Panama is seeking to establish that companies operating under its jurisdiction must maintain a real presence in the country.

The Minister of Economy and Finance, Felipe Chapman, stated that the proposal will adapt the country to new economic demands. The first debate on Bill 641, which amends and adds articles to the Tax Code regarding income tax and establishes economic substance requirements to determine passive income from foreign sources, began with a strong defense from government authorities. Its proponent, Minister of Economy and Finance Felipe Chapman, told the Assembly's Committee on Economy and Finance that the proposal represents "a sovereign, intelligent, and strategic decision" to adapt the country to the new demands of the global economic environment. He assured that this is being done without abandoning the principle of fiscal territoriality that has historically characterized Panama. "Today is an important day for our country, not because someone is forcing us from the outside, but because Panama has decided, with its own conviction, to take a step that strengthens its position in the world," he said. During this first day of consultations, some lawyers participated, including former Ombudsman Eduardo Leblanc, who said that part of the text of this bill could affect legitimate investments. The Assembly's Committee on Economy and Finance began the first debate on the economic substance law. His colleague, Ramsés Owens, expressed reservations about the document, and considered it prudent to approve an economic substance law with some exceptions. According to Chapman, the bill seeks to ensure that companies operating under Panamanian jurisdiction maintain a real presence in the national territory, through job creation, hiring of local suppliers, and decision-making from Panama. In his opinion, the measure does not represent a burden for the business sector, but rather an opportunity to attract quality investments and strengthen the national economy. Multinational corporations and companies that already have substantial operations in Panama will benefit from greater legal guarantees, reduced financial friction in their countries of origin, and better conditions to compete internationally, he said. In addition, according to a press release from the Ministry of Economy and Finance, the head of the economic portfolio indicated that the initiative is part of the country's efforts to leave international lists that, in the government's opinion, do not reflect the true economic reality of the country. The debate on the bill is expected to be enriched by the opinions of businesspeople, unions, lawyers, academics, and citizens. During the discussion of the bill, it was indicated that recommendations from various sectors, including businesspeople, unions, lawyers, academics, and citizens, will be incorporated. "The goal is not to approve a law simply to fulfill a formality. The goal is to approve the best possible law for Panama," Chapman said, while assuring that the regulation seeks to consolidate Panama as "a reliable, transparent, and competitive partner." Meanwhile, Aylín Jaramillo, representing the law firm Rivera, Bolívar, Castañeda, stated that this bill represents an opportunity for Panama to reaffirm its commitment to transparency and defend a competitive tax model based on legal certainty, proportionality, and respect for the principle of territoriality. After the first day of consultations, the president of the Assembly's Committee on Economy and Finance, Deputy Eduardo Gaitán, said that after listening to the various interventions and some recommendations, he considered that everyone essentially agrees that Panama needs an economic substance law. He added that a large amount of correspondence with observations from various sectors and unions has been received, and he hopes that they will participate in person in the coming days. "We plan to receive their proposals so that, starting next week, we can work on a consolidated document with each of the modifications," Gaitán said, noting that the consultation period for this bill will continue on May 12.