access to telecommunications services to encourage take -up of information and  
communication technologies (ICTs). To that end, to improve both fixed and mobile broadband access 
in rural and hard -to-reach areas, funding is provided to projects, such as the National Internet 
Network (RNI), to install free Internet access points throug hout the country, as well as mobile 
telephony and fibre -optic antennas. These projects are financed through the Fund for the 
Development of Universal Access and Service Projects (FDPSA), to which all operators contribute 
1% of their revenue.120 Public -private partnerships have also been set up to finance the installation 
of community telecentres (known as Infoplazas). Public services have also been digitalized, with the 
Panamá Digital portal created in 2020. The National Secretariat of Science, Technology an d 
Innovation (SENACYT) promotes the digitalization of MSMEs; during the period 2014 –21, it financed 
only two projects (selected through public tender processes) for a total amount of around 
PAB 70,000.121  
4.107.   Revenue generated by the digital economy accounted for 10.4% of GDP in 2019. The 
activities that contributed the most value added were financial technology and e -commerce.122 
E-commerce is governed by Law No. 51 of 22 July 2008. Between 2014 and 2019, e -commerce in 
Panama grew at an average annual rate of 12%.123 In 2020, during the pandemic, online sales 
increased by 18%.124 The vast majority of online purchases in Panama are made using foreign 
platforms, as domestic platforms have not yet been developed and retailers generally do not have 
online shops.125 In general, MSMEs have not yet adopted e -commerce due to implementation costs 
and lack of financing and advisory services.126 However, following the onset of the pandemic, they 
started selling online in 2020. Firms based in the ZLC started selling online in 2 018, but sale amounts 
were limited to a maximum of PAB 2,500 per sale and PAB 10,000 per customer per month.127 
Cross -border sales via digital platforms are exempt from the movable goods and services transfer 
tax (ITBMS).  
4.108.   Telecommunications services are gov erned by Law No. 31 of 8 February 1996, its 
implementing regulations128 and the Operating Regulations for Cellular Mobile Telephony Services.129 
Law No. 81 of 29 March 2019, governing the protection of personal data, entered into force in 2021. 
The telecommunications market regulator is the National Public Service Authority (ASEP).  
4.109.   Foreign private operators may enter the telecommunications market and have a majority 
shareholding in the capital of companies in the sector;130 to operate in the market they must 
establish themselves in Panama. However, foreign state -owned entities cannot operate in Panama.  
4.110.   Panama has 22 types of telecommunications servi ces, classified as Type  A and Type  B 
(Table  4.11). ASEP grants concessions (20 years, renewable) to provide any type of service. 
Concessions for Type A services are granted through public tenders in which pre -qualified bidders 
participate; the last concess ion was awarded in 2008. Concessions for Type B services are awarded 
to any eligible operator, but only applications submitted within the deadlines set by ASEP are 
accepted.  
 
120 Information provided by the authorities; and Article 9 of Law No. 59 of 11 August  2008.  
121 SENACYT funded one of the projects in full, and only 80% of the other (information provided by the 
authorities).  
122 IDB (2020), A un clic de la transición: Economía Digital en Centroamérica y la República Dominicana . 
Viewed at: https://publications.iadb.org/publications/spanish/document/A -un-clic-de-la-transicion -Economia -
digital-en-Centroamerica -y-la-Republica -Dominicana.pdf . 
123 ICEX (2020), "Resumen", Informe e -País: el comercio electrónico en Panamá , June.  
124 Information provided by the authorities.  
125 ICEX (2020), "Resumen", Informe e -País: el comercio electrónico en Panamá , June. 
126 Romero Ramos N. (2019), "Análisis del e -commerce en la República de Panamá",  Revistas 
Académicas USMA . Viewed at: http://ipc.org.pa/ojs/index.php/ipc/article/view/111 . 
127 J.D. Resolution No. 006 -2018 of 17 October 2018.  
128 Executive Decree No. 73 of 9 April 1997.  
129 Executive Decree No. 21 of 12 January 1996.  
130 Telecommunications is a public utility service. According to the Constitution, foreigners may not 
own more than 51% of the capital of a business that provides services of this nature unless otherwise 
permitted by law. Law No. 31 (Article 21) authorizes majority foreign holdings in the capital of 
telecommunication s companies.  WT/TPR/S/421 /Rev.1  • Panama  
- 124 - 
  Table 4.11 Classification of teleco mmunications services, 2014 –21 
Type  Services  
A  Personal communications; mobile telephony  
B Local basic telecommunication; domestic basic telecommunication; international basic 
telecommunication; public and semi -public terminals; telecommunications transport; conventional 
trunked systems for public or private use; fixed and mobile radio communication; paging; Internet 
for public use; facsimile forwarding; maritime mobile communication; aeronautical mobile 
communication; low -orbit s atellite telecommunication; linking and/or transport for radio or 
television broadcasting stations; permanent or occasional satellite television or radio broadcasting; 
geostationary orbit satellite mobile telecommunications; call centres; interactive telev ision with or 
without use of the radio spectrum; value -added telecommunications; resale of telecommunications 
services  
Source:  ASEP. Viewed at: https://www.asep.gob.pa/?page_id=13048 . 
4.111.   ASEP allocates concessions for the use of radio spectrum frequency bands through a 
comparative selection procedure whereby the concession is awarded to the operator that best meets 
the requirements announced by the r egulator (ASEP).131 The term of the concession is 20 years 
(renewable).132 The user pays an annual fee for using the frequencies, which is calculated on the 
basis of a formula. ASEP can reallocate the use of allocated frequencies without compensation, in 
order to ensure public interest, national security, use of new technologies or continuity of service.133 
In 2019, the National Frequency Allocation Plan (PNAF) was revised to make more -efficient use of 
the spectrum and allow the use of new technologies.134 Previously, several studies had indicated 
that the radio spectrum allocated to mobile telecommunications in Panama was insufficient.135 
Between April 2020 and June 2021, ASEP allocated, free of charge, more of the radio spectrum to 
each of the mobile operators to respond to the increase in call and data traffic resulting from the 
pandemic.136  
4.112.   Shared use of passive and active infrastructure is permitted.  
4.113.   Competition in the sector is governed by Law No. 45 of 31 October 2007, which governs 
competition in all sect ors of the economy, including telecommunications; and by Law No.  36 of 
5 June 2018, which governs economic concentrations in the mobile telephony market. Law No.  36 
of 2018 authorizes mergers, but only between two operators, and in the event of a merger, o nly a 
maximum of three operators may operate in the mobile telephony market.137 Due to the size and 
saturation of this market, Panama continues to limit the number of operators in the mobile telephony 
market.138  
4.114.   With regard to competition, ACODECO conducts investigations into alleged monopolistic 
practices, with the assistance of ASEP, although no investigations into such practices have been 
conducted in the sector since 2014. ASEP is responsible for identifying relevant markets, establishing 
the criteria fo r determining substantial power and, with ACODECO's approval, setting out the 
conditions for operators with such market power to operate.139 Since the previous review in 2014, 
neither the number of relevant markets (22) nor the criteria for determining subs tantial power have 
been revised, which in the case of mobile telephony are: having a market revenue share of more 
 
131 OECD/IDB (2016), Broadband Policies for Latin America and the Caribbean: A Digital Economy 
Toolkit. Viewed at: https://doi.org/10.1787/9789264251823 -en 
132 Article 19 of Law No. 31 of 8 February 1996.  
133 Article 13 of Law No. 31 of 8 February 1996.  
134 Resolution AN No. 15710 -Telco of 10 April 2019; and ASEP (2020), Memoria 2019 . Viewed at: 
https://www.asep.gob.pa/?page_id=11770 . 
135 IDB ( 2017), La Gobernanza de las Telecomunicaciones: Hacia la economía digital . Viewed at: 
https://publications.iad b.org/publications/spanish/document/La -gobernanza -de-las-telecomunicaciones -Hacia -
la-econom%C3%ADa -digital.pdf ; 5G Américas (2019), Estado de las Bandas del Espectro Radioeléctrico en 
América Latina . Viewed at: https://brechacero.com/wp -content/uploads/2019/07/WP -MULTIBANDA -30-jul-
2019-ES.pdf . 
136 ASEP news. 8 April 2020. Viewed at: https://www.asep.gob.pa/?p=194 997; and Cabinet Resolutions 
No. 72 of 13 October 2020 and No. 88 of 12 November 2020.  
137 Article 47(9) of Law No. 31 of 8 February 1996, repealed by Law No.  36 of 5 June 2018.  
138 Information provided by the authorities; Law No. 17 of 9 July 1991; and Resolu tion No.  JD-080 of 
10 April 1997.  
139 Article 7 of Executive Decree No. 73 of 9 April 1997; and Article 15 of Executive Decree No.  279 of 
14 November  2006.  WT/TPR/S/421 /Rev.1  • Panama  
- 125 - 
  than 15%; or having a share of 20% or more on the Herfindahl -Hirshman Index (HHI); or 25% or 
more in the CR4 ratio (market share ratio of the four largest companies).140 
4.115.   Panama's telephony market continues to have four mobile operators (América Móvil, CW, 
Digitel and Millicom) and two fixed -line operators (CW and Millicom). Currently, Millicom, which 
entered the market in 2018 after acquiring one  of the former fixed -line operators (Cable Onda) and 
a mobile operator (Telefónica) in 2019, is the main operator.141 The State has a stake (49% of the 
capital) in Cable & Wireless (CW).  
4.116.   Operators negotiate the terms and conditions for interconnecting their networks, including 
charges, but where they cannot agree, ASEP dictates the interconnection arrangements, based on 
reference offers submitted by the operators or on an offer that ASEP prepares. Operators offer traffic 
volume discounts  on interconnection charges.142  
4.117.   During the period under review, ASEP did not regulate tariffs for telecommunications 
services, but could do so if there was only one operator, cross -subsidization or anti -competitive 
practices.143 During the pandemic, mobile operators offered free voice and SMS packages to users 
who could not afford to pay for the service.144 In addition, bill payment deadlines were extended in 
2020, a practice that was also followed in 2021.145 
4.118.   Tariffs for telecommunications services are taxed with ITBMS (7%) and, in the case of 
prepaid mobile service (the most common form in the country), with ISC (5%). In 2016, the 
contribution of 0.5% of the tariff, which was used to finance the burial of cables, was eliminated 
(prepaid mobile service was exe mpt from this contribution).146 However, all users must pay a 1% 
contribution to finance the Single Emergency Management System 911 (SUME);147 and a 
contribution (PAB 0.02) to cover the costs generated by the portability service.148 Portability exists 
for bot h fixed and mobile telephony.  
4.4.3   Transport  
4.119.   Panama's transport system includes more than 16,000 km of roads, one railway line, 
six airports, 46 ports and the Panama Canal. The road network is interconnected around the 
Pan--merican Highway, the Transisthmian Hi ghway and four toll highways. One of the highways is 
operated by a concession holder, while the rest are operated by the state -owned Empresa Nacional 
de Autopistas (ENA). ENA subcontracts the maintenance service of the motorways it operates to 
private enti ties.149 Currently, 43% of the road network is paved. Road infrastructure in some 
provinces, such as Darien, is still poor, while in others (such as Bocas del Toro) it has improved.150  
4.120.   Freight transport by road is governed by Law No. 51 of 28 June 2017 and its implementing 
regulations,151 as well as by Law No. 10 of 24 January 1989, and is regulated by the National Transit 
and Land Transport Authority (ATTT). International transport is governed by the "strict" reciprocity 
 
140 Resolution No. JD -1334 of the Public Utilities Regulatory Body of 12 April 1999; and information 
provided by the authorities.  
141 Millicom. Viewed at: https://www.millicom.com/our -company/markets/panama/.  
142 Articles 204 and 214 of Executive Decree No. 73 of 9 April 1997.  
143 Executive Decree No. 73 of 9 April 1997.  
144 GSMA (2020), The Mobile Economy in Latin America . Viewed at: 
https://www.gsma.com/mobileeconomy/wp -
content/uploads/2020/12/GSMA_MobileEconomy2020_LATAM_Eng.pdf  
145 Resolutions AN  No. 16.096 -Telco of 21 May 2020 and AN No. 16.593 -Elec of 21  January  2021.  
146 Resolution AN No. 5490 -Telco of 1 August 2012, repealed by Resolution AN No. 9585 -Telco of 
28 January  2016.  
147 Article 20 of Law No. 44 of 31 October 2007, as amended by Article 31 of Law No.  120 of 
19 December  2019.  
148 ASEP. Viewed at: https://www.asep.gob.pa/?page_id=14488  and 
https://www.asep.gob.pa/?page_id=14495 . 
149 ENA (2020), Memoria 2018 –2019. Viewed at: https://www.enacorredores.com/wp -
content/uploads/2020/01/Asamblea%20 -%20Memoria%202019.pdf . 
150 Latin American Development Bank (2020), Análisis de inversiones en el sector transporte terres tre 
interurbano latinoamericano a 2040: Panamá . Viewed at: 
https://scioteca.caf.com/bitstream/handle/123456789/1537/Panama_Analisis_de_Inversiones_en_el_Sector_d
e_Transporte_Interurbano_Terrestre_Latinoamericano_al_2040.pdf?sequence=16&isAllowed=y . 
151 Executive Decree No. 226 of 17 October 2018.  WT/TPR/S/421 /Rev.1  • Panama  
- 126 - 
  regime.152 Companies transporting cargo in Panama must be controlled by Panamanians (60% of 
the capital) and freight can only be carried in vehicles registered in Panama. As of 2017, imports of 
freight vehicles 10 or more years old was prohibited.153  
4.121.   The railway network consists of a singl e line used for both freight and passenger transport. 
It is operated by the Panama Canal Railway Company (PCRC), a private concession holder. The line 
links the port of Balboa on the Pacific coast with the port of Colón on the Atlantic side. The line has 
the capacity to transport up to 400,000 containers a year, but is not fully utilized.154  
4.122.   Panama's main objective is to consolidate itself as a logistics hub for international trade, 
increasing transhipment operations and extending the hinterland of its port s in the region. To achieve 
this objective, the country intends to offer more value -added services, raise efficiency at its ports, 
improve intermodal transport, and integrate logistics chains.155 Currently, Tocumen International 
Airport is the regional dist ribution hub of one of the world's leading logistics companies.  
4.4.3.1   Air transport  
4.123.   Air transport is governed by Laws No. 21 and No. 22, both of 29 January 2003, Executive 
Decree No. 542 of 24 November 2005, the Panama Civil Aviation Regulations (RACP) and air services 
agreements. Panama is a member of the International Civil Aviation Organisation (ICAO) and of the 
Latin American Civil Aviation Commission (LACAC) and is also part of the Regional Safety Oversight 
Cooperation System (SRVSOP).  
4.124.   Panama has some 30 a ir services agreements (Chart 4.2). Since the previous review, it has 
signed seven new agreements and revised some of its existing agreements with the objective of 
expanding the country's international connectivity to maintain its position as the region's main 
airport hub and to facilitate access for tourism from different markets.  
4.125.   International air services are governed by air services agreements. Panama generally grants 
fifth freedom traffic rights for passenger and freight traffic. Air cabotage is not p ermitted. The 
agreements with Colombia, Spain, the United States and Guatemala are open skies agreements.156 
In the absence of an agreement, air services are provided in accordance with the principle of 
reciprocity.157  
 
152 Article 4  of Executive Decree No. 226 of 17 October 2018.  
153 Articles 5 and 15 of Law No.  51 of 28 June 2017.  
154 Latin American Development Bank (2020), Análisis de inversiones en el sector transporte terrestre 
interurbano latinoamericano a 2040: Panamá ; and Georgia Tech Panama Logistics Innovation & Research 
Center. Viewed at: https://logistics.gatech.pa/en/assets/railroad . 
155 Government Strategic Plan 2019 -24; Panama's Strategic Plan for Maritime and Port Development – 
Vision 2030; and Executive Summary of the National Logistics Strategy (ELN) 2030.  
156 Information provided by the authorities.  
157 Article 83 of Law No. 21 of 29 Ja nuary 2003.  WT/TPR/S/421 /Rev.1  • Panama  
- 127 - 
  Chart 4.2 Air services agreements  
 
Note:  In 2017, agreements were signed with the Netherlands to  regulate air services with Aruba and 
Curaçao.  
Source:  WTO Secretariat and information provided by the authorities.  
4.126.   Panama maintains control of Panamanian airlines. In the case of companies operating 
international routes, 51% of the capital must be in the hands of Panamanians and in the case of 
companies operating flights within the national territory, this percentage rises to 60%.158 In addition, 
domestic airlines must preferably hire local employees. The hiring of foreign pilots (up to 15% of the 
workforce ) is allowed if the company commits to training Panamanian personnel.159 
4.127.   The Civil Aviation Authority (AAC) regulates air transport and also provides air navigation 
services. 160 The AAC grants operating certificates (for three years, renewable) to domestic and 
foreign airlines operating international routes. To obtain such a certificate, foreign airlines must be 
domiciled in Panama. They may also be required to provide a guarantee of up to 30% of their 
potential bi -monthly revenues.161 Companies domiciled in Panama also require an air operator's 
certificate issued by the AAC to provide services within and outside Panamanian territory. Currently, 
three Panamanian airlines operate commercial flights in and outside the country: Copa Airlines, 
Wingo (a low -cost su bsidiary of Copa Airlines, created in 2016) and Air Panama. In addition, TAECA 
provides air freight services in Panama.162 
4.128.   The airports are operated by the AAC and the state -owned Aeropuerto Internacional de 
Tocumen S.A. (AITSA). In addition to Tocumen, AITSA operates four of the six international 
airports,163 as well as financing the Special Fund for the Development of National Aviation 
Infrastructure (FEDIAN) for works and improvements at the airports operated by the AAC. In 2017, 
 
158 Article 79 of Law No. 21 of 29 January 2003.  
159 Article 3 of Law No. 89 of 1 December 2010.  
160 Article 23 of Law No. 23 of 29 January 2003.  
161 Article 86 of Law No. 21 of 29 January 2003.  
162 Georgia Tech Panama Logistics Innovation & Research Cen ter. Viewed at: 
https://logistics.gatech.pa/en/assets/airports . 
163 Georgia Tech Panama Logistics Innovation & Research Center. Viewed at: 
https://logistics.gatech.pa/en/assets/airports ; and Tocumen. Viewed at: 
http://www.tocumenpanama.aero/index.php/turismo/red -de-aeropuertos . 
GermanyBelgium
SpainNetherlands
United
Kingdom
Switzerland
UruguayParaguay
ArgentinaUnited States
United Arab
EmiratesRepublic of
Korea
Bolivian Republic 
of Venezuela
PeruCanada
(2020)
ChileCosta RicaGuatemalaMexico
BrazilFrance
Qatar
(2018)Turkey
(2014) China
(2017)Russian Federation
Italy
Chinese TaipeiMorocco
(2018) 
Singapore
(2014)NicaraguaEl Salvador (2017)Cuba
JamaicaDominican Rep.WT/TPR/S/421 /Rev.1  • Panama  
- 128 - 
  AITSA's fundin g increased from USD 4.5 million to USD 15 million, taking into account the 
investment projections presented by the AAC.164 The authorities indicated that, between 2017 and 
2021, the procurement of air navigation aids and infrastructure improvements were fi nanced 
through this fund.  
4.129.   Between 2013 and 2017, imports of machinery, equipment and other materials necessary 
for the operation of airports were exempt from import duties and other import charges. Airport 
operators were also exempt from property tax.165 Those exemptions were lifted in 2018.  
4.130.   The ACC issues operating certificates (one year, renewable) to provide airport 
ground -handling services.166 The authorities indicated that there is no limit on the number of 
providers of such services and that airlines can provide those services themselves. Airlines may also 
provide the service to third parties, provided that they have obtained the operating certificate.  
4.131.   Tocumen International Airport is the main Panamanian airport and an important airport hub 
in the reg ion. Tocumen is used by several foreign airlines as a hub, hence the high number of 
passengers transiting the airport annually (Table 4.12).167 Tocumen's freight terminal (the only one 
in the country) moves high -value products, such as technological equipme nt and pharmaceuticals.168 
In 2021, the airport terminal and air freight centre were being remodelled, and a multimodal zone, 
which will include an airport free zone, was under development.169 To help finance these 
improvements, international passengers pass ing through Tocumen airport have, since 2016, been 
charged an airport development fee (USD 12) in addition to the departure tax (USD 40). The AAC 
must approve the fees charged for aeronautical services at Tocumen. In 2020, no aeronautical fees 
were charged  to mitigate the impact of the pandemic on the sector, one of the worst affected.  
Table 4.12 International air traffic at Tocumen, 2014 -20 
 2014  2015  2016  2017  2018  2019  2020  
Number of flights  130,209  137,650  140,953  141,038  144,417  143,400  47,459  
Passengers (thousands)  8,529  8,856  9,636  10,164  10,351  10,568  2,908  
With Panama as final 
destination (%)  48.7 47.9 46.7 44.7 42.0 44.4 45.1 
In transit (%)  51.3 52.1 53.3 55.3 58.0 55.6 54.9 
Freight (tonnes)  111,859  103,359  112,414  117,230  111,091  108,113  100,587  
Source:  INEC. Viewed at: https://www.inec.gob.pa/publicaciones/Default.aspx ; and information provided by 
the authorities.  
4.4.3.2   Maritime transport  
4.132.   According to the authorities, maritime transport generates more than 32% of GDP and 
almost 300,000 direct and indirect jobs. It is governed by several laws: the Maritime Trade Law 
(Law No.  55 of 6  August  2008), which governs the ownership of vessels, maritime commerce 
contracts, and credit and mortgages; the General Law on the Merchant Marine (Law No. 57 of 6 
August 2008), which gover ns the flagging of vessels; and Decree -Law No. 8 of 26 February 1998, 
which governs the recruitment of crew members.  
4.133.   The Panamanian Maritime Authority (AMP), through the Directorate -General of the Merchant 
Marine (DGMM), is responsible for registering vess els and ensuring the safety of the service.  
 
164 Information provided by the authorities; Article 30 of Law No. 23 of 29  January  2003 and Cabinet 
Resolutions No.  37 of 30 April 2003 and No. 95 of 5 July 2016.  
165 Article 22 -A of Law No. 23 of 29 January 2003, added by Law No. 125 of 31  December  2013 and 
repealed by Law No. 66 of 17 October 2017.  
166 ACC. Viewed at: https://www.aeronautica.gob.pa/recursos/index.php?c=direccion_de_finanzas . 
167 Tocumen. Viewed at: http://www.tocumenpanama.aero/index.php/nosotros/historia . 
168 Tocumen. Viewed at: http://www.tocumenpanama.aero/index.php/presente . 
169 Access regulations  for the free trade zone known as the Tocumen Airport Logistics Zone (Resolution 
No. 018-JD-17 of 20 July 2017); Tocumen. Viewed at: http://tocumenlogisticshub.com/ ; and AITSA (2018), 
Memoria Annual 2017 . Viewed at: 
http://tocumenlogisticshub.com/site/templates/assets/docs/Memoria_Anual_2017_AITSA.pdf . WT/TPR/S/421 /Rev.1  • Panama  
- 129 - 
  4.134.   Foreigners may register ships in Panama without having to establish themselves or reside in 
the country.170 However, shipowners must have an agent residing in the country.171 Vessels must 
be registered in one of th e DGMM registers (Table 4.13).172 The Regular Register is the most common 
type of registration. Registrations are made by type of maritime service, international or domestic 
(cabotage). Foreigners may register a vessel for international service at the DGMM or at Panamanian 
missions abroad that are authorized to handle merchant marine matters.173 Foreign vessels bareboat 
chartered in Panama may maintain their foreign registration, provided that the contract of carriage 
does not exceed two years and the country /territory where the vessel is originally registered accepts 
dual registration.174 Bareboat chartered foreign vessels may provide international maritime services 
and cabotage services.  
Table 4.13 Panamanian me rchant shipping registers  
Registers  Types of vessel  
Regular Register  All ships, except those which must be entered in a special 
register  
Special Register of Foreign Vessels under 
Bareboat Charter in Panama  Foreign vessels bareboat chartered in Panama  
Special Register for Temporary Navigation  Ships making a single international voyage (e.g. to be 
delivered to the owner or taken to a ship yard for scrap)  
Special Register of Panamanian Vessels under 
Foreign Bareboat Charter  Panamanian vessels bareboat chartered abroad  
Special Lay -Up Register  Vessels that are not operated and remain berthed in 
Panamanian ports  
Source:  Law No. 57 of 6 August 2008; Resolution No. 106 -50-DGMM of 18 June 2018; and AMP. Viewed at: 
https://amp.gob.pa/servicios/marina -mercante/abanderamiento -de-naves/servicio -exterior/ . 
4.135.   Vessel registration in Panama is subject to a fixed fee, depending on tonnage. Vessels 
engaged in international service are additionally charged an annual tax per net tonne, an annual 
consular fee, an annual inspection tax, and an annual tax for accident investigation and participation 
by the administration in international conferences and treaties.175 To encourage vessel registration, 
the DGMM grants discounts on the registration fee, which usually last for th ree consecutive years. 
For example, shipping companies that register at least three vessels receive discounts of between 
25% and 60%; new vessels can obtain discounts of up to 100% for the first year of registration; 
and, since 2016, vessels that comply wi th certain environmental standards benefit from a 50% 
discount.176 The DGMM periodically reviews the different discount percentages; these discount 
percentages were initially set in 2008 by the General Law on the Merchant Marine.177 
4.136.   Panama has the largest sh ipping register in the world in terms of number of registered 
vessels, registered cargo capacity and value of the registered fleet (Table 4.14).  
 
170 Article 3 of Law No. 57 of 6 August 2008.  
171 Article 102 of Law No. 57 of 6 August 2008.  
172 In 2019, the registration process began to be digitalized, with the creation of the Electronic Ship 
Registration System (ESRS). According to the authorities, the pandemic accelerated the digitalization process.  
173 Currently, merchant shipping matters can be handled at 53 consulates and 13 maritime safety 
technical offices abroad.  
174 Article 70 of Law No. 57 of 6 August 2008 and Consulate of Panama in Marseille. Viewed at: 
https://www.consulatgeneraldepanamamarseille.com/the -flagging/requirements -to-register -a-vessel -under -
the-panamanian -flag/. 
175 Law No.  4 of 24 February 1983.  
176 This discount is not granted if the vessel has availed itself of other discounts.  
177 Articles 8 and 149 -151 of Law No. 57 of 6 August 2008. See, for example, Resolutions 
No. 106-65-DGMM of 17 September 2014, No. 106 -64-DGMM  of 25 August 2016 and No.  106-61-DGMM of 
14 November  2019.  WT/TPR/S/421 /Rev.1  • Panama  
- 130 - 
  Table 4.14 Shipping registration, 2014 –20 
 2014  2015  2016  2017  2018  2019  2020  
Number of registered vessels  .. 8,351  8,153  8,052  7,914  7,860  7,886  
As % of total registered vessels worldwide  .. 9.3 9.0 8.6 8.4 8.2 8.0 
Deadweight tonnage (thousands)  .. 352,19
2 334,36
8 343,39
8 335,88
8  333,33
7 328,95
0 
As % of deadweight tonnage of the world 
fleet  .. 20.1 18.5 18.4 17.5 17.0 16.0 
Value of the fleet registered in Panama (USD 
million)  .. .. .. .. 128,501  129,648  127,765  
As % of world fleet value  .. .. .. .. 14.4 14.2 13.4  
.. Not available.  
Source:  UNCTAD (various years), Review of maritime transport. Viewed at: 
https://unctad.org/en/pages/publications/Review -of-Maritime -Transport -(Series).aspx.   
4.137.   Since Panama's previous review in 2014, the country has maintained incentives to promote 
the ship ping industry and maritime finance and insurance activities. Since 2013, imports of material 
and equipment for the construction of smaller vessels have been exempt from import duties; and 
since 2017, the tariff on materials and equipment for the constructi on of deep -draft vessels has been 
3%.178 Income generated from activities related to international maritime trade is exempt from 
income tax.179 Furthermore, shipyards and maritime financing and insurance entities have been 
exempt from income tax since 2017.180 Previously only shipyards were exempt from income tax, for 
a period of 10 years.181  
4.138.   Panama continues to favour the employment of national crew members on Panamanian 
merchant vessels. In order to hire foreign seafarers on coastal vessels, the approval of the Ministry 
of Labour and Social Development is required and there is an obligation to offer training courses for 
nationals.182 
Ports  
4.139.   The General Panamanian Ports Law (Law No. 56 of 6 August 2008) governs ports. The AMP, 
through the Directorate -General of Ports and Auxiliary Maritime Industries (DGPIMA), is the port 
authority.  
4.140.   Panama has 47 ports: 25 state ports operated by the AMP and 22 pri vate (under concession) 
ports.183 The main ports (Manzanillo, Cristobal, Col ón, Balboa and Pana ma International Terminal) 
have been awarded to concession holders.  The State is a shareholder (10%) in the Panama Port 
Company (PPC),  which operates the ports of  Balboa and Cristobal.  
4.141.   In 2019, two new sets of regulations on the port sector were adopted: the Regulations on 
the Granting of Port Concessions184 and the Regulations on the Granting of Operating Licences for 
Auxiliary Maritime Services.185 According to the authorities, there was a need to update the 
regulatory provisions to provide greate r predictability for operators in the sector, as the previous 
regulations had been in place since 1976 and 2008, respectively.  
4.142.   According to the new Regulations on the Granting of Port Concessions, the State continues 
to retain ownership of areas and asset s under concession.186 Furthermore, an operator may obtain 
a provisional permit for a maximum of 18 months to conduct feasibility studies before applying for 
a concession. Applications remain subject to the payment of an inspection fee that varies according  
 
178 Law No. 41 of 14 June 2013; Article 3 of Law No. 50 of 28 June 2017; and AMP Press Release of 
29 December  2017. Viewed at: https://amp.gob.pa/noticias/comunicado -de-prensa -hoy-entra-en-vigencia -la-
ley-de-financiamiento -naval/ . 
179 Article 708(e) of the Tax Code (Law No. 8 of 27 January 1956).  
180 Article 23 of Law No. 50 of 28 June 2 017. 
181 Law No.  41 of 14 June 2013.  
182 Articles 4 and 109 of Decree -Law No. 8 of 26 February 1998.  
183 Information provided by the authorities.  
184 J.D. Resolution No. 010 -2019 of 27 March 2019 repealed Agreement No. 9 of 24 March 1976.  
185 J.D. Resolution No. 011 -2019 of 27 March 2019 repealed J.D. Resolution No. 027 -08 of 
21 January  2008.  
186 As of 2019, the following have been eligible for concession: seabed, beaches and seashores; 
riverbeds and river banks; estuaries; lakes; land areas of ports and real estate of  the AMP.  WT/TPR/S/421 /Rev.1  • Panama  
- 131 - 
  to the amount of the investment. Where several applications are submitted for the same concession, 
the DGPIMA gives preference to the project with the "highest public interest". The amount of the 
concession royalty continues to be calculated according to a formula. Also, since 2019, concession 
holders who obtain or renew a concession must pay a contribution of between 1% and 4% of the 
amount of the investment to finance social projects implemented by the AMP. The concession term 
(20 years, renewable) has n ot changed. The AMP has to approve the renewal, modification or 
assignment of a concession and since 2019 this decision must be endorsed by the Comptroller -
General of the Republic.187 
4.143.   According to the new Regulations on the Granting of Operating Licences fo r Auxiliary 
Maritime Services, from 2019 operating licences will be granted by type of service (or cluster); there 
are currently nine types of service.188 Also from 2019, the number of operating licences for the same 
port service may be limited, provided th at "numerous" licences have been granted or the limitation 
is motivated by reasons of "public interest". When seeking to limit the number of licences, the 
DGPIMA must assess the existing supply and the level of market concentration; the decision is 
communi cated through a resolution. The authorities have reported that the issuance of licences has 
been temporarily suspended since 2019, in particular for launch and provisioning services.189 The 
validity term of the licences (10 years, renewable) has not changed . The AMP sets the maximum fee 
for each type of service; since the previous review in 2014, the maximum fees have not been 
revised.190 
4.144.   Until 2015, Panama restricted the participation of foreigners in launch and provisioning 
services, which could not exceed 25% of the capital of the owning or chartering shipping companies. 
In 2015, that prohibition was lifted, and since then foreigners have been able to own and charter 
such vessels. As for port pilots, they must be Panamanian, as must 90% of the crew of the v essels 
providing port services.191  
4.145.   Since 2017, the AMP has been operating the Maritime Single Window of Panama (VUMPA) 
to streamline port movements.192 Through VUMPA, the necessary information is submitted for the 
arrival, stay, departure and transit of ves sels (cargo declaration, crew list, etc.) and the 
corresponding payments are made. According to the authorities, the use of VUMPA has made it 
possible to automate control, adopt digital documents (reducing the use of paper) and carry out 
100% risk assessme nt prior to the arrival of vessels, thus minimizing turnaround times (with an 
estimated saving of more than 6,000 hours at port terminals).  
4.146.   Containerized cargo is the most common cargo handled in Panamanian ports; transhipment 
operations are the most preva lent (Chart 4.3). Panamanian ports are equipped with 82 gantry cranes 
(the highest number for one country in the region) and have the capacity to berth 10 Neopanamax 
container vessels.193 The port of Colón is one of the most important for container traffic in the 
region.194 In 2017, construction began on a new container port in the province of Colón. In addition 
to the port of Colón, the port of Bocas Fruit Co. is also of great significance to Panama, as it is used 
to export bananas, an important export commo dity.  
 
187 Information provided by the authorities.  
188 Provisioning; shipping agency services; ship and port facility inspections; maritime and port 
manoeuvres; construction, repair and maintenance of ships and port facilities, waste management and 
fumigat ion; transport; mobile offshore drilling unit service; safety and hygiene; and nautical tourism (AMP. 
Viewed at: https://amp.gob.pa/servicios/puer tos-e-industrias -maritimas -auxiliares/licencia -de-operacion/ ). 
189 See ADM Resolution No. 107 -2020 of 31 August 2020; and J.D. Resolution No. 075 -2020 of 
8 October  2020 as extended by ADM Resolution No. 026 -2021 of 22 April 2021.  
190 Information provided by the authorities.  
191 Article 44 of J.D. Resolution No. 020 -2003 of 14 August 2003 as amended by J.D. Resolution No. 
056-2010 of 1 July 2010; and Article 43 of Law No. 56 of 6 August 2008 as amended by Law No.  41 of 
14 June 2011 and L aw No. 4 of 11 February 2015.  
192 Executive Decree No. 281 of 12 June 2017.  
193 Georgia Tech Panama Logistics Innovation & Research Center. Viewed at: 
https://logistics.gatech.pa/e n/assets/seaports . 
194 ECLAC. Viewed at: https://www.cepal.org/en/notes/port -activity -report -latin-america -and-caribbean -
2018 and https://www.cepal.org/es/notas/movimiento -portuario -2019. WT/TPR/S/421 /Rev.1  • Panama  
- 132 - 
  Chart 4.3 Port operations by type of cargo, 2014 –21 
 
Note:  Data for 2021: first six months.  
Source:  AMP (various years), Boletín Estadístico . Viewed at: https://amp.gob.pa/transparencia/estadistica/ ; 
and information provided by the authorities.  
4.147.   Bulk cargo is the second largest type of cargo (Chart 4.3). Fuels, to supply the domestic 
market and mar itime services, are the biggest component of this type of cargo. The sale of bunker 
fuel is an important activity at Panamanian ports.195 Bunker fuel is processed under a free zone 
arrangement (section 3.2.4).  
4.148.   In 2020, during the pandemic, 15 days of free warehousing were offered to support port 
terminal operators in the maritime -port sector.196  
Panama Canal  
4.149.   The Panama Canal Authority (ACP ), a public entity, governs the operations of the Canal. 
Since the previous review in 2014, some regulations issued by the ACP have been amended, such 
as the Procurement Regulations (section 3.3.6). In 2019, the ACP issued new regulations governing 
the pro cess for granting concessions within the port precincts and areas it manages and operates. 
Through a concession, private entities may engage in a commercial or industrial activity, as well as 
provide services to the ACP or to third parties; the concession holder may be granted exclusivity for 
a maximum of 10 years. A concession is usually granted for 20 years, although this term may be 
shorter or longer (up to 40 years), depending on the type of investment, the payback time, its 
economic impact or its poten tial to generate employment. Concessions can be renewed for the same 
term, but only once.197 
4.150.   Some 2.3% of world maritime trade passes through the Panama Canal.198 Use of the Canal 
is subject to a toll, the rate of which is set according to the type of vessel  and locks used, the 
maximum capacity of the vessel and the volume of cargo.199 Since 2016, the ACP has been 
implementing a programme to promote shipping loyalty and increase the volume of cargo 
transported, using preferential toll rates based on volume.200 In addition to tolls, a freshwater usage 
charge has been levied since 2020. This charge is composed of a fixed component (PAB 10,000) and 
a variable component, consisting of a percentage of between 1% and 10% of the toll value, 
 
195 AMP. Viewed at: https://amp.gob.pa/transparencia/estadistica/ . 
196 Information provided by the authorities.  
197 The regulations can be viewed at: https://micanaldepanama.com/nosotros/sobre -la-
acp/fundamentos -legales/.  
198 Information provided by the authorities.  
199 The rates can be viewed at: https://micanaldepanama.com/nosotros/servicios/servicios -
maritimos/#152471 7132584 -01a6fd1e -753b. See also: https://tolls.panama -canal.com/ . 
200 ACP. Viewed at: http://www.pancanal.com/peajes/TablasPeajesAprobadas -v3.pdf and 
https://tolls.panama -canal.com/pdf/2020/AF2020 -Peajes -Aproba dos.pdf.  
WT/TPR/S/421 /Rev.1  • Panama  
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  determined according to the availability of water at the time of transit. The higher the water level at 
the time of transit, the lower the percentage charged and vice versa.201 However, shipping lines can 
reserve the day and time of transit, subject to the payment of a reservation fee  (set according to 
the type of vessel and lock). In 2020, a fee was also introduced, which is charged upon registration 
of the vessel's transit itinerary, the amount of which (PAB 1,500 or PAB 5,000) depends on the size 
of the vessel.202 The ACP regulates t he rates for ancillary maritime services.203  
4.151.   During the period under review, the Canal was expanded; work was completed in 2016, 
allowing for higher traffic volumes and, thus, higher revenues (Table 4.15). After a period of 
increased traffic, in the first part of 2020, the Canal's operations decreased by 10.2% as a result of 
the pandemic -related slowdown in trade flows. In particular, movements of passengers (cancellation 
of the cruise season), Ro/Ro vessels (closure of factories in Asia) and refrigerated g oods, oil and 
petroleum products (lower global demand) declined (Table 4.16).204 Traffic through the Canal started 
to pick up from October 2020.205 
Table 4.15 Panama Canal indicators, 2014 –20 
 2014  2015  2016  2017  2018  2019  2020  
Vessels (units)  13,505  13,796  13,015  13,667  13,692  14,281  12,983  
Tonnes of cargo (thousands)  232,127  217,033  210,042  244,668  256,066  258,649  260,294  
Revenue (USD million)         
Toll  1,919  1,988  1,969  2,316  2,513  2,665  2,711  
Freshwater usage charge  n.a. n.a. n.a. n.a. n.a. n.a. 137,133  
Transit itinerary registration 
charge  n.a. n.a. n.a. n.a. n.a. n.a. 262,446  
Ancillary maritime services  414 447 431 469 485 485 676 
n.a. Not applicable.  
Source:  ACP (various years), Informe anuales . Viewed at: https://micanaldepanama.com/nosotros/sobre -la-
acp/rendicion -de-cuentas/informes -anuales/ ; and informat ion provided by the authorities.  
Table 4.16 The pandemic and its impact on Panama Canal operations, April –June 2019 
and April –June 2020  
(Number and %)  
Type of vessel  April–June 2019  April–June 2020  Change (%)  
Passenger ships  35 6 -82.9 
Ro/Ro vessels  217 111 -48.8 
Refrigerated container ships  163 126 -22.7 
Tankers  699 549 -21.5 
LNG carriers  95 89 -6.3 
Container ships  629 611 -2.9 
Bulk carriers  643 630 -2.0 
Freighters  163 160 -1.8 
LPG carriers  281 341 21.4 
Other  88 84 -4.5 
Total  3,013  2,707  -10.2 
Source:  UNCTAD (2020), Review of Maritime Transport 2020. Viewed at: 
https://unctad.org/en/pages/publications/Review -of-Maritime -Transport -(Series).aspx .  
4.152.   According to the Panamanian Constitution, the ACP must transfer to the S tate the economic 
surpluses generated by Canal activity, once it covers the Canal's operating and investment costs, 
 
201 ACP (2021), Informe anual 2020 . Viewed at: https://micanaldepanama.com/nosotros/sobre -la-
acp/rendicion -de-cuentas/informes -anuales/.  
202 ACP. Viewed at: https://micanaldepanama.com/canal -de-panama -adopta -medidas -para-garantizar -
disponibilidad -de-agua-y-confiabilidad -de-la-ruta/?utm_source=rss&utm_medium=rss&utm_campaign=canal -
de-panama -adopta -medidas -para-garantizar -disponibilidad -de-agua-y-confiabilidad -de-la-ruta. 
203 The rates can be viewed at: https://micanaldepanama.com/nosotros/servicios/servicios -
maritimos/#1524717132584 -01a6fd1e -753b.  
204 UNCTAD (2020), Review of Maritime Transport 2020. Viewed at: 
https://unctad.org/en/pages/publications/Review -of-Maritime -Transport -(Series).aspx.  
205 ACP (2021), Informe anual 2020 . Viewed at: https://micanaldepanama.com/nosotros/sobre -la-
acp/rendicion -de-cuentas/informes -anuales/.  WT/TPR/S/421 /Rev.1  • Panama  
- 134 - 
  and the necessary reserves206 are built up to deal with extraordinary situations.207 Between 2014 
and 2020, the amount that the ACP transferred to the National Treasury increased from 
PAB 1,028  million to PAB 1,827 million, equivalent to 52.9% and 75.1% of the total non -tax 
revenues received by the State (Table 4.17). The ACP also pays th e State a public service charge 
and a fee for each net tonne of goods transported through the Canal.208 If ACP contributions exceed 
a certain percentage of GDP (2.25% since 2020209), the surplus is deposited in the Panama Savings 
Fund.210 ACP transfers to the  Treasury in 2020 amounted to 3.5% of GDP if only direct contributions 
are considered, but if other contributions (income tax payments and contributions to social security 
and education insurance; purchases of local goods and services; and net wages) are t aken into 
account, the ACP generated 5.2% of the country's revenue in 2020 (Table 4.17).  
Table 4.17 Contribution of the ACP to the National Treasury and other state institutions, 
2014–20 
(PAB million)   
2014  2015  2016  2017  2018  2019  2020  
Current GDP at purchasers' prices (PAB 
million)  49,166  54,092  57,908  62,203  64,928  66,788  52,938  
Non -tax revenue  1,942  1,932  1,915  2,798  2,908  2,739  2,448  
Contributions to the National Treasury  1,028  990  1,058  1,647  1,710  1,794  1,824  
As % of total non -tax revenue  52.9  51.3  55.3  58.9  58.8  65.5  75.1  
As % of GDP  2.1 1.8 1.8 2.6 2.6 2.7 3.5 
Duty per net tonne; and public service charge  374  380  388  454  511  576  543  
Surplus payment  654  611  670  1,194  1,199  1,218  1,281  
Contributions to other state entities  169   .. 198  217  223  226  229  
Income tax and social security and education 
insurance contributions  169  .. 198  217  223  226  229  
Indirect contributions  1,518   .. 1,200  897  847  877  712  
Purchases of local goods and services  1,147  .. 784  444  377  403  225  
Net salaries  371  .. 416  453  470  474  487  
Total  2,715  990  2,456  2,761  2,780  2,897  2,765  
As % of GDP  5.5 1.8 4.2 4.4 4.3 4.3 5.2 
.. Not available.  
Source:  Information provided by the authorities; and ACP (various years), Informes anuales . Viewed at: 
https://micanaldepanama.com/nosotros/sobre -la-acp/rendicion -de-cuentas/informes -anuales/.  
4.4.4   Tourism  
4.153.   Tourism is one of the country's largest earners of foreign exchange and one of Panama's 
main exports (Table 4.18). Between 2013 and 2019, the contribution of tourism (hotels and 
restaurants) to GDP ranged from 3.6% to 4.1% (section 1). However, according to the Government's 
2019–24 Strategic Plan, the sector has even greater potential.  
Table 4.18 International tou rism indicators, 2014 –20 
 2014  2015  2016  2017  2018  2019  2020 
(Jan–Nov)  
Visitors (thousands)  2,143.9  2,145.5  2,204.7  2,225.8  2,487.4  2,240.9  610.6  
Tourists  1,752.0  1,885.3  1,921.1  1,844.7  1,785.8  1,588.1  386.3  
Short -stay tourists  188.3  205.0  240.5  308.7  332.6  338.0  87.2  
Cruise ship tourists  203.6  55.2  43.2  72.4  369.1  314.7  137.2  
Inbound tourism expenditure 
(USD million)  5,749  5,754  6,280  6,824  5,615  7,050  .. 
Travel  3,729  3,948  4,231  4,419  3,093  4,519  .. 
Passenger transport  2,020  1,806  2,049  2,405  2,522  2,531  .. 
Inbound tourism expenditure as 
% of GDP  11.7 11.0 10.9 11.0 8.6 11.0 .. 
Inbound tourism expenditure as 
% of services exports  50.3 48.5 51.2 51.2 45.8 51.0 .. 
 
206 According to the Regulations on ACP Reserves, the amount of the reserves must be equivalent to 
33% of the total amount of the ACP Investment Programme for the following 10 years (Agreement No.  631 of 
18 February  2020 as amended by Agreement No. 371 of 23 September 2020).  
207 Articles 320 and 316 of the Political Constitution.  
208 Articles 316 and 321 of the Political Constitution.  
209 Between 2014 and 2017 this percentage was 3.5% of GDP; in 2018 and 2019 it was 2.5% of GDP.  
210 Law No. 38 of 5 June 2012 and Law No. 51 of 10 October 2018.  WT/TPR/S/421 /Rev.1  • Panama  
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   2014  2015  2016  2017  2018  2019  2020 
(Jan–Nov)  
Inbound tourism expenditure as 
% of goods and services exports  20.3 22.1 24.9 25.1 20.8 24.9 .. 
.. Not available.  
Source:  National Institute of Statistics and Censuses (INEC). Viewed at: 
https://www.inec.gob.pa/publicaciones/Default.aspx ; UNWTO Tourism Statistics. Viewed at: 
https://www.e -unwto.org/ ; and information  provided by the authorities.  
4.154.   In 2020, the sector was adversely affected by the health crisis, and its contribution to GDP 
fell to 2.3%. To mitigate the economic and social effects of the pandemic and help the sector recover, 
in 2020 and until the end of 2 021, the Panamanian Tourism Authority (ATP) implemented the 
Post-COVID -19 Strategic Plan, which offers financial support, training and incentives to stimulate 
demand. The financial support offered under the Plan includes the Zero Coupon Bond to defer 
interest payments; in addition, access to finance was facilitated and a Credit Risk Transfer 
Programme was introduced.211  
4.155.   Panama did not revise its legislation governing tourism during the period under review. This 
legislation includes Laws No. 73 and No. 74, b oth of 22 December 1976, and Executive Decree 
No. 82 of 23 December 2008. The Government's 2019 –24 Strategic Plan recognizes the need to 
update legislation in order to regulate new tourism products.212  
4.156.   The ATP develops and implements sectoral policy and regulates the sector. The ATP also 
owns and operates the ATLAPA Convention Centre.213 
4.157.   In Panama, tourism is considered a sector of national priority interest.214 Since the previous 
review in 2014, the objectives for the development of the sector have not cha nged. Panama seeks 
to increase the sector's contribution to GDP and employment by promoting an inclusive and 
sustainable tourism model and positioning itself as a world -class tourism destination215 by 
consolidating and diversifying its international tourism  offerings.216 Following the outbreak of the 
COVID -19 pandemic, strategies were rethought in order to prioritize the promotion of domestic 
tourism as the main driver for recovery. To that end, the Bono Turístico  scheme was introduced 
in 2021, with a budget of PAB 1 million, through which the ATP subsidizes tourism packages offered 
by travel agencies.217  
4.158.   Retail tourism activities, including tour guiding, are reserved for Panamanians, with certain 
exceptions. Foreigners may work as foreign tourist guides if th ey have been resident in Panama for 
at least five years.218 In addition, since 2007, foreigners can operate travel agencies and provide 
tour operator services (section 2.4). However, the authorities indicated that foreigners are not 
restricted from engaging  in wholesale tourism activities.  
4.159.   All tourism service providers must obtain an operating licence and be enrolled in the National 
Tourism Register (RNT).219  
4.160.   The ATP implements a Tourism Quality Certification System for tourist accommodation. 
Certification is voluntary and free of charge. The quality label can be used for three years, subject 
 
211 ATP. Viewed at: https://www.atp.gob.pa/atp -pone-en-marcha -plan-estrategico -post-covid-19/; and 
information provided by the authorities.  
212 Among others, health, rural, sports, cultural, adventure, gastr onomic, convention and exhibition 
tourism and ecotourism.  
213 ATP. Viewed at: https://www.atp.gob.pa/industrias/reuniones -incentivos -conferencias -y-
exposicion es/. 
214 Article 1 of Law No. 80 of 8 November 2012.  
215 Since 2019, international tourism promotion is coordinated with the Tourism Promotion Fund 
(PROMTUR), a public -private body (PROMTUR. Viewed at: https://www.promturpanama.com/quienes -
somos/historia/ ). 
216 Plan Maestro de Turismo Sostenible 2020 -2025. 
217 Plan Maestro de Turismo Sostenible 2020 -2025; ATP. Viewed at: https://www.atp.gob.pa/atp -logra-
aprobacion -del-proyecto -bono-turistico/ ; and information provided by the authorities.  
218 Article 89 of Executive Decree No. 82 of 23 Dece mber 2008.  
219 Law No. 73 of 22 December 1976; Law No. 74 of 22 December 1976; and Executive Decree No.  82 
of 23 December  2008.  WT/TPR/S/421 /Rev.1  • Panama  
- 136 - 
  to annual assessments.220 Establishments that obtain the quality label  and have fewer than 50  rooms 
can obtain tax benefits and tariff exemptions (Table 4.19).  
4.161.   In addition to the incentives granted following the onset of the pandemic, since the previous 
review in 2014, Panama has continued to offer incentives to investment in the sector (Table 4.19). 
In some instances, operators must meet an investment requirement in order to obtain the 
incentives; and securing them may also depend on the location of the project. As for tariff 
exemptions, these are granted only if the materi als and equipment are not produced in Panama in 
sufficient quantity or quality or at a price equivalent to those imported. Also, since 2019, the amount 
invested in tourism companies operating outside the district of Panama can be used as a tax credit 
again st income tax; previously, 50% of what was invested could be deducted from the amount of 
taxable income.221 Tourism companies can deduct from the amount of taxable income the expenses 
incurred to participate in events organized by the ATP abroad, up to a ma ximum of PAB 5,000.222 
Table 4.19 Main incentives granted to tourism enterprises, 2014 –20 
Legal framework: beneficiaries and 
requirements  Incentives  Amount of 
exemptions 2014 –
20 (PAB)  
Article 1 of Law No. 58 of 28.12.2006:  
construction, equipping and remodelling of 
hotels, aparthotels, hostels and bungalows 
located outside tourist development zones of 
national interest;  
Investment requirement: PAB 3 million in 
metropolitan areas; PAB 50,000 in the rest of 
the country  Tariff exemptions: materials and 
equipment, including vehicles (20 years)  3,862,536  
ISC exemption: materials and equipment, 
including vehicles (20 years)  .. 
Property tax exemption (20 years)  .. 
Article 4 of Law No. 80 of 08.11.2012, as 
amended by Law No. 82 of 18.04.2019 : 
construction, equipping and remodelling of 
tourist accommodation located outside the 
district of Panama;  
Investment requirement: PAB 250,000 in new 
constructions; PAB 100,000 in new 
constructions in indigenous areas; PA B 
100,000 in refurbishment and equipping  Tariff exemptions: building materials (five 
years); materials, fixtures, furniture and 
equipment, including vehicles (10 years)  1,748,987  
Exemption from income tax (15 years); 
and from property tax (15 years)  .. 
Article 5 of Law No. 80 of 08.11.2012, 
amended by Law No. 82 of 18.04.2019 : 
tourist accommodation having up to 50 rooms 
and having obtained the tourism quality label 
awarded by the ATP  
Investment requirement: none  Tariff exemptions: materials, f ixtures, 
furniture and equipment, including 
vehicles; from 2019, energy -saving 
equipment (five years)  .. 
Exemption from income tax (five years) 
and property tax (10 years)  .. 
Article 6 of Law No. 80 of 08.11.2012 : 
tourist accommodation that was under 
construction in 2012 in the district of Panama;  
Investment requirement: PAB 8 million  Tariff exemptions: building materials (five 
years); fixtures, furniture and equipment 
(10 years)  547,757  
ISC exemption: certain goods (including 
vehicles) and services (five years)  3,372  
Property tax exemption (10 years)  .. 
Article 8 of Law No. 80 of 08.11.2012 : 
construction and operation of convention 
centres  
Investment requirement: PAB 30 million  Tariff exemptions: materials, fixtures and 
equipment (10 years)  .. 
Article 8 of Law No. 80 of 08.11.2012 : 
companies involved in organizing events  
Requirement: 50% of attendees must be 
foreigners  Exemption from income tax on event 
proceeds  .. 
Article 8 of Law No. 80 of 08.11.2012 : 
construction, equipping and administration of 
cruise ports  
Investment requirement: PAB 10 million  Tariff exemptions: materials, fixtures and 
equipment (five years)  .. 
Property tax exemption (15 years), 
except in the district of Panama (10 
years)  .. 
Article 8 of Law No. 80 of 08.11.2012 : 
construction, equipping and administration of Tariff exemptions: materials and 
equipment (five years)  .. 
 
220 Panamá América , 19 March 2014. Viewed at: 
https://www.panamaamerica.com.pa/economia/empresas -turisticas -poseen -sello-de-calidad -panameno -
919352 . 
221 Article 9 of Law No. 80 of 8 November 2012, as amended by Law No. 82 of 18 April 2019 and Law 
No. 122 of 31 December 20 19. 
222 Article 11 of Law No. 80 of 8 November 2012.  WT/TPR/S/421 /Rev.1  • Panama  
- 137 - 
  Legal framework: beneficiaries and 
requirements  Incentives  Amount of 
exemptions 2014 –
20 (PAB)  
marinas  
Investment requirement: none  Exemption from income tax, (15 years); 
and from property tax (15 years, except 
in the district of Panama (10 years))  .. 
Article 8 of Law No. 80 of 08.11.2012 : 
companies marketing nature, adventure, and 
sun and beach products  
Investment requirement: none  Tariff exemptions: materials and 
equipment, including vehicles (five years)  .. 
Exemption from income tax, (15 years); 
and from property tax (15 years, except 
in the district of Panama (10 years))  .. 
Article 8 of Law No. 80 of 08.11.2012, as 
amended by Law No. 91 of 26.12.2017 
and regulated by Executive Decree No. 
319 of 03.12.2020 : companies marketing 
"special tourism products": private museums, 
agritourism, rural tourism, ecoto urism, sports 
tourism, health tourism, recreational parks  
Investment requirement: between PAB 5,000 
and PAB 300,000, depending on the product.  Tariff exemptions: building materials (five 
years); fixtures, furniture and equipment, 
including vehicles (10 yea rs)  .. 
Exemption from ISC and ITBMS: building 
materials (five years); fixtures, furniture 
and equipment, including vehicles (10 
years)  .. 
Exemption from income tax (15 years)  
 .. 
Article 10 of Law No. 80 of 08.11.2012, as 
amended by Law No. 82 of 18.04.2019 : 
travel agencies  
Investment requirement: none  Tariff exemptions: certain goods 
(including new vehicles) and services 
(five years)  .. 
ISC exemption: certain goods (including 
new vehicles) and services (five years)  .. 
Article 10 of Law No. 80 of 08.11.2012, as 
amended by Law No. 82 of 18.04.2019 : 
tourist land transport companies (service 
provided to hotels)  
Investment requirement: none  Tariff exemptions: new vehicles (five 
years)  .. 
ISC exemption: new vehicles (five years)  .. 
Cabinet Decree of 30.12.1992 : tourist land 
transport companies (collective transport)  
Investment requirements: none  Tariff exemptions: new vehicles, whose 
c.i.f. value ≤ PAB 7,000 (95% 
exemption); vehicles up to five years old 
(75%); and tyres (95%)  .. 
.. Not available.  
Source:  WTO Secretariat and information provided by the authorities.  WT/TPR/S/421 /Rev.1  • Panama  
- 138 - 
  5  APPENDIX TABLES  
Table A1. 1 Merchandise exports by HS section, 2013 -20 
(USD million and %)  
Description  2013  2014  2015  2016  2017  2018  2019  2020    
(USD million)  
Total exports  1,032  1,023  913 774 815 814 1,660  1,900   
Re-exports  188 205 218 139 155 144 156 174   
(% of total exports)  
1 - Live animals; animal products  19.2 21.5 22.5 23.7 22.1 19.2 8.6 7.0  
03. Fish and crustaceans, molluscs 
and other aquatic invertebrates  13.8 16.3 17.0 17.8 16.4 13.5 4.8 3.9 
 
02. Meat and edible meat offal  3.5 3.4 2.9 3.2 3.4 3.4 2.6 2.1  
04. Dairy produce; birds' eggs; 
natural honey; edible products of 
animal origin  1.4 1.5 1.8 2.2 2.0 1.9 0.8 0.9 
2 - Vegetable products  17.9 17.9 18.7 20.3 19.1 18.9 11.7 10.5  
08. Edible fruit and nuts; peel of 
citrus fruit or melons  15.6 14.7 15.4 16.2 15.6 16.0 9.8 9.0 
 
09. Coffee, tea, maté and spices  1.5 2.4 2.6 3.2 2.9 2.3 1.6 1.3  
07. Edible vegetables and certain 
roots and tubers  0.3 0.4 0.5 0.6 0.2 0.3 0.2 0.1 
3 - Animal or vegetable fats and oils  2.8 2.7 1.8 2.4 2.9 4.0 3.1 2.7 
4 - Prepared foodstuffs; beverages, 
spirits and vinegar; tobacco and 
manufactured tobacco substitutes  11.7 12.6 10.7 13.9 13.0 13.9 6.8 5.3 
 
23. Residues and waste from the 
food industries  3.4 4.5 3.5 3.8 4.4 4.9 2.7 1.9 
 
17. Sugars and sugar confectionery  2.4 2.7 2.3 4.6 3.0 3.8 1.6 1.5  
22. Beverages, spirits and vinegar  2.7 2.3 2.4 2.7 3.0 2.8 1.4 1.1 
5 - Mineral products  0.4 0.1 0.1 0.3 0.1 0.2 47.8 56.3  
26. Ores, slag and ash  0.0 0.0 0.0 0.0 0.0 0.0 47.8 56.1 
6 - Products of the chemical or allied 
industries  5.2 4.2 4.7 4.3 3.9 4.5 3.2 4.1 
 
30. Pharmaceutical products  2.3 2.1 2.1 1.6 1.1 1.6 1.9 1.6  
38. Miscellaneous chemical products  0.4 0.8 1.0 0.8 1.0 1.2 0.5 1.3  
29. Organic chemicals  0.7 0.3 0.3 0.5 0.6 0.5 0.3 0.5 
7 - Plastics and articles thereof  1.2 1.3 1.2 1.2 1.2 1.4 0.6 0.7 
8 - Raw hides and skins, leather, 
furskins and articles thereof; saddlery 
and harness  2.2 2.4 2.0 1.4 0.9 0.6 0.3 0.2 
9 - Wood and articles of wood; wood 
charcoal  3.8 5.2 4.1 4.5 6.0 6.6 2.9 1.9 
 
44. Wood and articles of wood; wood 
charcoal  3.8 5.2 4.1 4.5 6.0 6.6 2.9 1.9 
10 - Pulp of wood or of other fibrous 
cellulosic material; paper and 
paperboard and articles thereof  3.9 4.0 3.6 3.2 3.2 3.6 1.4 1.2 
 
48. Paper and paperboard; articles 
of paper pulp, of paper or of 
paperboard  3.0 3.1 2.9 2.5 2.4 2.6 1.0 1.0 
11 - Textiles and textile articles  0.9 0.8 0.8 1.0 1.0 1.1 0.7 0.5  
62. Articles of apparel and clothing 
accessories, not knitted or crocheted  0.5 0.3 0.3 0.5 0.6 0.5 0.2 0.2 
 
63. Other made up textile articles; 
sets; worn clothing and worn textile 
articles; rags  0.0 0.1 0.0 0.0 0.0 0.0 0.1 0.1 
12 - Footwear, headgear, umbrellas, 
sun umbrellas, walking -sticks, seat -
sticks, whips, riding -crops and parts 
thereof; prepared  feathers and articles 
made therewith  0.2 0.1 0.1 0.2 0.2 0.2 0.2 0.1 WT/TPR/S/421 /Rev.1  • Panama  
- 139 - 
  Description  2013  2014  2015  2016  2017  2018  2019  2020  
13 - Articles of stone, plaster, cement, 
asbestos, mica or similar materials; 
ceramic products; glass and glassware  0.5 0.1 0.2 0.3 0.3 0.3 0.2 0.2 
14 - Natural or cultured pearls, 
precious or semi -precious stones, 
precious metals  9.6 3.8 2.2 2.1 4.3 4.6 3.4 1.8 
15 - Base metals and articles of base 
metal  11.0 11.0 9.9 11.7 14.0 13.7 6.2 4.2 
 
76. Aluminium and articles thereof  2.5 2.7 3.1 3.9 3.6 3.2 2.3 1.8  
72. Iron and steel  4.7 4.8 3.5 3.7 5.6 6.2 1.9 1.2  
73. Articles of iron or steel  0.7 0.7 0.9 1.7 2.2 1.6 1.0 0.5 
16 - Machinery and mechanical 
appliances; electrical equipment; and 
parts thereof  6.5 7.6 12.9 6.0 4.1 3.0 1.9 1.8 
 
84. Nuclear reactors, boilers, 
machinery and mechanical 
appliances  5.0 5.5 10.6 4.5 2.6 1.4 0.8 1.1 
 
85. Electrical machinery and 
equipment and parts thereof; sound 
recorders and reproducers  1.6 2.1 2.3 1.6 1.5 1.6 1.1 0.7 
17 - Vehicles, aircraft, vessels and 
associated transport equipment  1.8 3.1 2.9 1.6 0.6 2.1 0.4 0.6 
 
87. Vehicles other than railway or 
tramway rolling -stock, and parts 
and accessories thereof  1.8 3.1 2.8 1.5 0.5 1.8 0.3 0.5 
18 - Optical, photographic, 
cinematographic, measuring, checking 
or precision instruments and apparatus  0.7 0.9 0.8 1.1 1.6 1.1 0.5 0.5 
19 - Arms and ammunition; parts and 
accessories thereof  -  0.0 - 0.0 - 0.0 - - 
20 - Miscellaneous manufactured 
articles  0.5 0.4 0.7 0.8 0.9 0.9 0.4 0.4 
21 - Works of art, collectors' pieces 
and antiques  0.0 0.1 0.0 0.0 0.3 0.0 0.0 0.0 
Note:  Includes exports and re -exports to the Colón Free Zone.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.WT/TPR/S/421 /Rev.1  • Panama  
- 140 - 
  Table A1. 2 Total merchandise imports by HS section, 2013 -20 
(USD million and %)  
Description  2013  2014  2015  2016  2017  2018  2019  2020    
(USD million)  
Total imports  13,031  13,707  12,129  11,693  12,720  13,232  12,836  8,179    
(% of imports)  
1 - Live animals; animal 
products  1.5 1.6 1.8 2.1 2.1 2.1 2.2 3.0 
 
04. Dairy produce; birds' 
eggs; natural honey; edible 
products of animal origin  0.7 0.7 0.8 0.9 1.0 1.0 1.1 1.6 
 
02. Meat and edible meat 
offal 0.6 0.6 0.7 0.9 0.8 0.7 0.7 1.0 
 
03. Fish and crustaceans, 
molluscs and other aquatic 
invertebrates  0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 
2 - Vegetable products  2.6 2.5 2.8 3.1 2.7 3.1 2.9 5.0  
10. Cereals  1.4 1.3 1.4 1.5 1.2 1.7 1.4 2.6  
08. Edible fruit and nuts; 
peel of citrus fruit or melons  0.3 0.4 0.4 0.5 0.5 0.5 0.5 0.8 
 
07. Edible vegetables and 
certain roots and tubers  0.2 0.2 0.3 0.4 0.4 0.3 0.3 0.5 
3 - Animal or vegetable fats 
and oils 0.6 0.5 0.6 0.6 0.6 0.6 0.6 1.0 
4 - Prepared foodstuffs; 
beverages, spirits and 
vinegar; tobacco and 
manufactured tobacco 
substitutes  7.0 7.5 8.6 9.1 8.6 8.7 9.1 13.2 
 
21. Miscellaneous edible 
preparations  1.3 1.4 1.7 1.8 1.7 1.7 1.8 2.7 
 
19. Preparations of cereals, 
flour, starch or milk;  1.2 1.3 1.5 1.6 1.5 1.5 1.5 2.3 
 
22. Beverages, spirits and 
vinegar  1.2 1.4 1.6 1.6 1.4 1.4 1.6 2.2 
 
23. Residues and waste 
from the food industries  1.3 1.4 1.4 1.5 1.4 1.4 1.4 2.1 
 
16. Preparations of meat, of 
fish or of crustaceans  0.6 0.6 0.8 0.8 0.8 0.9 0.9 1.6 
 
20. Preparations of 
vegetables, fruit, nuts or 
other parts of plants  0.9 0.9 1.1 1.1 1.1 1.1 1.2 1.5 
5 - Mineral products  21.0 20.8 13.8 13.6 15.8 18.4 18.4 12.8  
27. Mineral fuels, mineral 
oils and products of their 
distillation  20.5 20.4 13.7 13.5 15.7 18.2 18.2 12.6 
6 - Products of the chemical 
or allied industries  8.3 7.6 9.8 10.4 9.9 10.2 11.3 15.6 
 
30. Pharmaceutical 
products  3.0 2.5 3.9 4.5 4.2 4.7 5.5 7.6 
 
38. Miscellaneous chemical 
products  1.5 1.4 1.6 1.8 1.6 1.5 1.5 2.7 
 
33. Essential oils and 
resinoids; perfumery, 
cosmetic or toilet 
preparations  1.1 1.1 1.4 1.2 1.3 1.2 1.2 1.4 
 
34. Soap, organic surface -
active agents, washing 
preparations, lubricating 
preparations  0.8 0.8 0.9 0.9 0.9 0.9 0.9 1.3 
 
31. Fertilisers  0.5 0.4 0.4 0.5 0.5 0.5 0.7 0.9  
32. Tanning or dyeing 
extracts; tannins and their 
derivatives; dyes, pigments 
and other colouring matter  0.7 0.7 0.8 0.9 0.8 0.8 0.8 0.7 
7 - Plastics and articles 
thereof  3.9 4.2 4.5 4.6 4.6 4.4 4.3 5.0 WT/TPR/S/421 /Rev.1  • Panama  
- 141 - 
  Description  2013  2014  2015  2016  2017  2018  2019  2020   
39. Plastics and articles 
thereof  2.9 3.2 3.4 3.6 3.6 3.3 3.2 3.9 
 
40. Rubber and articles 
thereof  1.0 1.0 1.1 1.0 1.0 1.1 1.1 1.1 
8 - Raw hides and skins, 
leather, furskins and articles 
thereof; saddlery and harness  0.6 0.6 0.6 0.5 0.5 0.5 0.6 0.4 
9 - Wood and articles of 
wood; wood charcoal  0.5 0.5 0.6 0.6 0.6 0.5 0.5 0.4 
10 - Pulp of wood or of other 
fibrous cellulosic material; 
paper and paperboard and 
articles thereof  2.2 2.1 2.2 2.3 2.2 2.1 2.1 2.7 
 
48. Paper and paperboard; 
articles of paper pulp, of 
paper or of paperboard  1.6 1.4 1.7 1.7 1.7 1.7 1.7 2.3 
11 - Textiles and textile 
articles  4.6 4.6 5.2 5.2 4.8 4.7 4.6 4.1 
 
62. Articles of apparel and 
clothing accessories, not 
knitted or crocheted  2.4 2.4 2.7 2.6 2.4 2.2 2.3 1.7 
 
61. Articles of apparel and 
clothing accessories, 
knitted or crocheted  1.2 1.2 1.5 1.5 1.5 1.6 1.4 1.1 
 
63. Other made up textile 
articles; sets; worn clothing 
and worn textile articles; 
rags 0.4 0.4 0.4 0.5 0.4 0.4 0.4 0.8 
12 - Footwear, headgear, 
umbrellas, sun umbrellas, 
walking -sticks, seat -sticks, 
whips, riding -crops and parts 
thereof; prepared  feathers 
and articles made therewith  1.8 1.8 2.1 2.1 1.9 1.7 1.7 1.2 
 
64. Footwear, gaiters and 
the like; parts of such 
articles  1.7 1.6 1.9 1.9 1.8 1.6 1.5 1.1 
13 - Articles of stone, plaster, 
cement, asbestos, mica or 
similar materials; ceramic 
products; glass and glassware  1.5 1.5 1.8 1.8 1.8 1.6 1.5 1.3 
 
68. Articles of stone, 
plaster, cement, asbestos, 
mica or similar materials  0.5 0.5 0.6 0.7 0.8 0.6 0.5 0.5 
 
69. Ceramic products  0.7 0.6 0.7 0.7 0.6 0.5 0.6 0.4 
14 - Natural or cultured 
pearls, precious or semi -
precious stones, precious 
metals  0.3 0.3 0.4 0.3 0.3 0.4 0.3 0.1 
15 - Base metals and articles 
of base metal  8.0 9.9 8.9 7.2 7.8 7.6 6.7 5.3 
 
73. Articles of iron or steel  3.2 5.2 4.4 3.0 3.7 3.4 3.1 2.4  
72. Iron and steel  3.0 2.9 2.4 2.1 2.2 2.3 1.9 1.2  
76. Aluminium and articles 
thereof  0.8 0.9 1.1 1.1 0.9 0.9 0.8 0.7 
16 - Machinery and 
mechanical appliances; 
electrical equipment; and 
parts thereof  19.1 18.7 18.8 18.9 20.1 18.2 17.1 16.7 
 
84. Nuclear reactors, 
boilers, machinery and 
mechanical appliances  11.1 11.6 10.8 11.2 11.5 11.3 9.6 9.6 
 
85. Electrical machinery 
and equipment and parts 
thereof; sound recorders 
and reproducers  8.0 7.2 8.0 7.6 8.5 6.9 7.6 7.1 WT/TPR/S/421 /Rev.1  • Panama  
- 142 - 
  Description  2013  2014  2015  2016  2017  2018  2019  2020  
17 - Vehicles, aircraft, vessels 
and associated transport 
equipment  11.0 9.9 11.5 11.6 9.9 9.6 10.3 6.6 
 
87. Vehicles other than 
railway or tramway rolling -
stock, and parts and 
accessories thereof  9.4 8.7 10.5 11.3 9.7 8.8 8.5 6.2 
18 - Optical, photographic, 
cinematographic, measuring, 
checking or precision 
instruments and apparatus  1.5 1.8 1.9 1.9 1.9 2.0 2.2 2.4 
 
90. Optical, photographic, 
cinematographic, 
measuring, checking, 
precision, medical or 
surgical instruments and 
apparatus  1.3 1.5 1.6 1.6 1.7 1.8 2.0 2.2 
19 - Arms and ammunition; 
parts and accessories thereof  0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 
20 - Miscellaneous 
manufactured articles  3.7 3.5 3.9 3.8 3.7 3.5 3.6 3.2 
 
94. Furniture; bedding, 
mattresses, mattress 
supports, cushions and 
similar stuffed furnishings; 
lamps and lighting fittings, 
not elsewhere specified or 
included  2.2 2.0 2.2 2.0 2.0 1.8 1.9 1.4 
21 - Works of art, collectors' 
pieces and antiques  0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 
Other  0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 
Note:  Includes imports from the Colón Free Zone and other free zones.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
  WT/TPR/S/421 /Rev.1  • Panama  
- 143 - 
  Table A1. 3 Merchandise exports by trading partner, 2013 -20 
(USD million and %)  
Description  2013  2014  2015  2016  2017  2018  2019  2020   
(USD million)  
Total exports  1,032  1,023  913 774 815 814 1,660b 1,900  
 Re-exports  188 205 218 139 155 144 156 174  
(% of exports)  
America  51.4 47.4 50.7 47.1 42.5 41.8 38.1 25.7 
 United States  18.4 19.6 18.3 20.3 17.6 16.6 14.5 7.0 
 Other America  33.0 27.9 32.3 26.7 24.9 25.2 23.5 18.6 
 Brazil  0.2 0.5 0.2 0.6 0.8 1.1 0.6 6.8 
 Costa Rica  6.8 7.4 8.1 7.0 5.9 5.9 5.4 2.7 
 Mexico  1.2 1.7 4.5 1.1 1.1 1.2 2.2 1.3 
 Cuba 1.0 1.0 1.0 1.1 1.2 1.0 0.8 1.1 
 Venezuela, Bolivarian 
Republic of  2.4 0.9 1.0 0.8 0.6 0.6 1.1 1.1 
 Guatemala  1.0 1.4 1.5 1.9 1.8 2.0 2.4 1.0 
 Nicaragua  1.7 2.5 3.4 2.9 2.0 2.1 1.3 0.8 
 Colombia  1.4 1.8 2.4 1.8 2.0 1.8 2.2 0.7 
 Ecuador  1.7 1.7 1.3 1.4 0.9 1.2 1.2 0.6 
Europe  22.4 24.2 23.0 25.8 26.1 27.4 31.0 27.4 
 EU (27)  18.4 21.0 20.6 23.1 22.6 23.3 26.5 25.5 
 Spain  1.9 2.5 2.1 2.2 3.5 2.6 1.6 11.5 
 Netherlands  4.0 4.3 3.3 12.6 13.8 14.2 16.6 7.5 
 Bulgaria  0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.9 
 Germany  4.8 8.6 10.2 2.5 1.2 1.1 1.6 1.6 
 Denmark  0.8 1.4 0.8 1.7 1.3 1.4 2.7 0.6 
 EFTA 0.9 1.3 0.4 0.5 2.0 2.6 3.0 0.9 
 Switzerland  0.9 1.3 0.4 0.3 2.0 2.6 3.0 0.9 
 Other Europe  3.0 1.9 2.0 2.2 1.5 1.5 1.5 1.0 
 United Kingdom  2.3 1.3 1.0 1.8 1.2 1.1 1.2 0.7 
 Turkey  0.7 0.5 0.9 0.3 0.4 0.3 0.2 0.3 
CIS a 0.7 0.4 0.0 0.1 0.2 0.2 0.1 0.1 
Africa  0.1 0.2 0.8 0.3 0.4 0.3 0.1 0.1 
Middle East  0.5 0.2 2.5 0.4 0.2 0.2 0.5 0.2 
Asia 18.0 21.9 17.1 18.2 22.3 21.8 20.5 42.0 
 China  5.1 6.8 4.4 4.6 5.3 6.0 6.9 19.5 
 Japan  0.8 1.7 0.6 0.7 0.9 0.9 1.0 6.6 
 Other Asia  12.2 13.3 12.0 12.9 16.1 14.9 12.6 15.9 
 Korea, Republic of  1.7 1.6 1.4 1.4 1.0 0.9 1.0 7.2 
 India 2.8 2.2 2.4 3.1 4.1 5.2 5.1 4.1 
 Philippines  0.1 0.0 0.0 0.0 0.0 0.0 0.1 2.1 
 Chinese Taipei  3.8 3.0 3.2 3.5 4.5 3.7 2.7 1.0 
 Thailand  1.0 0.8 0.8 0.9 1.5 2.2 1.7 0.8 
Other  6.9 5.7 5.9 8.1 8.2 8.4 9.8 4.6 
 Colón Free Zone  6.9 5.7 5.9 8.1 8.2 8.4 9.8 4.6 
MEMORANDUM:          
EU (28)  20.8 22.3 21.7 24.9 23.7 24.5 27.7 26.2 
Note:  Includes exports and re -exports to the Colón Free Zone . 
a Commonwealth of Independent States, including some associate States and former member States.  
b These percentages are based on total exports of USD  669 million. Copper exports are excluded, 
since no breakdown by partner was obtained for 2019.  
Source:  WTO Secretariat calcu lations, based on data provided by the authorities.  WT/TPR/S/421 /Rev.1  • Panama  
- 144 - 
  Table A1. 4 Merchandise imports by trading partner, 2013 -20 
(USD million and %)   
2013  2014  2015  2016  2017  2018  2019  2020   
(USD million)  
Total imports  13,031  13,707  12,129  11,693  12,720  13,232  12,836  8,179   
(% of imports)  
America  43.6 42.9 46.0 47.3 44.9 45.3 45.7 49.6 
 United States  24.4 25.1 25.9 25.7 24.3 24.9 25.5 25.5 
 Other America  19.3 17.9 20.1 21.6 20.6 20.4 20.1 24.2 
 Mexico  4.1 4.2 5.1 5.3 4.9 4.8 4.8 5.6 
 Costa Rica  4.0 3.7 3.7 3.9 3.7 3.4 3.7 4.4 
 Colombia  3.0 2.8 3.0 3.1 2.6 2.5 2.8 3.6 
 Guatemala  1.4 1.4 1.5 1.5 1.4 1.5 1.6 2.2 
 Brazil  1.5 0.9 1.3 1.8 2.3 1.8 1.5 1.5 
 El Salvador  0.9 0.9 1.1 1.0 0.9 0.9 0.8 1.0 
 Argentina  0.7 0.5 0.5 0.5 0.7 0.9 1.0 1.0 
 Chile 0.6 0.7 0.7 0.8 0.8 0.8 0.8 1.0 
 Peru 0.9 0.6 0.7 1.0 1.1 0.9 0.7 0.8 
 Canada  0.5 0.6 1.0 1.0 0.7 0.9 0.8 0.7 
Europe  12.4 12.2 12.4 11.9 11.7 11.7 12.8 11.4 
 EU (27)  10.3 10.7 10.9 10.4 9.9 9.5 10.5 9.8 
 Spain  2.9 2.5 2.8 2.3 2.2 2.6 3.8 2.4 
 Germany  1.9 1.7 2.3 2.2 2.4 2.1 2.0 1.8 
 France  2.1 1.2 1.2 1.2 1.3 1.2 1.2 1.2 
 Italy 1.2 3.3 2.2 1.5 1.3 1.1 1.1 1.1 
 Netherlands  0.8 0.4 0.5 1.0 0.6 0.5 0.4 0.6 
 EFTA 0.4 0.4 0.5 0.5 0.5 0.5 0.4 0.5 
 Switzerland  0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.4 
 Norway  0.1 0.1 0.1 0.0 0.1 0.0 0.0 0.1 
 Other Europe  1.7 1.0 1.0 1.0 1.4 1.7 1.8 1.2 
 Turkey  0.9 0.3 0.2 0.4 0.9 1.1 1.2 0.7 
 United Kingdom  0.8 0.7 0.8 0.6 0.5 0.6 0.6 0.5 
CIS a 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.3 
 Russian Federation  0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.3 
Africa  0.1 0.2 0.2 0.4 0.6 0.8 0.4 0.3 
 South Africa  0.1 0.1 0.1 0.4 0.5 0.7 0.3 0.2 
Middle East  0.1 0.1 0.1 0.1 0.1 0.2 0.1 0.1 
 Israel  0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 
Asia 16.1 18.8 20.6 19.8 20.8 18.4 17.6 17.7 
 China  7.9 9.6 9.6 9.2 9.8 10.1 10.1 10.4 
 Japan  2.1 2.0 2.4 2.7 2.2 2.0 2.0 1.7 
 Other Asia 6.1 7.3 8.6 7.9 8.8 6.3 5.6 5.5 
 Korea, Republic of  2.8 3.4 3.5 2.7 3.7 1.5 1.5 1.3 
 India 0.5 0.6 0.9 1.0 0.9 0.8 0.8 0.9 
 Thailand  1.2 1.4 1.6 1.7 1.3 0.9 0.8 0.8 
 Chinese Taipei  0.4 0.5 0.6 0.5 0.5 0.4 0.4 0.4 
 New Zealand  0.1 0.2 0.2 0.3 0.2 0.3 0.2 0.3 
Other  27.6 25.7 20.6 20.4 21.7 23.6 23.3 20.6 
Colón Free Zone 
(Panama)  9.8 9.0 8.7 8.3 7.3 7.1 7.5 7.4 
Free zones (Panama)  1.2 1.5 2.1 2.7 3.4 3.4 3.9 5.1 
Petroleum free zones 
(Panama)  16.5 15.0 9.6 9.3 10.8 13.0 11.7 7.8 
Bonded warehouses 
(Panama)  0.2 0.2 0.2 0.2 0.2 0.1 0.2 0.2 WT/TPR/S/421 /Rev.1  • Panama  
- 145 - 
   
2013  2014  2015  2016  2017  2018  2019  2020  
MEMORANDUM:          
EU (28)  11.1 11.5 11.7 11.0 10.4 10.1 11.2 10.2 
Note:  Includes imports from the Colón Free Zone and other free zones .  
a Commonwealth of Independent States, including some associate States and former member States.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.WT/TPR/S/421 /Rev.1  • Panama  
- 146 - 
  Table A2. 1 Trade measures notified to the WTO, 1 January 2014 -30 September 2021  
Agreement/  
Decision  Description  Frequency  WTO documents (latest if 
recurrent)  Date  
Agreement on Trade -Related Aspects of Intellectual Property Rights    
Article 63.2  Main laws and regulations  Ad hoc  IP/N/1/PAN/P/4  11/7/2014  
IP/N/1/PAN/P/3  11/7/2014  
IP/N/1/PAN/P/2  11/7/2014  
IP/N/1/PAN/P/1  10/7/2014  
IP/N/1/PAN/T/1  10/7/2014  
IP/N/1/PAN/2  8/7/2014  
Agreement on Trade Facilitation (WT/L/911, replaced by WT/L/931)    
Article 15  Commitments designated 
under Category A  Ad hoc  WT/PCTF/N/PAN/1  6/8/2014  
Articles 15 
and 16  Deadlines for the 
implementation of 
Category B and C 
commitments  Ad hoc  G/TFA/N/PAN/1  8/5/2019  
Article 10.6.2  Customs brokers  Ad hoc  G/TFA/N/PAN/2  15/10/2019  
Article 12.2.2  Contact point for the 
exchange of information  Ad hoc  G/TFA/N/PAN/2  15/10/2019  
Agreement on Agriculture    
Articles 10 
and 18.2; 
ES:1 Export subsidies  Annual  G/AG/N/PAN/57  7/5/2021  
Article 18.2; 
DS:1 Domestic support  Annual  G/AG/N/PAN/58  27/5/2021  
Article 18.2; 
MA:2 Market access - Volume 
of imports under tariff 
and other quotas  Annual  G/AG/N/PAN/59  2/6/2021  
Article 18.3; 
DS:2 New or modified domestic 
support measures exempt 
from reduction  Ad hoc  G/AG/N/PAN/38  13/4/2016  
G/AG/N/PAN/33  13/3/2015  
Articles 5.7 
and 18.2; 
MA:5 Market access - Special 
safeguard provisions  Annual  G/AG/N/PAN/56  17/5/2021  
General Agreement on Trade in Services    
Article III:4 
and/or IV:2  Contact/enquiry points  Once S/ENQ/78/Rev.19  29/8/2019  
Article V:7(a)  Regional trade agreement  Ad hoc  S/C/N/1054  16/4/2021  
S/C/N/864  7/6/2016  
S/C/N/774  21/11/2014  
Enabling clause - Integration    
Paragraph 
4(a) Preferential arrangements 
among developing 
countries  Ad hoc  WT/COMTD/RTA15/N/1  3/3/2020  
WT/COMTD/N/49  21/3/2016  
LDC services waiver  
  Preferential treatment to 
services and suppliers of 
LDCs Once; ad hoc  
(modifications)  S/C/N/890  5/5/2017  
GATT 1994    
Article 
XXVIII:5  Modification of Schedules  Triennial  G/MA/372  7/8/2020  
Article 
XVII:4(a)  State trading activities  Annual 
(triennial for full 
and 
notifications 
and annual for 
modifications)  G/STR/N/15/PAN, 
G/STR/N/16/PAN, 
G/STR/N/17/PAN, 
G/STR/N/18/PAN  10/6/2020  
Article 
XXIV:7(a)  Formation of a free -trade 
area Ad hoc  WT/REG452/N/1  16/4/2021  
WT/REG422/N/1  8/1/2021  
WT/REG384/N/1  25/4/2017  
WT/REG374/N/1  7/6/2016  
WT/REG357/N/1  21/11/2014  
Agreement on Implementation of Article VI of GATT 1994 (anti -dumping)    
Article 16.4 - 
Semi-annual 
reports  Anti-dumping actions 
(taken during the 
preceding six months)  Semi-annual  G/ADP/N/328  14/6/2019  WT/TPR/S/421 /Rev.1  • Panama  
- 147 - 
  Agreement/  
Decision  Description  Frequency  WTO documents (latest if 
recurrent)  Date  
Agreement on Import Licensing Procedures    
Article 7.3  Replies to questionnaire 
on import licensing 
procedures  Annual  G/LIC/N/3/PAN/12  27/5/2021  
Agreement on the Application of Sanitary and Phytosanitary Measures    
Article 7, 
Annex B  Sanitary/phytosanitary 
regulations  Ad hoc  G/SPS/N/PAN/71 - 
G/SPS/N/PAN/56  20/4/2021 – 
29/1/2014  
Agreement on Rules of Origin    
Article 5 and 
Annex II.4 - 
First time  Preferential and non -
preferential rules of origin 
in force  Once  G/RO/N/225  29/4/2021  
G/RO/N/222  29/4/2021  
G/RO/N/208  11/1/2021  
G/RO/N/161  21/7/2017  
G/RO/N/145  12/9/2016  
Agreement on Technical Barriers to Trade    
Article 2.9  Technical regulations  Ad hoc  G/TBT/N/PAN/115 - 
G/TBT/N/PAN/42  26/5/2021 -
12/3/2014  
Article 2.10  Technical regulations 
(urgent)  Ad hoc  G/TBT/N/PAN/109  29/6/2020  
Agreement on Safeguards    
  Termination of a 
safeguards investigation 
without the application of 
safeguard measures  Ad hoc  G/SG/N/9/PAN/1  19/11/2019  
Article 
12.1(a) - 
initiation  Safeguard measures - 
Initiation of an 
investigatory process 
relating to serious injury 
or threat thereof and the 
reasons for it  Ad hoc  G/SG/N/6/PAN/2  14/5/2019  
Agreement on Subsidies and Countervailing Measures    
Article 25.11 
- Semi-
annual 
reports  Countervailing actions  Semi-annual  G/SCM/N/349  14/6/2019  
Source:  WTO Secretariat.  WT/TPR/S/421 /Rev.1  • Panama  
- 148 - 
  Table A3. 1 Summary analysis of the MFN tariff, 2021  
Product description  MFN Bound tariff  
(range)a 
 
 
(%) Number  
of lines  Average  
(%) Range  
(%) Coefficient  
of 
variation  
(CV)  
Total  9,370  6.8 0 - 260 1.9 0 - 260 
HS 01 -24 1,760  15.1 0 - 260 1.7 0 - 260 
HS 25 -97 7,610  4.9 0 - 81 1.2 0 - 81 
By WTO category       
Agricultural products  1,484  15.2 0 - 260 1.8 0 - 260 
 - Animals and animal products  206 30.1 0 - 260 1.8 0 - 260 
 - Dairy produce  75 43.0 0 - 155 1.0 4 - 155.7  
 - Fruit, vegetables and garden 
produce  414 11.8 0 - 81 0.9 0 - 81 
 - Coffee and tea  39 21.8 0 - 81 0.9 5 - 81 
 - Cereals and cereal preparations  214 13.0 0 - 90 1.4 3 - 90 
 - Oilseeds, fats and oils and their 
products  124 8.1 0 - 30 0.9 5 - 30 
 - Sugar and confectionery  39 23.4 0 - 144 1.5 15 - 144 
 - Beverages, alcoholic beverages and 
tobacco  145 11.3 0 - 30 0.5 10 - 90 
 - Cotton  5 0.0 0 - 0 n.a. 10 - 10 
 - Other agricultural products n.e.s.  223 5.0 0 - 15 1.2 0 - 30 
Non-agricultural products (including 
petroleum)  7,886  5.3 0 - 81 1.2 0 - 81 
 - Non-agricultural products (excluding 
petroleum)  7,853  5.3 0 - 81 1.2 0 - 81 
 - - Fish and fish products  383 11.1 0 - 15 0.5 5 - 60 
 - - Mineral and metal products  1,466  5.7 0 - 81 1.2 0 - 81 
 - - Chemicals and photographic 
products  1,610  2.0 0 - 15 1.7 0 - 30 
 - - Wood, wood pulp, paper and 
furniture  748 8.1 0 - 15 0.8 0 - 30 
 - - Textiles  848 3.8 0 - 15 1.5 0 - 32.5 
 - - Clothing  422 10.7 0 - 15 0.3 5 - 36 
 - - Leather, rubber, footwear and 
travel articles  354 8.0 0 - 15 0.6 5 - 30 
 - - Non-electrical machinery  697 1.8 0 - 15 2.1 0 - 30 
 - - Electrical machinery  401 3.2 0 - 15 1.5 0 - 30 
 - - Transport equipment  262 3.9 0 - 15 1.4 5 - 30 
 - - Non-agricultural products n.e.s.  662 7.9 0 - 15 0.8 0 - 30 
 - Petroleum  33 4.2 0 - 30 1.8 5 - 30 
By HS section       
 01 Live animals; animal products  605 20.6 0 - 260 1.8 0 - 260 
 02 Vegetable products  493 10.7 0 - 90 1.3 0 - 90 
 03 Fat and oils  72 10.6 0 - 30 0.8 10 - 30 
 04 Miscellaneous edible preparations  590 13.5 0 - 144 1.1 5 - 144 
 05 Mineral products  208 4.7 0 - 81 2.4 3 - 81 
 06 Products of the chemical or allied 
industries  1,419  1.8 0 - 15 1.9 0 - 30 
 07 Plastics and rubber  425 3.9 0 - 15 1.2 5 - 30 
 08 Hides, skins and leather  141 9.2 0 - 15 0.6 30 - 30 
 09 Wood and articles of wood  208 6.8 0 - 15 0.9 7.5 - 30 
 10 Wood pulp, paper, etc.  480 8.4 0 - 15 0.8 0 - 30 
 11 Textiles and textile articles  1,222  5.8 0 - 15 1.0 5 - 36 
 12 Footwear and headgear  177 9.8 0 - 15 0.4 5 - 30 
 13 Articles of stone  272 8.1 0 - 15 0.8 0 - 35 
 14 Precious stones, etc.  67 8.1 0 - 15 0.7 5 - 30 
 15 Base metals and articles of base 
metal  954 5.2 0 - 15 1.1 5 - 30 
 16 Machinery and mechanical 
appliances  1,145  2.5 0 - 15 1.8 0 - 30 
 17 Vehicles, aircraft, vessels and 
associated transport equipment  277 4.1 0 - 15 1.4 5 - 30 
 18 Precision instruments  276 5.0 0 - 15 1.2 0 - 30 
 19 Arms and ammunition  25 14.6 10 - 15 0.1 30 - 30 WT/TPR/S/421 /Rev.1  • Panama  
- 149 - 
  Product description  MFN Bound tariff  
(range)a 
 
 
(%) Number  
of lines  Average  
(%) Range  
(%) Coefficient  
of 
variation  
(CV)  
 20 Miscellaneous manufactured 
articles  305 10.8 0 - 15 0.4 5 - 30 
 21 Works of art, etc.  9 7.2 0 - 10 0.5 25 - 30 
a As the bound rates correspond to the HS2012 classification and the applied rates to HS2017, there 
may be a difference in the number of lines used in the analysis.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
  WT/TPR/S/421 /Rev.1  • Panama  
- 150 - 
 
 
Table A3. 2 Imports subject to tariff quotas, 2019 and 2020  
Products  HS code  In-quota 
tariff, 2021  
(%) Out-of-quota 
tariff, 2021  
(%) Tariff quota 
quantity  
(tonnes)  In-quota 
imports, 2019  
(tonnes)  Fill rate, 
2019  
(%) Total imports, 
2019  
(tonnes) In-quota 
imports, 2020  
(tonnes)  Fill rate, 
2020  
(%) Total imports, 
2020  
(tonnes)  
Pig meat     
880.0  822.7  93.5 12,088.2  645.0  73.3 10,558.7   
0203.11.00.00  3 60  
39.5  
207.5  0.0  
118.8   
0203.12.00.00  3 70  
0.0  
72.8 0.0  
44.8  
0203.19.00.00  3 70  
40.0  
170.8  0.0  
233.1   
0203.21.00.00  3 70  
0.0  
98.9 0.0  
290.6   
0203.22.00.00  3 70  
42.0  
1,687.2  171.0   
2,517.1   
0203.29.00.00  3 70  
664.0   
5,947.4  436.5   
4,928.1   
0210.11.11.00  15 15  
0.0  
43.2 0.0  
24.9  
0210.11.19.00  15 70  
0.0  
367.5  0.0  
5.5  
0210.11.90.00  15 70  
0.0  
24.2 0.0  
2.2  
0210.19.10.00  15 70  
0.0  
144.5  0.0  
170.7   
0210.19.21.00  15 15  
0.0  
75.7 0.0  
72.3  
0210.19.29.00  15 70  
0.0  
7.0 0.0  
2.9  
0210.19.90.00  15 70  
0.0  
781.1  0.0  
506.1   
1602.41.11.00  15 70  
0.0  
1,218.0  0.0  
682.7   
1602.41.19.00  15 30  
0.0  
467.7  0.0  
97.9  
1602.42.10.00  15 70  
37.1  
735.4  37.5  
818.5   
1602.42.90.00  15 70  
0.0  
3.6 0.0  
17.6  
1602.49.13.00  15 70  
0.0  
0.0 0.0  
5.7  
1602.49.19.00  15 70  
0.0  
35.8 0.0  
19.1 
Poultry meata   
756.0  0.0 0.0 1,439.5  0.0 0.0 781.8   
0207.13.13.00  3/15 260  
0.0  
0.0 0.0  
22.3  
0207.13.14.00  3/15 260  
0.0  
0.0 0.0  
0.00  
0207.13.19.00  3/15 260  
0.0  
301.2  0.0  
124.3   
0207.14.13.00  3/15 260  
0.0  
1,138.3  0.0  
635.3   
0207.14.14.00  3/15 260  
0.0  
0.0 0.0  
0.00  
0207.14.19.00  3/15 260  
0.0  
0.0 0.0  
0.00 
Dairy produce     
12,074.0  3,973.6  32.9 27,276.9  5,747.3  47.6 24,471.7   
0401.10.00.00  15 60 1,500.0  778.1  51.9 2,343.6  0.0  
1,179.7   
0401.20.00.00  15 60 1,897.0  0.0 0.0 0.0 0.0  
3,220.2   
0404.90.92.00  15 60 181.0  165.0  91.2 10,762.6  0.0  
3,774.2      
1,282.0  920.3  71.8 3,362.8  1,056.1  82.4 3,846.8   
0402.10.91.00  15 50  
0.0  
11.8 27.3  
33.9  
0402.10.92.00  15 50  
14.2  
47.8 0.0  
0.2  
0402.10.93.00  3 50  
906.1   
3,284.2  1,028.7   
3,812.2   
0402.10.99.00  15 50  
0.0  
19.0 0.0  
0.5  
0403.90.22.00  3 50  
0.0  
0.0 0.0  
0.00   
  
2,548.0  823.0  32.3 3,586.8  2,465.9  96.8 5,095.2   
0402.21.91.00  15 50  
0.0  
66.1 0.0  
35.9  
0402.21.92.00  3 50  
0.0  
282.2  79.1  
659.1   
0402.21.99.00  15 50  
90.1  
428.4  0.0  
597.1   
0402.29.91.00  15 50  
0.0  
0.0 0.0  
1.1  
0402.29.92.00  3 50  
732.9   
2,808.8  2,386.7   
3,801.7   
0402.29.99.00  15 50  
0.0  
1.4 0.0  
0.2  
0403.90.23.00  3 50  
0.0  
0.0 0.0  
0.0   
  
849.0  301.2  35.5 506.1  0.0 0.0 375.9    
  WT/TPR/S/421 /Rev.1  • Panama  
- 151 - 
 
Products  HS code  In-quota 
tariff, 2021  
(%) Out-of-quota 
tariff, 2021  
(%) Tariff quota 
quantity  
(tonnes)  In-quota 
imports, 2019  
(tonnes)  Fill rate, 
2019  
(%) Total imports, 
2019  
(tonnes) In-quota 
imports, 2020  
(tonnes)  Fill rate, 
2020  
(%) Total imports, 
2020  
(tonnes)   
0402.91.91.00  15 155  
0.0  
51.3 0.0  
18.7  
0402.91.92.00  15 155  
301.2   
302.7  0.0  
253.3   
0402.91.99.00  15 155  
0.0  
152.1  0.0  
104.0    
  
34.0 34.0 99.9 176.4  0.0 0.0 229.6   
0402.99.91.00  15 155  
0.0  
1.5 0.0  
2.8  
0402.99.92.00  15 155  
0.0  
0.0 0.0  
0.0  
0402.99.93.00  15 155  
34.0  
171.9  0.0  
217.8   
0402.99.99.00  15 155  
0.0  
3.1 0.0  
9.0   
  
3,326.0  782.7  23.5 4,425.7  2,122.8  63.8 5,074.6   
0403.90.13.00  3 30  
0.0  
0.0 0.0  
0.0  
0406.90.11.00  3 30  
782.7   
4,425.7  2,122.8   
5,074.6      
230.0  0.0 0.0 47.8 0.0 0.0 22.6  
0403.90.90.00  3 120  
0.0  
0.0 0.0  
0.0  
0404.90.10.00  3 120  
0.0  
43.5 0.0  
20.5  
0404.90.99.00  3 120  
0.0  
4.3 0.0  
2.1  
0406.10.90.00  15 30 53.0 29.2 55.0 525.6  53.0 100.0  515.7   
0406.30.00.00  15 30 174.0  140.2  80.6 1,539.6  49.6 28.5 1,137.3  
Potatoes  0701.90.00.00  15 81 618.0  289.1  46.8 1,473.2  505.1  81.7 2,406.1  
Tomatoes     
1,650.0  1,578.0  95.6 5,371.4  1,640.2  99.4 6,007.1   
2002.90.11.00  0 81  
0.0  
1.5 0.0  
11.4  
2002.90.12.00  0 81  
1,578.0   
3,484.2  1,568.4   
3,814.3   
2002.90.13.00  0 30  
0.0  
39.6 0.0  
54.3  
2002.90.14.00  0 30  
0.0  
19.7 0.0  
30.2  
2002.90.15.00  0 30  
0.0  
1,508.4  71.8  
1,964.6   
2002.90.19.00  0 81  
0.0  
318.0  0.0  
132.3  
Beans  0713.33.30.00  15 15 500.0  0.0 0.0 2,972.3  0.0 0.0 3,772.4  
Rice    
9,711.6  9,711.6  100.0  82,534.8  9,711.6  100.0  143,184.8   
1006.10.90.00  3 90  
9,711.6   
22,735.6  9,711.6   
131,423.8   
1006.20.10.00  15 90  
0.0  
81.7 0.0  
0.0  
1006.20.90.00  15 90  
0.0  
154.5  0.0  
0.0  
1006.30.10.00  15 90  
0.0  
949.7  0.0  
0.0  
1006.30.90.00  15 90  
0.0  
58,613.3  0.0  
11,485.7   
1006.40.00.00  3 90  
0.0  
0.0 0.0  
275.2  
a For poultry meat, the tariff is 3% for raw material and 15% for finished products.  
Source:  WTO Secretariat calculations based on data provided by the authorities and on WTO documents G/AG/N/PAN/55 of 11 June 2020 and  G/AG/N/PAN/59 of 2 June 2021.  WT/TPR/S/421 /Rev.1  • Panama  
- 152 - 
  Table A3. 3 Goods and services exempt from ITBMS, 2021  
Goods exempt from ITBMS  Services exempt from ITBMS  
Agricultural products in their natural state  Services related to human health  
Aerated beverages  Leasing and subleasing of real estate intended 
exclusively as the house or dwelling of the lessee 
(contracts of at least 6 months)  
Crude oil, diesel, light diesel, marine diesel, 
gasoline, aviation spirit, natural gasoline, low -
viscosity fuel oil, intermediate fuel oil, bunker C, 
LPG, jet fuel or turbo fuel, kerosene and asphalt, 
except for lubricating oils, mineral oils and 
greases.  Services related to education, if provided by persons 
authorized by the Ministry of Education  
Food products  Lending to the State  
Manufactured fertilizers  Freight transport by air, sea and land and passenger 
transport by sea and land  
Insecticides, fungicides, herbicides, disinfectants 
and the like, used in agriculture and livestock 
breeding  Generation, transmission and distribution of electrical 
energy  
All seeds used in agriculture  Social communication, such as radio, press and 
television, with the exception of the sale of advertising 
space  
Barbed wire  Postal services provided by the State  
Hand tools used in agriculture  Games of chance at state and private casinos and 
racecourses, including those operated on concession 
from the State  
Newspapers, magazines, reviews, magnetic 
media of an educational nature, exercise books, 
pencils and other articles exclusively for school 
use, as well as textbooks, books and publications 
in general, excluding pornography  Insurance and reinsurance  
Medicinal and pharmaceutical products and the 
instruments needed to apply them, diapers, 
feeding bottles, baby carriages, car seats for 
infants, infant bath tubs, and children's seats of 
plastics.  Loading, unloading and transfer operations within or 
betwe en ports; logistics and auxiliary loading services in 
ports and in free zones or special economic areas, 
together with repair, maintenance and cleaning services 
supplied to ships in transit through Panama's territorial 
waters  
Drinking water supplied by the National Water 
Supply and Sewerage Company (IDAAN) and by 
other public utilities  Internet access services, both residential and for 
government -approved entities providing educational 
services  
Foreign currency, shares, and government and 
private securities  Sewage and garbage collection services provided by 
public entities or concession -holders  
 Public cultural events, as classified by the National 
Institute of Culture  
 Activities of securities and agricultural commodity 
exchanges and the financial activities of cooperatives  
 Food retailing on business premises on which alcoholic 
beverages are not sold or consumed  
 Fees charged by travel agencies  
Source:  Article 1057 -V, paragraph 8 of the Tax Code of Panama (Single Text).  
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