Tropiland

Panama has officially its very own Ministry of Public Security, created by the  Ricardo Martinelli’s government, making good on a campaign promise to re-think the country’s security issues .

The new  ministry is directly related to U.S. policy to control drug trafficking between Colombia and the U.S. Shakira’s homeland is now the largest producer and exporter of cocaine in the world.  U.S., in turn, consumes more than 50 percent of all drugs produced worldwide.

The new ministry will also have responsibility to facilitate data transmission  and operational support to the US security  forces in Colombia.

The new ministry will control all the repressive forces of the Panamanian State. To that effect it’ll combine the activities of the National Police, Special forces of the Presidency, Air Force and Navy, the Judicial Investigation Directorate (Panama’s FBI), as well as, Immigration and Border Forces. Some U.S. advisers suggested that the Attorney General’s Office  be put to the new ministry.

The new entity, which is part of the Cabinet of President Martinelli, replaces the old Defense Forces (FDP) created by Noriega in an effort   to concentrate all the repressive law enforcement institutions, back in 1983 .

The centralization of Panamanian law enforcement, allows the U.S. to keep tighter control on the activities of government.  Today, Panama allows a total of 11 naval bases on both the Atlantic and Pacific to be used by small patrol boats and U.S. warships.  It also draws funds, technology and advice from the U.S. to patrol the border with Colombia.

The new ministry is headed by Jose Raul Mulino, president of the small party the Patriotic Union, a member of the governing alliance.  In the new arrangement  the former Ministry of Government and Justice, which led the fight against crime rise in Panama, merges with the Ministry of Interior. Everything indicates that this new branch will engage social input by means of  community boards, firefighters and the Banda Republicana.

While the U.S. has very clear security goals in Panama, the government of President Martinelli has not decided its policies yet.  To date, after 10 months in the presidency, it has managed to keep a high profile  favored in the polls.  However, it has not really dealt with any public safety issues.

The recent collapse of the garbage collection system is a small indication of the problems the current government faces. Environmental policies, mining and tourism tend to accumulate contradictions that can explode at any moment.  Martinelli seems more interested in turning the country into a dubious investment center.

In this context, his government  has faced workers and the middle class and more recently questioned the legitimacy of organizations formed in the 1990s.  popular subsidy programs the partly inherited from the previous government, have allowed it to retain some credibility. But it appears that the Ministry of Public Security will bring into question the legitimacy of the occupants of the Palacio De Garzas (Panama’s White House).

Panama’ president, Ricardo Martinelli, made a surprising announcement yesterday in Colombia. He promised the creation and commencement of a new immigration program to legalize thousands of Colombians living and working illegally in Panama.

While he was receiving the keys of the city of Medellin, by its mayor Alonso Salazar, Martinelli said that the Panamanian government will shortly implement “a program of reintegration and  legalization of all the undocumented Colombians in Panama”.

“They are honest and hard-working, and many of them are not a part of the formal  Panamanian economy. Further more, they cannot cover their basic needs living secretly.” added president Martinelli .

The issue of illegal  Colombians in Panama have generated many heated debates during previous administrations  due to the increase of violence as a product of drug trafficking and due to the fact that these undocumented aliens are “stealing” jobs from Panamanians.

Even though the Martinelli administration will have to step on some serious union and social toes to implement such a bold immigration policy, I think that, if completed, such a move will have great effects for Panama. Here is why.

1. Colombian worker labor who is now a big part of Panama’s “under-economy” (or Black Market if you like) will become part of formal economy, generating, at least on theory, new tax revenues.
2. For those who have used Colombian workers (especially in construction), it is not a secret that their level of skill and labor ethic is far superior to the Panamanian counterpart. Legalizing Colombians will (again on theory) bring some healthy competition to all Panamanian workers. The later, will now be forced to improve their own work practices and not rely on unions and immigration protection.

The new “Tax Reform Law” (Law 119, Spanish Only .pdf  file) that is now the law of the land (enacted march 15th, 2010) has greatly effected the tax due on all Panama car imports.

One of the biggest changes was the elimination of the tax exception for retirees who are now called to pay regular importation taxes on all cars they may bring in Panama.

This is a big blow to all retirees who, among other benefits, were counting on the tax exception to be able to bring their cars with them in Panama. I am not sure at this point (and I doubt if any authorities are too) if this new import tax is applied from March 15 on or it covers all retirees who got their status before March 15th.

Regardless of what the case may be, here is what the new car import tax valuation is:

• All passenger cars (sedans, SUV etc), regardless of class must pay:

- 15% tax if their value is less than $8,000

– 18% tax if their value is between $8,000 and $20,000

– 23% tax if their value is between $20,000 and $25,000

- 25%  tax if their value is more than $25,000

• Electric and hybrid cars pay 0% tax until December 31st, 2012 and 5% thereafter.
• commercial Vehicles (fleet) pay 12% tax
• Cargo vehicles pay 10% tax
• Public transport vehicles pay 10% tax
• Motorcycles greater than 125cc, outboard motors greater than 75cc, yachts, aquatic vehicles (jet-skis), and boats pay 10% tax

There is also a minimum tax applied depending on the age of the car as follows:

• $750 if older than 12 months
• $1,000 if older than 24 months
• $1,500 if older than 36 months

Of course, on top of all of the above a 7% ITBMS (Goods and Services Tax) is also applied.

All the above %  are applied to the value of the vehicle as defined by Panama Customs and not Blue Book or any other market reference guide. The valuation process of Panama Customs is very long and tedious and beyond the scope of this post.

You can get a more detailed explanation of the valuation process and the general car importation process on this online Panama Guide.

A glitch in the Vehicle registration and title issuing system has come to light concerning the manner in which passport numbers of extranjeros were previously entered into the system.

The two letter prefix on passport numbers from Canada and some other countries was omitted when registering a vehicle but is now required. It seems it was discovered that two or more individuals from different countries could have the same I.D. number if the prefix was not included.

In the case of U.S. citizens, who have a 9 digit Passport number, four zeros were entered in front of the number on the title. The previous system had 13 spaces that the person entering the data needed to fill.

The new system, set up by Sertracen, the contractor that issues driver’s licenses and provided the TPV cards, inputs prefixes and digits exactly as printed on the passport.

What does this mean?

Since the vehicle registrations and drivers’ license systems are now coordinated, an individual who’s ID number does not exactly match the one on their vehicle title, will be required to have the title re-issued by the ATTT.

Otherwise, their drivers license will not be issued or renewed, and as I wrote beforehand regarding requirements involving new passports, these folks just say NO.

It seems this issue will eventually affect almost every foreigner who has a driver’s license and has registered a vehicle before the latter part of 2009. To add to the problem, the ATTT issuing offices are already under-equipped and overworked.

Obviously this a growing pain that is necessary to upgrade the system. It’s also appropriate to remember that the previous systems were designed for the cedula numbers of the citizens of Panama, not the passport numbers of foreigners.

Don’t Know How To Get A Driver’s License In Panama? Go here!

Mexico signed agreements to avoid double taxation and prevent fiscal evasion with both Panama and the Bahamas, on the occasion of the Summit of Latin American and Caribbean Unity.

The purpose of the agreements was to promote international cooperation in tax matters through information exchange and verify that in future, the appropriate amounts of tax are paid.

The agreements also establish a ‘Mutual Agreement Procedure’ for resolving amicably conflicts that could arise from their application and interpretation.

The wording of the agreements conform with OECD standards, and, in the case of the Bahamas Agreement, cover all federal Mexican taxes and Bahamian taxes of every kind and description, including identical or substantially similar taxes imposed added later or replacing existing taxes.

During his speech Mexican President Felipe Calderón said that, with the signing of the Agreement with Panama, Mexico could promote Panama internationally as a country that meets international standards on fiscal matters.

In order to protect the country’s financial services and remove its name from the OECD’s ‘grey list’, Panama is working on similar agreements with Italy, Belgium and Spain and has initiated negotiations for more than a dozen agreements.

The French authorities have prepared their own list of countries considered to be “tax havens“ consisting of  18 “accused”, between them Costa Rica, Guatemala and Panama.

The list came forward yesterday by the newspaper Le Figaro, and will be valid until January 1, 201. The list will serve as a reference point to all French companies operating in these countries, who will charged with higher taxes.

In the list , presented by the newspaper and confirmed by official sources , no European country is listed. Instead there is an extensive coverage on Anguilla, Belize, Brunei, Dominica, Granada, Guatemala, Islands Cook, Island Marshall, Liberia, Nauru, Niue, Panama, Philippines, Saint-Kitts-et-Nevis, Saint Lucia and San Vicente and Granada.

The inclusion of Panama in the list came despite a bilateral agreement to avoid double taxation, for which Paris showed its satisfaction for Panama’s efforts on the subject of fiscal transparency.

There is a strong Central American and Caribbean “representation” on the list, and, curiously enough,  nor Chile or Uruguay were included, which they had been mentioned in the past as countries that do not provide enough cooperation on the subject of fiscal information exchange.

The list does not also include Andorra, which signed an information exchange agreement in fiscal matters with France last September.This was one of the steps taken  by the Principate to leave the Organization for the Cooperation and the Economic Development (OCDE) “tax haven” list.

Switzerland, which last Friday agreed to resume the process of ratification of fiscal information exchange with France, is not on the list either.

According to  Le Figaro,  French companies operating in the countries included on the list will receive a harder fiscal treatment, by means of  50 % (!) taxation on all income generated from businesses within those countries (ouch!). The measurements, according to the source, will begin to be applied from March 1 on.

This ,of-course, is really bad news for Panama since there is a large number of French companies operating within its territory.

Vive La France!

Today I’d like to talk about asset protection in Panama by means of a Panama Private Interest Foundation.

If you would like to know what a Panama Private Interest Foundation is, we should perhaps begin by clarifying that a Panama Private Interest Foundation has all the features of a trust, a will and best of all, an offshore Corporation as well. In fact, this combination makes Panama Private Interest Foundations far more versatile and powerful than ordinary Trusts.

One of the most attractive aspects of a Panama Foundation is that it is easy to set it up – typically it takes only two to three days to set up one. In fact, even if the Foundation were to eventually set up and own a Panama Offshore Corporation, it does not take more than two to three days to set up both the Foundation and the Panama Offshore Corporation.

According to Panama laws, no one can own a Panama Private Interest Foundation. This grants complete anonymity to the founders of any Panama Foundation. Further, the Foundation can own the ‘Bearer Shares’ of a Panama Offshore Corporation but as there is complete anonymity regarding the founders, this grants complete anonymity to the owners of the Panama Offshore Corporation as well. No mention is ever made in any public registry of the owners or founders. In fact, the Foundation can be set up so that you appear not even as a beneficiary of the trust but as a Private Protector, whose duty is to protect the functioning of the Foundation and of the Panama Offshore Corporation so that the aims of the Foundation are fulfilled.

One of the main aims of setting up a Panama Private Interest Foundation is to ensure that most of the wealth and estate that you have earned goes to your rightful heirs and not to the government. A Panama Offshore Corporation is a great way of ensuring this. Panama Foundations can hold various assets such as real estate, bank account, brokerage accounts and of course own Panama Offshore Corporations. Any qualified attorney or firm can help you design a careful corporate strategy that will allow to create a Panama Foundation and set up a Panama Offshore Corporation. Since a Corporation has ‘perpetual’ life, you can ensure that your heirs can inherit and enjoy the assets that you have left for them without having to worry about inheritance taxes, probate and most of the legal delays that accompany the passing of an estate. This is because according to Panama laws, there are no reporting requirements for a Panama Foundation nor is it required to pay any taxes if any assets, such as the ‘Bearer Shares’ of a Panama Offshore Corporation, are donated or received from the Panama Foundation. Most importantly, the Private Protector of the Panama Foundation can indicate who the beneficiaries of the Foundation are through a Private Letter of Wishes ensuring that the beneficiaries too can maintain their privacy and confidentiality.

Source:ernestochongcoronado

Panamanian Secretary of Commerce and Industries, Roberto Henríquez, has come on record on Panama’s TVN News to confirm that there was a plan to kidnap the president of the Republic, Ricardo Martinelli.

Henríquez revealed that two agents of the System of Institutional Protection , Panama’s Secret Service, allegedly taking part in this plan against president Martinelli.

The agents “were seemingly approached and compromised by a foreigner of Puerto Rican nationality.

Secretary  Henríquez added that after kidnapping there was an interest “of trasporting him physically (probably out of Panama) through some unofficial group”.

Investigations on the subject continue and have not concluded yet and, consequently , there can be more ramifications as the story is put together.

Henríquez said that the information in his possession allows him to ensure that “this plan is completely true”.

The titling process of property with Rights Of Possession (ROP) status in Panama has been a long, counter intuitive, frustrating, and confusing one for all foreigners and expats that, for one reason or another, purchased ROP property in Panama with aspiration of obtaining title and retiring on or using it  in small scale tourism projects.

After a long wait Panama now has an enacted law (Law 80, formerly known as Project Law 71) that has replaces Law 23 of the Torijos administration and attempts to settle the titling of island and coastal property in Panama.

A copy of the  signed and enacted Law 80 in Spanish can be downloaded here.

Susan Guberman Garcia is an American expat (owner of ROP land in Panama) that has been following the ROP saga for a number of years now and is considered an expert in the issue (at least in Panama’s expat circles and cyber forums). Recently, she wrote a concise summary of all key points of Law 80 as they apply to all ROP owners in Panama. This article originally appeared in Don Winner’s Panama Guide. I am presenting it here for the benefit of my visitors and I encourage all comment participation and/or questions.

Requirements For the “Right” To Title Your ROP

In order to qualify for the “right” (though its not really a “right” as first worlders understand that term) to title, either free (1st 5 hectares) or by buying the land from the government, you have to demonstrate, to the satisfaction of the Catastro bureaucrats who are in charge of this whole process (or to a court if Catastro disputes your ROP claim) that (1) you; or (2) the person you got your ROP from; or (3) a combination thereof, have occupied the land for at least 5 years in a material, peaceful, uninterrupted manner, with the “animus of ownership” (ie, you act as though you own the property). (Articles 1, 3.)

How Can You Prove Your ROP Status?

You can prove this by any method generally accepted in the judicial code, such as: oral testimony, documentation, certifications by local or national authorities (for example, the police, correijdor, mayor, municipality, Reforma Agraria, Catastro, etc.). (Article 3). Examples of this would be your ROP purchase documents, certifications from some government agency (which buyers of ROP usually get from Reforma Agraria, Catastro, or the municipality), affidavits from the corregidor, statements and testimony by your neighbors, your contractor’s bill, etc. etc. etc. If you live on your ROP or run a tourism or other business there, this will be very easy to prove. If you don’t live on it, haven’t built anything on it, it may be harder, so you should probably get a small dock, a bodega or something up on it as soon as possible if you’ve been waiting for retirement ot build. Fence it, sign it, put a caretaker on it, hire a management company to oversee it for you.anything to demonstrate that you are acting as an owner would with respect to the land.

What if there is a dispute over the legitimacy of your ROP claim?

(Article 3). If there are conflicting claims to the same ROP, boundary disputes, or the government refuses to accept your proof, some form of alternative dispute resolution will be held and if the dispute cannot be resolved, it will be referred to the courts.

The first 5 hectares of your title will be free.

This was an important victory for the locals and for the expat retirees and small tourism providers in the coastal/island areas. 5 hectares is more than 10 acres, and that’s a lot of land. Assuming titling will be permitted (this is a big “IF” for island ROP owners, see below), you will be able to title up to 5 hectares (assuming you can prove possession of that amount) at no cost. You won’t have to buy it from the government and you won’t have to pay administrative costs to title it. (Article 5). The free titles are the ssame as any other title (ie, if you re-sell your freely titled land, you will have to pay transfer tax, capital gains tax and any fees and costs normally associated with the sale of titled property. (Articles 5, 6).. The 5 free hectares will be available whether you are a natural person, corporation, or foundation, and regardless of your residency or citizenship status, so long as you can prove “possession.”

But you won’t be able to game the system on the 5 free hectares by splitting up your ROP, “selling” it to new corporations, etc. prior to title. If you hold your ROP via corporation you will have to disclose all shareholders and dignitaries, and if you hold your ROP in a foundation you will have to disclose all beneficiaries as well as dignitaries. Moreover, this disclosure, like the rest of the title application process, will be public; no more anonymity for any corporation or foundation that applies to title its ROP. Moreover, legal entities will have to submit a financial statement along with their application (Articles 7, 9, 11). The government reserves the right to investigate your bona fides if it thinks you are trying to get more free hectares than you are entitled to.

How much will it cost to title ROP?

For titling of land over 5 hectares, you will have to buy the land (again) from the government. The law contains a table of prices (Article 7). The price table divides the coastal and island areas into various zones, and each zone has two prices: One price if you title from more than 5 to 25 hecatres, and a higher price (often 250% higher) if you apply to title more than 25 hectares. The prices range from a low of $1,000 per hectare (for the outer Bocas and Chiriqui islands) to a high of $300,000 per hectare (!) for the “urban” and “near urban” areas of Isla Colon in Bocas del Toro). (NOTE: There is no “urban development” anywhere in Bocas del Toro, and I can’t imagine where this ridiculous price came from.)

The price table incorporated within Article 7 is subject to revision every 3 years. The government must hold a public hearing before revising the prices.

Can’t pay for your title? The government will loan you the money

If you want to title more than 5 hectares of your ROP but can’t afford to pay right away, the government has arranged with Banco Nacional de Panama to offer loans at the current prime rate. A mortgage lien will be placed on the land and you won’t be able to sell the mortgaged land unless you pay off the loan first (but you can bequeath it to your children or give it to your spouse without first paying it off.) (Article 7).

Protected areas not eligible for titling and ROP may not be recognized

If your ROP is in a designated protected area (like a forest reserve, for example), you cannot title it. Moreover, your ROP will not be honored unless you purchased the area before it was designated as a protected area. If you did, you will be allowed to continue to occupy it but you can’t title it. (Article 10).

Island ROP holders may or may not be allowed to title

Due to the government’s restrictive interpretation of Article 291 of the constitution, there is no guarantee in this law that island ROP holders will ever be allowed to title. In order for any island land to be titled under this law, the President and his Cabinet must first issue a decree declaring any particular island area (or if they wish, all island areas) to be a “special development area” and that specified development goals will be met by allowing ROP holders to title. This is a loophole big enough to drive a truck through. It is quite possible that titling will be allowed only for specific types of uses, or even limited to specific developments (which you can bet money will be owned by those who are “connected” politically. There is no guarantee in this law that ANY ROP holders on islands (other than those who have tourism businesses, see below) will ever be allowed to Furthermore, the government can declare any island area it wants a “strategic area” where titling won’t be allowed. If such a “strategic area” declaration is made, the ROP holders will be offered a 20 year concession. (Article 13).

NOTE: Article 13 appears to conflict with Law 2, which remains good law except as expressly amended by Law 80. . Article 1 of Law 2 expressly grandfathered all existing ROP rights to the extent they existed prior to January 2006, and relieved the holders of any obligation to obtain a concession. Since Law 80 does not repeal or amend that Article, there is a potential conflict of laws here, depending on how the government chooses to implement this Article (and Article 22, discussed below).

Also, if you have a tourism business and your island ROP is within the tourism development zone specified by Law 2 (and any implementing regulations or decrees re Law 2) you will be allowed to title. Moreover, Law 80 expands the scope of tourism businesses who are allowed to title to micro, small and medium sized tourism businesses, whereas Law 2 only allowed large tourism projects to title. (Articles 14, 24.)

What if you have a titling application already in process?

Law 80 is retroactive in that it will be applied to titling procedures that area already in the hopper but not yet completed, including the price table, if your titling application is based on an existing claim of ROP rights. If its not based on existing ROP but is simply a purchase of unoccupied untitled land from the government, the price table will apply but the procedures will be based on the Public Procurement Act and Judicial Code. (Articles 16-19).

Fines and penalties

You will be fined if you violate beach access laws and public use easements. (Article 12). You can also be fined if you are occupy land without a title or a contract (such as a concession) unless you can prove that you have occupied the land for at least 5 years, under the definitions of “possession” above. Furthermore, your home can be demolished unless the government chooses to lease it to you instead.

*NOTE: This provision clearly conflicts with Article 1 of law 2, which guarantees all possessory rights that existed prior to the signing of that law, which was January 2006. Since Article 1 of Law 2 is not expressly repealed or modified in Law 80, this sets up a conflict of laws dispute if the government chooses to initiate penalties against someone who meets the requirements of Law 2.

Procedures for purchasing or concessioning untitled land that is not currently occupied by you or anyone else.

This law sets up procedures for anyone to apply to purchase or lease (via an administrative concession) from the government untitled coastal or island land that is currently unoccupied by anyone., and modifies some existing laws and procedures regarding such contracts. (Articles 25-33).

Titling your ROP may be mandatory

(Article 34). This article appears to provide that titling your ROP will be mandatory for any region which the government declares to be a region of “mass regularization and titling.” From the use of that term in Article 1 and 3, it appears that, at least for coastal regions (but not islands), this law itself declares coastal zones to be areas of “mass regularization and titling” immediately, and leaves it open to the President’s Cabinet to declare all or some island areas to be such as well. If so, then your titling is mandatory, not optional (get ready to pay property taxes!). This article expressly states that all “beneficial holders” will be notified that they have 30 days to make application for title. If they do not, their titles will be registered anyway, complete with a limiting lien and mortgage in favor of the National Bank of Panama.

This process is fraught with potential problems. In order to “notify” ROP holders, there would first have to be a complete survey of all ROP lands to identify them. And what if you are shown on the survey has having 30 hectares but you choose to title only the free 5 hectares, or 5 free and 5 paid, leaving the rest untitled? And what if (as so often happens in Panama with legal procedures), there is a problem with identification and notice?

Can the government sell your ROP to somebody else?

Furthermore, there is an obvious conflict between Article 35 and Article 4, which states that if a holder of ROP does not apply to title, the government can sell it to someone else. So which is it? Will you be automatically titled whether you want it or not I(and thereby obligated to pay property taxes), or will your land be sold out from under you if you choose not to title it or choose only to title part of it (giving the government the right to take any part of the property you choose not to title and award it to someone else for a price?) This article (which purports to give the ROP holder nothing more than a “right of first refusal” is in direct conflict with the express promises of the government during the discussion and hearing process for Law 80 that all existing ROP rights will be respected and if you have legitimate ROP you need not fear confiscation whether you are allowed to title it or whether you choose to title it or not. Furthermore, Article 4 expressly conflicts with Article 1 of Law 2 of 2009, which is not repealed nor modified as to that Article.

The third (and final) debate began yesterday at about 5:00 p. m and finished at 8:10 p. m. with the approval of Law 80 – formerly proposed law project 71 -  (41 to 21 representatives in favor) which recognizes land Rights of Possession and regulates the qualifications for titling  of coastal and island property in Panama.

Opposition leader and deputy of the Democratic Revolutionary Party, Juan Carlos Arosemena asked the Assembly to “think and kick the project back to second debate”. The approved Law 80 (formerly proposed law project 71) repeals  Law 23  of  April 23 ,2009 that was proposed and enacted the National Assembly under Torijos’  PRD  administration.

Deputy José Blandón of the Party Panameñista said that that Law 23 lead to  very low land prices that were both unrealistic and unfair from the government’s point of view.

With Law 80 (formerly proposed law 71), both natural and juridical persons will have the right to title for free 5 hectares or less on the coasts and islands of Panama. Nevertheless, to title more than 5 hectares, buyers  and ROP holders will have to adhere to a price table unique to each area: From Punta Chame up to Gorgona  Beach 60 thousand dollars per hectare. From Portobelo  to Palenque  42 thousand dollars per hectare. The highest price results in Isla Colon  in Bocas Del Torro with 300 thousand dollars per hectare (ouch!!!).

Amidst all the political gong-show that has always been a part of the Rights of Possession issue, the bottom line is clear: If you want your island or coastal land title you need to fork over big cash. Also, the era of blatant beach front land grabbing by sleek investors is over (theoretically).