Panama

Income Tax: 

The corporate income tax rate is 25%. The general rule in respect of income tax is that if the income is received within Panamanian territory it is subject to income tax. If the aircraft is not used in Panama, given that any income received is not in respect of an aircraft used in Panama, and that there is no benefit for persons located in Panama, there is no taxable income and therefore there is no obligation to pay income tax. Income tax is payable by the seller. 

Transfer of Movables and Service Tax (ITBMS): 

When title of the aircraft is transferred while the aircraft is in Panama, the sale is subject to transfer of movables and service tax (ITBMS) at a rate of 7%, regardless of the place where the contract was executed, the domicile or nationality of the parties. ITBMS is payable by the buyer but is charged and retained by the seller who has the responsibility of submitting to Tax Authorities. An exemption applies when the transfer takes place while the aircraft is located within a tax-free zone.  

Capital Gains Tax: 

The capital gains tax rate is 10% on net profit, i.e. difference between cost and sales price. Where capital gain tax is payable, the seller is liable to pay the tax. In addition, capital gains tax could arise if the aircraft is physically located in Panamanian territory on the delivery date and is used economically in Panama.  

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Panama is not part of the EU. Panamanian tax laws are based on territoriality and accordingly any tax applicable to seller or buyer under EU rules must be dealt with in the relevant EU jurisdiction. 

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Answers to question 1 above apply, the nationality of the purchaser does not affect the general rules as Panamanian taxes are based on territoriality and not on the nationality of the parties. 

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Export taxes do not apply in the Republic of Panama.

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Panama Aviation law provides that companies engaged in aviation services which hold a certificate of exploitation and operation issued by the Civil Aeronautics Authority (AAC) are exempt from import tax. Aircraft that are not engaged in aviation services under a certificate of exploitation and operation issued by the AAC must pay import tax as follows: 

Aircraft with empty weight less or equal to 2,000 kg: 

Commercial use       15% 

All others                  15% 

Aircraft with empty weight more than 2,000 kg but less than or equal to 15,000 kg: 

Commercial use       15% 

All others                   15% 

Aircraft with empty weight over 15,000 kg: 

Commercial use       10% 

All others                   10% 

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General stamp tax provisions of the Republic of Panama establish a tax of US$0.10 per each US$100.00 or fraction of value of the document or transaction applies to all contracts that do not have a special tax and that refer to acts that are subject to the Panamanian jurisdiction. 

Documents that refer to matters that do not generate taxable income in Panama are exempt from the stamp tax, unless the documents are used or filed before Panamanian courts or administrative authorities, in which case, the stamp tax must be paid in order to present/use/file the document in Panama.   

Accordingly, if the contract refers to a transaction that does not generate taxable income, then the stamp tax is paid only when and if the document is enforced in Panama or if any registration is required. 

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Title on the aircraft must be registered at both the Public Registry Office and the AAC.

Registration fees at the Public Registry are US$100.00 for review by the Public Registry of the transfer documents plus US$250.00 for each US$100,000.00 or fraction thereof of the transfer price or the AAC appraised value, whichever is higher, with a cap of US$4,200.00.

An appraisal issued by the AAC is required for registration purposes. Appraisal fees are as follows:

There are no luxury taxes payable in the Republic of Panama.

Payments made by lessee to a lessor under an aircraft lease are subject to corporate income tax if the aircraft is economically used within the Republic of Panama or by a local operator for international transport. The applicable tax rate is of 25% per cent of net taxable income.   

Payments made by a lessee to a non-domiciled lessor under a lease of an aircraft economically used within Panama or by a local operator for international transportation are subject to a withholding tax of 50% per cent of the applicable tax rate on 100 per cent of the amounts credited to the non-domiciled lessor unless reciprocity agreements are in effect between the Republic of Panama and the country of the lessor.   

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Commercial aircraft operators are subject to payment of income tax on the earnings for the commercial operation of the aircraft. They must charge and retain service tax (ITBMS) on all invoices for their services and remit this to the Tax Authorities. 

Private and corporate aircraft operators are not subject to payment of income over their private operations.

Interest on account of payments made by a debtor to a lender under an aircraft finance agreement are subject to corporate income tax if the aircraft is economically used within Panama or by a local operator for international transport. The applicable tax rate is of 25% per cent of net taxable income. Payment must be made by the lender who receives the income.   

Interest on account of payments made by a debtor to a non-domiciled lender under an aircraft finance agreement over an aircraft economically used within Panama or by a local operator for international transportation are subject to a withholding tax of 50% per cent of the applicable tax rate (25%) on 100 per cent of the amounts credited to the non-domiciled lender unless reciprocity agreements are in effect between the Republic of Panama and the country of the lender.   

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The Republic of Panama maintains environmental regulations on carbon and other emissions. There are currently no taxes, but the regulations contain fines and penalties for violations. 

There are no cargo, airport or passenger taxes in the Republic of Panama. Tocumen International Airport charges the following fees:

Passenger service fee US$20.00 per passenger. 

Aircraft Parking fees:

For internal flights after 12 hours after landing, US$0.25 for each 1,000 Kg or fraction of 1,000 Kg of the weight of the aircraft for each 24 hours.

Minimum charge US$0.75 for 24 hours.

International flights after 6 hours from landing US$0.50 for each 1,000 Kg or fraction of 1,000 Kg of the weight of the aircraft, for each hour or fraction of 6 hours.

Minimum charge US$1.50 for each 6 hours or fraction.

There are no aviation fuel taxes under the laws of the Republic of Panama.

There are no other taxes specific to aircraft in the Republic of Panama.