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EMMA licence in Panama: manufacturing, assembly, repair and logistics services for a multinational group at 5 percent under Ley 159 de 2020

Last verified: 2026-10-29 · Status: Stable

Ley 159 de 2020 created the EMMA regime for multinationals that manufacture, assemble, maintain, remanufacture, condition, test or develop products, or run related logistics, for companies of their own group from Panama. Licensees pay income tax at 5 percent on net taxable income from those services (2 percent floor with foreign tax credits), no dividend or complementary tax, import their inputs and equipment free of duty and get ten year stability automatically. The 5 percent rate is earned yearly by meeting substance tests set by Decreto Ejecutivo 33 de 2021.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates as legal tender (Ley 84 de 1904; see fx/dollarization-and-the-balboa). USD figures therefore equal the balboa figures.

Key facts

Income tax rate for EMMA licensees on net taxable income from manufacturing related services	5 %Ley 159 de 2020 art. 20, as of 2026-10-29 · in force
Minimum effective EMMA rate when foreign tax credits apply	2 %Ley 159 de 2020 art. 20, as of 2026-10-29 · in force
Dividend, complementary and branch tax for EMMA licensees	Exempt textLey 159 de 2020 art. 22, as of 2026-10-29 · in force
Import duties on inputs and equipment for EMMA services	Exempt textLey 159 de 2020 art. 29, as of 2026-10-29 · in force
Single overtime surcharge in EMMA companies	25 %Ley 159 de 2020 art. 46, as of 2026-10-29 · in force
Term of the EMMA temporary staff visa, renewable	2 yearsLey 159 de 2020 art. 31, as of 2026-10-29 · in force

The rule

1. EMMA services, alone or combined, are: manufacturing of products, machinery and equipment; assembly; maintenance and repair; remanufacturing; conditioning (labelling, coding, kitting, batching and similar); product development, research or innovation; analysis, laboratory and testing; and logistics such as storage, deployment and distribution of components needed for those services; plus analogous services approved by the Cabinet. All are provided to companies of the same business group.Ley 159 de 31 de agosto de 2020, arts. 3 and 4, 2020-08-31 official text · verified 2026-10-29

2. An EMMA serves only its business group; complementary production processes for others need prior approval of the licensing Commission. It operates as a foreign company registered in Panama or as a Panamanian company owned by the multinational or its subsidiaries or affiliates, and a company serving clients outside its group does not qualify.Ley 159 de 31 de agosto de 2020, arts. 6, 7 and 8, 2020-08-31 official text · verified 2026-10-29

3. The licensing Commission sets the licence requirements considering group assets, affiliates and locations, activities, stock exchange listing and the minimum full time employees and annual operating expenses in Panama adequate to the business. The application form must at least identify the company, its lawyers, the group and its main activities, group assets, the services to be provided and the group companies served, the estimated initial investment, the projected full time qualified staff in the first year, the ultimate shareholders or beneficial owners or the listing, social responsibility plans and projected annual operating expenses in Panama.
Cost to do it: Neither the law nor DE 33 sets a licence fee or a fixed asset threshold; the Commission may set a minimum asset amount and number of group companies served. Budget legal, notarial, apostille and translation fees.Ley 159 de 31 de agosto de 2020 art. 11; Decreto Ejecutivo 33 de 4 de febrero de 2021 art. 6, Ley 159 art. 11; DE 33 art. 6, 2021-02-04 official text · verified 2026-10-29

4. EMMA licensees pay income tax at 5 percent on net taxable income from the services rendered and may deduct all employees' salaries even if exempt. Foreign taxes and Panamanian withholdings may be credited, but then at least 2 percent of Panamanian net taxable income is due; credits cannot be carried forward or refunded.
Example: Net taxable income of B/.1,500,000 from assembly services for group companies: B/.75,000 of income tax at 5 percent. / US$1,500,000 of net income, US$75,000 of tax.Ley 159 de 31 de agosto de 2020, art. 20, 2020-08-31 official text · verified 2026-10-29

5. EMMA licensees are exempt from dividend, complementary and branch taxes whatever the source of profits, need no fiscal printers (but must invoice, including electronically) and need no Aviso de Operación for the licensed services.Ley 159 de 31 de agosto de 2020, arts. 22, 23 and 24, 2020-08-31 official text · verified 2026-10-29

6. EMMA companies are exempt from all import taxes, fees and duties on goods, machinery, materials, packaging, raw materials, inputs, supplies and spare parts used for the licensed services; these goods cannot be sold, leased, pledged or auctioned without paying the taxes due. Products they make in a special economic area, free zone or customs controlled area can be brought into Panama's customs territory by a group company paying duties only on the foreign raw materials and components incorporated, with an input output sheet approved by the customs authority.Ley 159 de 31 de agosto de 2020, arts. 29 and 30, 2020-08-31 official text · verified 2026-10-29

7. To keep the 5 percent rate in a fiscal year, the EMMA must carry out the licensed activities in Panama, keep an adequate number of qualified full time employees and incur an adequate amount of operating expenses in Panama directly related to them, and file the annual report. Outsourcing is allowed to providers in Panama under the EMMA's supervision, but outsourcing outside Panama breaches substance and makes that income taxable under the Código Fiscal. The annual report, by sworn statement, is due within six months of the fiscal year end, and records must be kept five years.Decreto Ejecutivo 33 de 4 de febrero de 2021 (Gaceta Oficial 29213-B), arts. 19, 24, 25, 26 and 31, 2021-02-04 official text · verified 2026-10-29

8. An EMMA that in a fiscal year lacks the adequate full time staff or operating expenses, or does not carry out the income generating activities, pays income tax for that year at the general rate with fines, surcharges and interest; operating outside the licence leads to cancellation and liability for unpaid taxes.Ley 159 de 31 de agosto de 2020, art. 48, 2020-08-31 official text · verified 2026-10-29

9. Temporary staff visas for foreign operational or training staff last two years, renewable, and come with a work permit in the same procedure; permanent staff visas follow Ley 41 de 2007 and last five years, renewable. Salaries of temporary and permanent visa holders that the EMMA pays and books are exempt from income tax, social security and educational insurance. Visa holders may import household goods free of duty on first arrival and one vehicle duty free every two years.Ley 159 de 31 de agosto de 2020, arts. 31, 34, 35 and 41, 2020-08-31 official text · verified 2026-10-29

10. EMMA companies may agree a weekly rest day other than Sunday without surcharge for Sunday work; work on the agreed rest day carries a 50 percent surcharge and overtime a single 25 percent surcharge.Ley 159 de 31 de agosto de 2020, arts. 45 and 46, 2020-08-31 official text · verified 2026-10-29

11. EMMA companies may locate in the Panama Pacífico special economic area, a Ley 32 de 2011 free zone or elsewhere, but only the EMMA tax regime applies to them; the area's laws apply only to administrative and operating matters. They receive the Ley 54 de 1998 stability guarantees automatically from registration. Projects needing an environmental impact study can get a provisional licence first, but need the study approved before starting the project.Ley 159 de 31 de agosto de 2020, arts. 52, 54 and 55, 2020-08-31 official text · verified 2026-10-29

Item	EMMA	SEM
Activities	Manufacturing, assembly, repair, remanufacturing, conditioning, testing, R&D and related logistics for the group	Management, administrative, financial, technical and support services for the group
Income tax	5 percent, 2 percent floor with credits	5 percent, 2 percent floor with credits
Dividend and complementary tax	Exempt	Exempt
Import duties on inputs and equipment	Exempt (art. 29)	No equivalent exemption in Ley 41
Group size test	Set by the Commission (no amount in the law or DE 33)	US$200 million assets or more than 40 countries (Res. 20-17)
Stability	Automatic Ley 54 guarantees	Automatic Ley 54 guarantees

EMMA and SEM compared (Ley 159 de 2020 and Ley 41 de 2007).

Worked example

A German medical device group sets up an EMMA in a free zone to assemble and test devices for its distributors in the region.
It imports B/.3,000,000 (US$3,000,000) of machinery and components free of import duty under art. 29.
Its assembly fee from group companies yields B/.800,000 of net taxable income: tax at 5 percent is B/.40,000 (US$40,000), and profits can be paid up to Germany with no dividend tax.
Units sold into Panama by a group importer pay duty only on the foreign components incorporated.

Step by step

Confirm the services fit art. 4 and are for group companies only.
Choose the location (free zone, Panama Pacífico, customs controlled area or elsewhere) and check whether an environmental impact study is needed.
Incorporate or register the company and prepare the DE 33 art. 6 application with group, staffing and spending projections.
File with the Technical Secretariat at MICI; obtain a provisional licence if the environmental study is pending, then the final licence.
Process temporary and permanent staff visas through the Secretariat and set up transfer pricing documentation.
File the annual sworn report within six months of each fiscal year end and keep substance records for five years.

Common traps

Outsourcing any licensed activity outside Panama breaches the substance requirements and makes that income taxable at the general rate.
Duty free inputs and equipment cannot be sold, leased or pledged without paying the duties.
An EMMA in Panama Pacífico or a free zone gets only the EMMA tax regime, not the area's own tax benefits.
The law lets the Executive set a percentage of Panamanian workers for EMMA companies; check for any regulation before planning headcount.

Sources

← Multinational headquarters (SEM) licence in Panama: who qualifies, the 5 percent tax regime, substance tests and staff visas under Ley 41 de 2007Panama Pacífico special economic area: registration, tax exemptions, the 5 percent office services rate and labor rules under Ley 41 de 2004 →

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