Below you can find the law promoting tourism and ecological development in North Panama, which includes Porta Norte. You can find the incentives in Chapter V, which includes details of the import tax, property tax and income tax exemption. You can find the original document below:

LEY 16

21 April 2015

Declaring the area of North Panama an Area of Ecological and Tourist Interest and of Ethnocultural and Historical Protection, and enacting other provisions.

THE NATIONAL ASSEMBLY DECREES:

Chapter I

General Provisions

Article 1. The area of Panama Norte, made up of the municipalities of Alcalde Díaz, Caimitillo, Chilibre, Ernesto Córdoba Campos and Las Cumbres, whose boundaries are described in Law 42 of 2009 and Law 29 of 2012, is hereby declared an Area of Ecological and Tourist Interest and of Ethnocultural and Historical Protection.

It is the responsibility of state institutions to collaborate with the development of this area by integrating it into their operational plans and allocating the necessary resources in accordance with their budgetary possibilities and the corresponding legal regulations.

The primary objective of the declaration of the Zone described in the previous article is to recognise, encourage and promote the area of North Panama in order to guarantee its sustainable development based on responsible community tourism activity, which constitutes a means of combating local poverty, promoting the development of entrepreneurial capacity in the communities, in accordance with the responsible use of natural resources. Likewise, to promote ethnic, cultural, historical and landscape protection, which is an integral part of this region, so that the State can make the necessary investments to guarantee the human development of its population and turn it into a model area that can be replicated throughout the country.

Article 3. For the purposes of this Law, the following terms shall be understood as follows:

1. Community-based tourism entrepreneur. A person of legal age, whose main activity is the tourism business in a family or organisational form, linked to their rural territory and to the local approach, whose activity is characterised by a rootedness to the land, a better distribution of wealth, a promotion of nature conservation, the creation of local alliances and a sustainable use of resources, promoting exchange and multicultural appreciation.

2. Ethnocultural. Set of customs and traditions that define an ethnic group or race.

3. Offers of communal rooms. Those offered in family homes with a maximum of two rooms for accommodation, which must meet the requirements established by the Panama Tourism Authority.

4. Intangible cultural heritage. Uses, representations, expressions, knowledge and skills, together with instruments, objects, artefacts and cultural spaces that are inherent to communities, groups and, in some cases, individuals that are recognised as part of their cultural heritage.

   The intangible cultural heritage, which is transmitted from generation to generation, is constantly recreated by communities and groups according to their environment, their interaction with nature and their history, giving them a sense of identity and continuity and thus contributing to promoting respect for cultural diversity and human creativity.

5. Community Tourism Strategic Plan. A method that seeks to establish means, goals and objectives to develop the tourism product, exploring external opportunities and internal strengths and weaknesses, which includes strategies that generate beneficial changes for the community, in the long and short term, as well as the implementation of controls and management of alliances with other state institutions and local authorities.

6. Organised local people. A group of people linked to a local territory, who are organised in law or in fact for a common purpose.

7. Safeguarding intangible cultural heritage. Measures aimed at ensuring the viability of intangible cultural heritage, including identification, documentation, research, preservation, protection, promotion, enhancement, transmission, through formal and non-formal education.

8. Community-based tourism. Relationship between the community and visitors from a cultural perspective, in the development of planned trips with the organised participation of its members, guaranteeing the adequate management of natural resources, the valuation of their heritage, and the cultural and territorial rights of nationalities and peoples for the equitable distribution of the benefits generated.

9. Cultural/ethnic tourism. Activity that produces trips motivated by the discovery and/or study of the tangible and intangible cultural heritage existing in Panama. It includes indigenous communities and their different cultures due to their importance.

10. Ecotourism. A form of travel to natural areas, which aims to minimise negative impacts on the environment and socio-cultural changes, and which also produces economic and financial opportunities for the benefit of protected areas and local populations.

Article 4. For the purposes of this Law, only intangible cultural heritage that is compatible with existing international human rights instruments and with the imperatives of mutual respect between communities, groups and individuals and of sustainable development shall be taken into account.

Intangible cultural heritage is manifested, in particular, in the following areas:

1. Oral traditions and expressions, including language as a vehicle of intangible cultural heritage.

2. Performing arts.

3. Social uses, rituals and festive events.

4. Knowledge and uses related to nature and the universe.

5. Traditional craft techniques.

   Chapter II

   Community-based tourism

Article 5. Community-based tourism is created as a tourism product to be developed at the national level, aimed at promoting ecological and cultural tourism in a rural environment, through the promotion of family or community-based businesses, in order to encourage the participation of communities in the planning, development and use of the resources of their environment, in a sustainable manner, allowing them to improve their living conditions.

The objective of the tourism product indicated in this article will be developed in accordance with the Community Tourism Strategic Plan, which must be elaborated between the community and the Panama Tourism Authority. The latter will also be responsible for the follow-up required to guarantee the achievement of the objectives.

Article 6. Community tourism, which must be carried out in accordance with the provisions of the Strategic Plan for Community Tourism, includes activities such as tourist accommodation establishments, public tourist accommodation, visitor facilities, community rooming houses, rural hotels, rural lodges and camping areas. It also includes food and beverage services such as rural restaurants, fondas, local food shops, Creole food services, local and national tour operators, local guide services, gastronomic routes, as well as the organisation of recreational, cultural and educational activities at the community level, within the framework of sustainable development.

Chapter III

Culture, History and Ethnicity

Article 7. Culture, history and ethnicity shall constitute aspects to be promoted and developed by community-based tourism as an integral part of the idiosyncrasy of a population.

The National Institute of Culture shall promote and ensure that community tourism includes culture, history and ethnicity in its implementation and development. In order to achieve these goals, the National Institute of Culture shall create committees for the protection and rescue of tourist sites, promote the creation of museums, as well as the organisation of cultural and ethnic fairs and events with the participation of community tourism and the community.

Article 8. The National Institute of Culture shall promote and develop activities aimed at disseminating and stimulating culture, the promotion of history and ethnicity in the national territory, directly or with the cooperation and participation of municipalities and community tourism entrepreneurs.

Article 9. For the protection of archaeological sites or other areas of cultural resources, the National Institute of Culture shall establish sites under the management categories of national monuments or zones of cultural interest, which shall comply with the technical guidelines established in Law 32 of 2003 and Law 14 of 1982, modified by Law 58 of 2003.

Chapter IV

Competencies of the Panama Tourism Authority and Municipalities

Article 10. The Panama Tourism Authority, as the governing body of tourism activity in the country, shall have the following powers in relation to community tourism activity:

1. Elaborate, in coordination with the community, the Community Tourism Strategic Plan.

2. To grant the public tourist accommodation permit to those who comply with the Strategic Plan and municipal regulations.

3. Regulate, process and resolve applications in accordance with the Community Tourism Strategic Plan.

4. Advise natural or legal persons involved in community-based tourism in order to speed up the procedures for their registration in the National Tourism Register.

5. Incorporate into the Panama Tourism Authority's Strategic Plan specific programmes that guarantee the development and promotion of community-based tourism.

6. Allocate the necessary human and financial resources for the implementation of policies to encourage and promote community-based tourism.

7. Coordinate with other state and local government entities the development of works and services required by the activity, as well as promote and encourage programmes aimed at the development of activities directly and indirectly related to ecological, recreational and cultural tourism, which should be oriented to economically benefit the communities located in areas adjacent to the zones where tourism activities will be developed.

8. Promote, nationally and internationally, the activity of community-based tourism both in the campaigns carried out by the Panama Tourism Authority and in the permanent dissemination it carries out.

9. Advise and train public entities, such as municipalities, autonomous institutions and private entities, to promote actions for the promotion and development of community-based tourism.

10. Promote the development of specific training programmes for the community tourism entrepreneur together with the National Institute of Vocational Training and Training for Human Development.

11. Ensure compliance with the provisions of this Law.

Article 11. The municipalities shall have the following powers

1. Establish mechanisms for organised communities to participate in local tourism development planning.

2. Establish the necessary conditions to develop community tourism by implementing policies to promote the sector based on sustainability criteria in relation to the tourism development of the municipality.

3. Create a local tourism management office in order to encourage the coordination of the community's tourism activities and competent regulation, for which purpose the corresponding municipal regulations will be drawn up.

Chapter V

Incentives

Article 12. Entrepreneurs engaged in community-based tourism shall be eligible for the following incentives:

1. Total exemption from import tax, for a period of five years, on the introduction of materials, fixtures, furniture and equipment, which are used exclusively in the remodelling and equipping of public tourist accommodation establishments, previously registered in the National Tourism Register.

   This incentive will be granted if these materials are not produced in the country or are not produced in sufficient quantity or quality or at a similar price. Likewise, all equipment introduced by the company with the purpose of contributing to energy saving or those necessary for the security of the area of the public accommodation establishment, excluding the introduction of weapons, are exempted.

   For the purposes of this Article, equipment shall be understood to mean vehicles with a minimum capacity of eight passengers, boats, boats or sporting equipment, exclusively dedicated to tourism activities. Such vehicles shall be exempt from the selective consumption tax on certain goods and services. A smaller capacity shall be allowed when the vehicle is equipped with a special system to cater for persons with disabilities, provided that it is used exclusively for tourism operations.

2. Total exoneration, for a period of ten years, of the real estate tax on land and improvements used in tourism development activities registered in the National Tourism Registry. In the case of multiple-use buildings, the area occupied by the tourist establishment must be segregated in order to enjoy the tax exemption.

3. Total exemption, for a period of five years, from income tax derived from the tourism activity operated by the company.

4. The loans granted to the tourism investments mentioned in this article, which are made in the first two years after their registration, shall not be subject to the withholding established by Law 4 of 1994 and its amendments, provided that the borrowers of such facilities are registered in the National Tourism Register.

   In order for a natural or juridical person to be eligible for the fiscal benefits of the present Law, he/she must present to the National Tourism Registry the project to be developed, indicating the details of the project, which will be supplied to the Panama Tourism Authority, by means of the application form for registration of said entity.

For the purposes of the right to obtain tax incentives, the term for the registration of interested parties in the National Tourism Register will be ten years, counted from the approval of the Strategic Community Tourism Plan for the area or region.

Article 13. Natural or legal persons involved in community, cooperative, self-managed and, in general, associative tourism, whether new or in operation, as well as associative groups made up of companies, will be eligible for the benefits and incentives of the present Law, provided that they comply with the conditions set out in this Law for the development of community tourism. Likewise, tourist accommodation establishments shall enjoy the benefits of this Law.

Chapter VI

Obligations

Article 14. For the purposes of this Law, the beneficiaries of the incentives shall have the following obligations:

1. Maintain their legal status in good standing, where applicable.

2. Have the requirements and permits required by the laws in force.

3. Maintain practices in line with the sustainable development model set out in the Community Tourism Strategic Plan.

4. Have 75% of the business with personnel belonging to the community or neighbouring areas. Exceptions to this obligation will be regulated by the Panama Tourism Authority.

5. Comply with the rules set out in the Labour Code.

6. Abide by the parameters determined in the Community Tourism Strategic Plan and the regulations of this Law.

   Chapter VII

   Funding

Article 15. The development of community cultural tourism shall be considered a high priority activity for the Panama Tourism Authority, the National Institute of Culture, the National Environmental Authority and the Municipality of Panama. Each institution shall allocate the necessary resources from its annual budget for this purpose, on a mandatory basis.

Article 16. Enterprises dedicated to community cultural tourism may receive benefits from the following sources of financing:

1. Support programmes for micro, small and medium-sized enterprises in force in national legislation.

2. Funds from public and private institutions or companies, as well as from foreign governments or entities, both public and private.

   Chapter VIII

   Control, Infringements and Sanctions

Article 17. The Ministry of Economy and Finance and the Panama Tourism Authority shall have the power to supervise all aspects concerning the fulfilment of the obligations contracted by the tourism companies that have been beneficiaries of the incentives granted in the present Law.

Article 18. The following constitute infringements of this Law:

1. The sale or de facto transfer of the property on which the tourism operation is located to businesses that do not qualify as beneficiaries of community tourism, according to the provisions of this Law.

2. Behaviour or actions that violate the morals or decency of the local population.

3. Violation of current environmental legislation.

4. Failure to comply with the tourism quality standards authorised by the Panama Tourism Authority for this activity.

5. The sale, lease, loan or dealing in any form whatsoever of equipment or articles that have been exempted under this Act or the use other than that for which the exemption or benefit was granted.

6. Failure to comply with any of the provisions of this Law.

Article 19. The infringements of this Law established in the previous article shall be sanctioned as follows:

1. The infringement referred to in paragraph 1, with the definitive suspension of benefits and incentives.

2. The infractions indicated in numerals 2, 3, 4 and 6, with the suspension of the benefits and incentives. The Executive Branch, through the Panama Tourism Authority, will regulate when the suspension will be temporary or definitive.

3. The infringement referred to in paragraph 5, with a fine equal to ten times the value of the exemption, without prejudice to any criminal or administrative sanctions that may be applied.

   Any other violation or non-compliance with the provisions of this Law shall be sanctioned in accordance with the provisions of Law 80 of 2012, as well as with the provisions of the General Environmental Law and complementary legislation, without prejudice to the corresponding civil liability.

Chapter IX

Final Provisions

The area of North Panama described in Article 1 of this Law, being a Zone of Ecological and Tourist Interest and of Ethno-cultural and Historical Protection, shall be considered as a pilot area for community tourism. Consequently, the Panama Tourism Authority shall initiate, at the time of the entry into force of this Law, the elaboration of the Strategic Plan for Community Tourism for this Zone.

The Panama Tourism Authority is empowered to incorporate the regions that, after the entry into force of this Law, request the development of community-based tourism.

Article 21. Companies that do not enjoy tax incentives at the time of the entry into force of this Law and that are carrying out community tourism activities, and that can prove it, may avail themselves of the benefits of this Law provided that they comply with all the provisions established herein.

Article 22. The Panama Tourism Authority, in coordination with the municipalities and local communities, shall promote and encourage programs aimed at the development of activities directly and indirectly related to ecological, recreational and cultural tourism. These programmes shall also be oriented to economically benefit the communities located in areas adjacent to the zones where tourism activities will be developed.

Article 23. The execution of the activities linked to the achievement of the objectives of the present Law, as far as the protected areas are concerned, shall be coordinated by the National Environmental Authority, under the guidelines established by the legal norms that establish each of these areas.

Article 24. The State, through the institutions indicated in this Law, shall annually include in the General State Budget the necessary appropriations for the execution of this Law.

Article 25. Article 9, paragraph 8 of Decree-Law 4 of 27 February 2008 is repealed.

Article 33 of Decree-Law 4 of 27 February 2008 shall read as follows:

Article 33. Distribution of competence. For the purposes of the distribution of competence in the administrative acts of the Authority, the first instance shall be before the corresponding operational directorate or instance.

In the administrative acts of the Authority, related to the registration, monitoring, supervision and cancellation of registrations in the National Tourism Register, the first instance will be before the Directorate of Tourism Investments. Such administrative actions shall be subject to appeal before the general administrator of the Authority. Once the resolution that resolves the appeal has been executed, the governmental channel is exhausted.

Article 27. This Law amends Article 33 and repeals numeral 8 of Article 9 of Decree-Law 4 of 27 February 2008.

Article 28. This Law shall enter into force on the day following its promulgation. 

BE COMMUNICATED AND COMPLIED WITH.

Bill 60 of 2014 approved in third debate in the Justo Arosemena Palace, Panama City, on the sixteenth day of March of the year two thousand and fifteen.

The President: Adolfo T. Valderrama R.

The Secretary-General: Franz O. Wever Z.

NATIONAL EXECUTIVE BODY, PRESIDENCY OF THE REPUBLIC, PANAMA, REPUBLIC OF PANAMA, 21 APRIL 2015.

President of the Republic: Juan Carlos Varela R.

Minister of Trade and Industry: Melitón A. Arrocha