PANAMA como HUB de distribuição para a

América Central e Caraíbas

SEMINARIO 2016

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PANAMA - INTERNAL CONTEXT

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PANAMA DATA

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WHY PANAMA?“Panama can be the perfect platform for developing a

business in the Americas and beyond.”

Panama is a key dest inat ion for foreign investment for a l l of i ts advantages:

• Strategic geographic posi t ion

• Economic, f inancial , and pol i t ical stabi l i ty

• The most important dest inat ion for tour ists and investment according to recognized

internat ional media

• World-class communicat ion plat form

• Highest economic growth in Lat in America and the Car ibbean

• Economy based on a developed service sector

• Complete logist ics plat form

• Panama Canal as main shaft

• Colón Free Zone as the largest f ree zone in the western hemisphere and second largest in

the wor ld

• Legal and tax benef i ts per areas and special programs such as the SEM (Headquarters of

Mult inat ional Companies), Panama Paci f ic Special Economic Area, and free zones, among others.

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TAX STRUCTURE

Persons, ei ther natural or legal ent i t ies, undertaking business both inside and outside the terr i tory of Panama are subjected to taxes only on income generated within the territory of Panama.

There are several special taxation regimes for companies operat ing under incent ive regimes, such as companies located in the Colón Free Zone and other special commercial areas, as wel l as for companies speci fy ing certain investments, services, or product ions.

Main taxesIncome Tax

What is taxed?Taxable income: income from Panamanian source, terr i tor ia l .

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How is tax applied?For taxpayers wi th annual gross taxable revenues over $1,500,000 , Panamanian source income is subject to a 25% corporate income tax rate assessed on the higher of :• The taxpayer 's actual net taxable income; or• a presumed net taxable income of 4.67%

DeductionsExpenses or costs of the enterpr ise used to generate taxable income or to preserve the business are deduct ib le in tax returns and must be documented by the f iscal pr inters.Rates of income taxGeneral rate: 25%

Annual tax returnsThree months af ter the f iscal year ends.

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VAT ( ITBMS )What is taxed?This income appl ies to imported merchandise, or products and services, sold in Panama.

Who is the contributor?The importer, sel ler, or service provider

Rates• General : 7%• Alcohol ic beverages: 10%• Hotels: 10%• Tobacco: 15%

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Real estate propertyFor the ordinary course of business with construct ion permits issued before January 1, 2010, the general tax regime

appl ies.

For the ordinary course of business with construct ion permits issued af ter January 1, 2010, a def in i t ive tax is paid over the

sale pr ice as fo l lows:

Value of the new real estate property:Up to $35,000: 0.5%From $35,000 to $80,000: 1.5%Over $80,000: 2.5%Commercial propert ies: 4.5%

DIVIDEND TAXWhat is taxed?Net af ter- tax prof i ts for the shareholder.

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RatesNominat ive shares: 10%Exempt incomes: 5% f) and l ) of the Art ic le 708 of the Fiscal Code, f ree zone companies, foreign source income.Bearer shares: 20%

Tax returnsTen (10) days fol lowing the date of d istr ibut ion.

NOTICE OF OPERATIONS TAXWhat is taxed?Net Assets.

Rates• 2% annual over the net assets of the company up to a maximum of $60,000.• 0.5% annual over the net assets of the company (free zones) up to a maximum of $50,000.

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Facts:Panama has been the fastest-growing economy in Lat in America in 2016.Panama's services industry , in part icular banking, commerce, and shipping, account for 80% of the country's economy.

The banking sector of Panama has evolved into one of the most important global f inancial centers of the 21st Century ( 48 banks that make up the country 's nat ional banking system, 18 are pr ivately owned

Panamanian banks, 28 are foreign banks with fu l l lending and deposi t operat ions in the consumer and commercial

segments which employs more than 23,000 people ) .

“Central to Panama's economy is the canal that is, in 2016, taking on a bigger role than ever before.”

ECONOMY

The notable stabi l i ty of i ts pol i t ical processes.A long history of low inf lat ion ( current ly : 2,5% ).Unemployment low: 4.5%.One of the least bureaucrat ic in the wor ld.

Panama has become a second home – or a new home – for many Lat in Americans f leeing their countr ies l ike Colombia or Venezuela.”

Panama has one of the region's most advanced e-government infrastructures.

Increase in minimum wage in 2016: 8,5% ( aprox.$500,00 ) .

GDP grew by 5.8% in 2015, s l ight ly down from 6.2 in 2014.

The second most compet i t ive economy in the region af ter Chi le.

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The World Bank forecasts growth of 5.9% in 2016 ( in 2011 at an al l - t ime high of 12.20% ).

The sectors that present the strongest growth in 2016 are energy, finance, industry, and transpor t.

The Port of Balboa is the leading container por t in Latin America , benef i t t ing f rom i ts super-strategic locat ion on the Paci f ic s ide of the Panama Canal.

Tocumen International Airpor t greeted more than 8.4 million passengers and i t is now bui ld ing a second terminal .

Increased demand for energy, which grew by 4% in 2015.

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Agricul ture, t radi t ional ly Panama's strong card, contr ibut ing 9.7% to GDP in 2015. Panama's agr icul tural sector is dominated by a smal l number of key crops, namely bananas, cocoa beans, coconuts, coffee beans, melons, pineapples, beef, chicken, shrimp, corn, potatoes, rice, soybeans, sugarcane, and timber.

Another boost to the economy comes from the extensive redevelopment of Colón.The urban renewal project is reckoned to benef i t more than 25,000 residents of the c i ty and involves the construct ion of

5,000 housing uni ts.

- 2nd. and 3rd. METRO l ines;

- the new TOCUMEN INTERNATIONAL TERMINAL ( 2nd. )

- the At lant ic Tour ist ic Center.

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Exports from Panama

The major i ty of Panama’s exported services are related ei ther direct ly or indirect ly to the Panama Canal and the CFZ ( more than 7.0% of the nat ional economy : USD 10 bi l l ion annual ly) .

The main goods that Panama expor ts are:

-medicines,

-petroleum products,

-ships and agr icul tural commodit ies.

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Main recipients of these expor ts:

The United States, Ecuador and Venezuela.Main or ig ins:North America, Asia and Europe.

The CFZ, which accounts for, a lso serves as a major distribution point for re-expor ted goods.

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Imports to Panama

Panama is self-sufficient in some domestically-produced agricultural products such as bananas, sugar and r ice, but imports large quant i t ies of other foods.

Moreover, Panama is the top energy consumer in Central America, and must import more than 80% of its energy to meet its needs.

Al l the rest…

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PANAMA - EXTERNAL CONTEXT

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Connecting the Pacif ic to the Atlantic and North America to South America, Panama is the tropical thoroughfare where transport, banking, logistics and travel retai l al l converge at the very backbone of Latin America.

Regional Super Hub

Panama’s economy has been growing at an average of about 10 percent annual ly over the past few years, but the reason i t is on the fashion radar is because of i ts growing status as a super hub.

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Indeed, for brands, magazines and retai lers al ike, Panama’s fast-growing domestic market of 4 million people is just an appetizer. The main course comes when they at t ract customers f rom the 30 or so international Latin markets on Panama’s doorstep.

With about 9,900 ultra high-net-worth individuals currently living in Latin America , the region now has more people wi th assets over US$30 mi l l ion than in the Middle East and Russia combined.

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Our priority markets

Honduras, Nicaragua, Costa Rica, El Salvador and Guatemala , as wel l as Cuba and Dominican Republic are the targeted markets for us…Mexico and Colombia are not a pr ior i ty for now.

Why?- Growth;- Market s ize;- TLC´s ( Tratados de Libre Comercio )Business and pleasure seekers come also f rom as far away as Uruguay, Argent ina, Brazi l , Peru, Chi le, Bol iv ia and Paraguay.

TLC´s wi th:- Canadá- Chi le- El Salvador

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- Honduras- Peru- México- Costa Rica- Taiwan ( China )- Guatemala- Nicarágua- Singapur- Republica Dominicana

As well as other commercial agreements with:- Uni ted States of America- Mexico- European Union- Israel- Colombia- Tr in idad & Tobago- ALADI ( Asociación Lat inoamericana de Integración )

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BUSINESS OPPORTUNITIES

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ENERGY

Panama's long-undersized energy sector is dest ined to t ransform i tsel f as a major player in the economy in the coming years. With big infrastructure projects coming on stream in 2017 , th is diversi f ied sector is heading in the r ight d i rect ion.

Panama's overal l generat ion:Hydroelectr ic power made up 64%;

Oi l - f i red generat ion 35%;

Biomass less than 1%.

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Energy diversif ication

Panama is looking to move away from oi l - fuel led power through diversi f icat ion, pr imari ly through increasing the role of natural gas as well as non-conventional renewable energy sources ( mainly wind and solar ) .

TELECOMS & ITPanama was one of the f i rst to offer 4G connect iv i ty in the region and among the f i rst in the wor ld to provide universal access to Wi-Fi .

“Panama spends more than $500 million a year on subsidies.”

Around 80% of the country 's network is accessed by mobi le devices but there is lot´s to do in rural areas.

As the connect ion point between Central and South America, there are more than seven major submarine f iber opt ic l ines that pass through Panama on their way south and to the rest of the wor ld.

New technologies & cal l -centers ( ZONA ESPECIAL PANAMA-PACIFIC ) .

TRANSPORTATION & LOGISTICS

The transportat ion and logist ics sector is the pi l lar of the Panamanian economy. The sector contr ibuted 19.2% to the country 's GDP in 2015.In 2014, the government announced a $19 bi l l ion investment plan, the Strategic Plan 2015-2019.

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CONSTRUCTION & REPAIRS

“Panama's construction scene is booming, with plenty of oppor tunities for fresh investments.”

Construct ion is a dynamic and important part of Panama's economy, contr ibut ing 14.5% to GDP in 2015.

In the 2015, the value of bui ld ing permits, construct ion projects, and repairs in Panama rose to $565 mi l l ion, an 18% increase from the 2014 figures.

Cement and cl inker product ion is central to the construct ion industry in Panama.Urban renewal.

New construct ion technologies.

Maintenance & services.

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WASTE TREATMENT, SANITATION & SEWERAGE

Pol icy and Regulat ion

The Panamanian Health Ministry is responsible for def in ing the sector 's pol icy, whereas the “Autor idad Nacional de los Servic ios Públ icos ASEP” or Nat ional Author i ty for Publ ic Services acts as regulatory agency.

Responsibi l i ty for water resources is vested in two inst i tut ions:The Autor idad Nacional del Ambiente or Nat ional Environment Author i ty and the Autor idad del Canal de Panamá or Panama Canal Author i ty.

According to the Water Law, the Inst i tuto de Acueductos y Alcantar i l lados Nacionales ( IDAAN) is responsible for water and sani tat ion services in urban areas.

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Projects currently under development

The 100% complet ion of the f i rst phase of the project aimed at eliminating the residual charges that contaminate the Pacific coast opposi te the capi ta l of the isthmus is due in December 2016. Therefore, the author i t ies accelerate a program to el iminate thousands of latr ines st i l l existent in the c i ty, af ter an investment of the State and internat ional banking of $ 900 mi l l ion.

The mosquito diseases ir radiation plan ( dengue, z ika y chikungunya ) .

Urban Drainage Project .

Urban waste treatment.

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TOURISM & WELL-BEING

“ With more air lines than ever before flying to Panama, the country is well placed to develop its tourism industry.”

Tourism contr ibuted 8.1% to Panama's overal l GDP in 2015, an improvement of 5.6% on 2014's performance.

Panama is blessed with many of the qual i t ies that tour ists f rom around the wor ld look for in a dest inat ion:

- a t ropical c l imate,- some of the wor ld 's most beaut i fu l beaches and coast l ine,- a pr ist ine hinter land with jungle-covered hi l ls and fast r ivers,- an internat ional and cosmopol i tan air, ref lect ive of the country 's outward engagement wi th the wor ld,

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- and an eco-tour ist 's paradise, wi th hundreds of rare bird species, mi les of v i rg in rainforests, and world-c lass f ishing, div ing, snorkel ing, and sai l ing along unspoi led coast l ines.

“ A wor ld-c lass dest inat ion, complete wi th top hotels, a f i rst-wor ld qual i ty of infrastructure and services, including across-the-board high-speed internet, and a business cl imate that is internat ional , l ight ly regulated, and that is r ight now the nerve center of the fastest growing economy in the Americas. “

Luxury Tourism

Panama is start ing to become a world destination for high-end tourism and travel.

EDUCATION

The lack of qual i f ied local staff presents as an oppor tunity for professional formation centers.

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Many restr ict ions exist for educat ion and heal th infrastructures to be operated by foreign companies.

COMMERCE AND SERVICES

Why?- Due to the growing demand,

- Economic capaci ty,

- Young consumers,

- Tech trend society,

- Cul tural d iversi ty,

- The “hub” of the Americas.

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“PORTU CALIDAD" - DOING BUSINESS IN PANAMA / BARRIERS

AND STRATEGIES

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DOING BUSINESS IN PANAMÁType of companies & costs.

Target Markets: Local : 48%

Regional : 28%

Internat ional : 21%

Posit ive points: 1 - Strong and growing local consumer base

2 - Government led campaign for t ransparency

3 - Good logist ics infrastructure and in-country t ransport network

4 - Access to overseas market

5 - Legal structures and incent ives to businesses

6 - Strong support f rom the f inancial sector

7 - Ease of doing business

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Challenges: 1 - Lack of qual i f ied local staff

2 - 10 Panamanian workers for each foreign worker ( by law )

3 - Local costumes and way of l i fe.

MAIN BARRIERS TO GROWTH

1 - Economic s lowdown in Lat in America ( Venezuela & Brasi l ) 2 - Lack of qual i f ied local staff 3 - Fal ls and volat i l i ty in commodity pr ices 4 - El Niño impact 5 - Lack of market knowledge among the populat ion 6 - Over rel iance on hydro power 7 - Lack of t ransparency 8 - Rel iance on Panama´s Financial services

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GENERAL CHALLENGES IN THE SHORT TIME:

1 - Improve urban planning 2 - Expand FTAs ( Free Trade Agreements ) 3 - Greater adver tisement/promotion of Panama and Panamanian products 4 - Develop water security plan

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STRATEGIES “ PORTU CALIDAD - BUSINESS CENTER “

1 SHOWROOM , open 7 hours a day : : 5 days a week

Staff: 1 assistant ( off ice, market ing and local sales ) + 1 commercial ( external c l ients )

20 exposition spaces ( 20 x 12m2 )

US$7.500,00 annual fee per company / exposition space

WHY? 1 - local operation 2 - building trust 3 - direct and permanent business contact

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