QUICK TAKES

Mars Bars in Panama

By Juan Carlos Martinez

On August 24, 2007 Panama passed Law 41 which created a special regime for companies setting up their regional headquarters in Panama. Since August 2007 to this day 31 companies have set up their headquarters in Panama to take advantage of the benefits this new regime awards these companies. Some of the companies that have already set up their headquarters in Panama are Maersk, AES, Caterpillar, Procter & Gamble, LG, Roche, Peugeot, Hyundai Heavy Industries, Halliburton, Inelectra, Western Union, Total, Sinopec, Thunderbird, AIA Bermuda Services, Endress Hauser, Volconsa, Kumho Tires, Pan American Global Life Services, Moffatt & Nichol, Heineken, ABB, Safra Asset Management, 3M, BMW, Cemex, among several others. Soon to join them are General Electric who has already announced its decision to move its headquarters from Costa Rica to Panama, as well as Mars, the sixth biggest private company in the United States with more than $30 billion in annual sales, maker of Mars bars, Snickers and M&M´s.

Mars has chosen Panama to set up its new regional office to provide support to its subsidiaries in the Central American and Caribbean region. GE has also chosen to change its regional headquarters. Several of these companies already had offices in Panama however they have decided to apply for this special status as Headquarter of a Multinational Company as this law gives them benefits which includes tax exemptions, such as no income tax payments in Panama, no transfer tax on goods and services on operations made outside the territory and exemption on import taxes. The workers of these companies are not required to pay income tax nor social security as long as their salaries are generated abroad. Other benefits are special work regimes and special migratory status for their workers.

In addition to this Panama as a country has other qualities which make it attractive to set up shop here such as a dollar based economy, a stable economy, democratic government, and protection of foreign investment.

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