The General Directorate of Revenue of the Ministry of Economy and Finance, confirmed that adjustments have been made to the form for the payment of the Income Tax (ISR) so that the Headquarters of Multinational Companies (SEM by its Spanish acronym) can proceed with the payment of this tax.

In accordance with the provisions of article 5 of Law 57 of October 24, 2018, which modifies article 21 of Law 41, 2007 which creates the Special Regime for the Establishment and Operation of Multinational Company Headquarters, and the Headquarters of Multinational Commissions, SEMs will pay ISR on the net taxable income derived from services provided at a rate of 5%, applying the following tax deductions or credits:

• Expenses incurred in respect of labor remuneration of all its employees, including those exempted from income tax.
• The amount that has been paid as ISR (or equivalent) abroad, in respect of the taxable income generated in the Republic of Panama derived from the provision of services to non-residents.
• The 5% that has been withheld by taxpayers of the Republic of Panama, as ISR. Income tax.

In the last two cases listed above, 2% of the net taxable income generated in the Republic of Panama must be paid as a minimum for ISR.

The form is available here.