Countries › Panama › Guide › 3. Investing › Foreign investment in Panama: equal treatment, free repatriation and expropriation guarantees under Ley 54 de 1998

Foreign investment in Panama: equal treatment, free repatriation and expropriation guarantees under Ley 54 de 1998

Argentina. For full detail on Argentina, go to The Argentine Thread.

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

Panama has no foreign investment approval, screening or registration requirement: Ley 54 de 1998 gives foreign investors the same rights and duties as nationals, limited only by the Constitution and the law. It guarantees free disposal of the resources an investment generates and free repatriation of capital, dividends, interest and profits, and lets expropriation happen only for public utility or social interest, without discrimination and with adequate compensation at market value. The real frictions are the constitutional reservations (retail trade, land near borders, gaming) and tax, covered on their own pages.

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

Prior approval or screening of foreign investment	None; equal treatment with nationals textLey 54 de 1998 art. 2, as of 2026-10-29 · in force
Repatriation of foreign capital	Free; guaranteed by law textLey 54 de 1998 art. 2, as of 2026-10-29 · in force
Basis of compensation for expropriation of protected investments	Market value on the day before the measure became known textLey 54 de 1998 art. 22, as of 2026-10-29 · in force
Conciliation period before arbitration or court under Ley 54	30 business daysLey 54 de 1998 art. 20, as of 2026-10-29 · in force

The rule

1. Panamanians and foreigners are equal before the law, but the law may, for reasons of work, health, morality, public security and the national economy, subject to special conditions or deny the exercise of certain activities to foreigners in general.Constitución Política (texto único, Gaceta Oficial 25176 de 15 de noviembre de 2004), art. 20, 2004-11-15 official text · verified 2026-10-29

2. The State promotes and protects investments in all sectors of economic activity and in any business or contractual form allowed by Panamanian law. Investment means placing capital, in money or credit facilities, capital goods or the transfer of assets, into the effective production of goods and services.Ley 54 de 22 de julio de 1998, art. 1, 1998-07-22 official text · verified 2026-10-29

3. Foreign investors and the companies in which they participate have the same rights and obligations as national investors and companies, with no limits other than those of the Constitution and the law, including freedom of trade, industry, export and import. They are guaranteed free disposal of the resources generated by the investment, free repatriation of capital, dividends, interest and profits, and free sale of their production.
Cost to do it: No approval, filing or fee is needed for the art. 2 guarantees; they apply to every investor, not only those registered under the stability regime.
Example: A Panamanian subsidiary distributes B/.1,000,000 of Panamanian source profits: B/.100,000 of dividend tax is withheld (Código Fiscal art. 733) and B/.900,000 can be wired abroad with no FX approval. / US$1,000,000 dividend, US$100,000 withheld, US$900,000 sent abroad.Ley 54 de 1998, art. 2, 1998-07-22 official text · verified 2026-10-29

4. Foreign investors' property rights have no limits other than those of the Constitution and the law, and their intellectual and industrial property rights follow the same rules as those of national investors.Ley 54 de 1998, arts. 3 and 4, 1998-07-22 official text · verified 2026-10-29

5. The implementing decree spells out the free production and marketing guarantee: free choice of goods to produce or sell, the right to set prices, free access to markets, freedom to export and import without restrictions and freedom of advertising, within the limits of the laws that regulate each matter.Decreto Ejecutivo 9 de 22 de febrero de 1999 (Ministerio de Comercio e Industrias), art. 4, 1999-02-22 official text · verified 2026-10-29

6. The State will not take direct or indirect measures of expropriation or nationalisation, including changing or repealing laws with the same effect, against investments covered by the law, unless the measure is for public utility or social interest under the Constitution, is not discriminatory and comes with adequate compensation. Compensation is based on the market value of the investment, under tax rules, on the day before the measure became known; where that is hard to determine, capital invested, depreciation, capital already repatriated and replacement value are considered.Ley 54 de 1998, arts. 18, 21 and 22, 1998-07-22 official text · verified 2026-10-29

7. Disputes between the State and investors over the application of Ley 54 go first to conciliation under the rules of the Centro de Conciliación y Arbitraje de Panamá; if not solved within thirty business days, the investor may choose the competent authority or court, or arbitration under that Centre's rules, with final and binding awards. Tax audits, tax assessment and collection acts are excluded.Ley 54 de 1998, art. 20, 1998-07-22 official text · verified 2026-10-29

8. No foreign government or foreign official or semi official entity may acquire ownership of any part of the national territory, except embassy premises as the law provides.Constitución Política, art. 290, 2004-11-15 official text · verified 2026-10-29

Guarantee	Who gets it	Source
Equal treatment with nationals	All foreign investors	Ley 54 art. 2
Free repatriation of capital, dividends, interest and profits	All foreign investors	Ley 54 art. 2
Property and IP rights on equal terms	All foreign investors	Ley 54 arts. 3 and 4
Ten years of legal, tax, customs and labor stability	Only registered investments of at least B/.2,000,000 in listed activities, plus SEM and EMMA licensees automatically	Ley 54 arts. 5, 10 and 16; Ley 41 de 2007 art. 15-A; Ley 159 de 2020 art. 55
Expropriation only with market value compensation	Investments covered by the law	Ley 54 arts. 18, 21 and 22

What Ley 54 de 1998 gives every foreign investor and what needs registration.

Worked example

A Spanish group capitalises a new Panamanian sociedad anónima with B/.500,000 (US$500,000) to run a logistics business.
No investment registration, central bank filing or approval is needed; the company forms, gets its Aviso de Operación and starts trading.
Three years later it sells the business and wires the proceeds and accumulated dividends out, paying only the taxes due (dividend tax and any capital gains tax), since Ley 54 art. 2 guarantees free repatriation.

Step by step

Check the activity against the constitutional reservations (retail trade, land within ten kilometres of the borders, gaming) and sector licences before choosing a structure.
Form the vehicle (usually a sociedad anónima or a registered foreign branch) and obtain the Aviso de Operación and tax registration.
If the project is at least B/.2,000,000 in an eligible activity, decide whether to register for the ten year stability regime with MICI.
Compare the incentive regimes (SEM, EMMA, Panama Pacífico, free zones) before locating the operation.
Keep investment records (capital contributions, loans, asset transfers) so that repatriation and any compensation claim can be documented.

Common traps

Equal treatment is not unlimited: the Constitution reserves retail trade to Panamanians and to companies formed by them, bars foreigners from owning land within ten kilometres of the borders and reserves gaming to the State.
Free repatriation is an FX guarantee, not a tax exemption; dividend tax, withholding on remittances and capital gains tax still apply.
The Ley 54 conciliation and arbitration route excludes tax audits and tax collection, which follow the tax procedure code.
Panama has no tax treaty with Argentina; Argentine investors pay domestic Panamanian rates on dividends and other payments.

Sources

← The Panama Canal and the economy: legal regime, results and payments to the TreasuryTen year legal and tax stability in Panama: registering a B/.2 million investment with MICI under Ley 54 de 1998 →

Get rule changes weekly

Free. One email a week from The LatAm Thread.

One more step after you press the button: we take you to Substack, where your email is already filled in. Confirm there to start. No spam, unsubscribe anytime, we never share your address. By subscribing you agree to the privacy policy.