Countries › Panama › Guide › 3. Investing › Multinational headquarters (SEM) licence in Panama: who qualifies, the 5 percent tax regime, substance tests and staff visas under Ley 41 de 2007

Multinational headquarters (SEM) licence in Panama: who qualifies, the 5 percent tax regime, substance tests and staff visas under Ley 41 de 2007

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

A group with consolidated assets of at least US$200 million, or presence in more than 40 countries under one brand and business line, can license a Panamanian or registered foreign company as a Sede de Empresa Multinacional to serve its own group from Panama. The SEM pays income tax at 5 percent on net taxable income from its services (2 percent floor with foreign tax credits), no dividend, complementary or branch tax, needs no Aviso de Operación and gets ten year stability automatically. Each year it must show adequate full time staff and Panamanian operating spend, or pay the general rate for that year.

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 multinational headquarters (SEM) on net taxable income from services	5 %Ley 41 de 2007 art. 21, as of 2026-10-29 · in force
Minimum effective SEM rate when foreign tax credits apply	2 %Ley 41 de 2007 art. 21, as of 2026-10-29 · in force
Dividend, complementary and branch tax for SEM licensees	Exempt textLey 41 de 2007 art. 21-B, as of 2026-10-29 · in force
Minimum consolidated group assets for an SEM licence (alternative: presence in more than 40 countries)	200000000 USDResolución 20-17 de 2017 numeral 2, as of 2026-10-29 · in force
Minimum initial capital to establish a group parent company in Panama under SEM	2000000 USDResolución 20-17 de 2017 numeral 3, as of 2026-10-29 · in force
Withholding by Panamanian taxpayers on deductible payments to an SEM	5 %Ley 41 de 2007 art. 23, as of 2026-10-29 · in force
Capital gains tax on transfers of SEM shares (buyer withholds 1 percent of price)	2 %Ley 41 de 2007 art. 21-E, as of 2026-10-29 · in force
Term of the Permanent SEM Staff Visa, renewable	5 yearsLey 41 de 2007 art. 27, as of 2026-10-29 · in force

The rule

1. An SEM is a multinational that from Panama provides defined services to its parent, subsidiaries, affiliates or associated companies, or sets its parent in Panama. Services include management of a region, logistics and storage of components for its own manufacturing, technical, financial or administrative assistance and other support to group companies (including treasury, risk and credit analysis, due diligence, compliance, data processing and intragroup loans), group accounting, drawings and designs, electronic processing, marketing coordination, R&D support and other services approved by the Cabinet. Activities that need a licence from the banking, insurance or securities regulators are excluded, and services to regulated financial groups require prior notice to the regulator.Ley 41 de 24 de agosto de 2007 (art. 4 numeral 4 as worded by Ley 57 de 2018 art. 1), arts. 3 and 4, 2018-10-24 official text · verified 2026-10-29

2. The SEM's main function is to serve its own business group, except where the law allows otherwise; it must operate as a foreign company registered in Panama or as a Panamanian company owned by the multinational or its subsidiaries or affiliates. Firms such as law firms that serve clients outside their group are not SEMs, and activities outside the licence must be carried on through a separate company with its own staff.Ley 41 de 2007 arts. 6 (as worded by Ley 57 de 2018 art. 2), 7, 8 and 17, arts. 6, 7, 8 and 17, 2018-10-24 official text · verified 2026-10-29

3. The licensing Commission's requirements (Resolución 20-17) are: an application form with a power of attorney to a Panamanian lawyer, articles of incorporation whose main object is to operate as an SEM, a sworn statement by the legal representative, the group's audited or certified consolidated financial statements apostilled, a bank reference, a share ownership certificate and a group chart; group assets of at least US$200,000,000, or presence in more than forty countries under one brand and type of business, proven by consolidated statements or a sworn statement listing an office address in each country; and, to set up a parent company in Panama, initial capital of at least US$2,000,000. Foreign documents must be apostilled or legalised and translated by a Panamanian authorised translator.
Cost to do it: No licence fee appears in Ley 41 or Resolución 20-17; costs are legal, notarial, apostille and translation fees. A parent company set up in Panama needs at least US$2,000,000 of initial capital.
Example: A group with B/.350,000,000 of consolidated assets qualifies on assets; one with B/.90,000,000 of assets but offices in 45 countries under one brand qualifies on presence. / US$350,000,000 or presence in more than 40 countries.Resolución 20-17 de 11 de septiembre de 2017, Comisión de Licencias de Sedes de Empresas Multinacionales (Gaceta Oficial 28363), Resuelve primero, numerals 1 to 6, 2017-09-11 official text · verified 2026-10-29

4. The Commission's licence requirements must consider group assets, locations, activities, listing on a stock exchange and the minimum full time employees and annual operating expenses in Panama, which must be adequate to the business; licensees must actually carry out the activities that generate the income taxed under the regime.Ley 41 de 2007 art. 12 as worded by Ley 57 de 2018 art. 3, art. 12, 2018-10-24 official text · verified 2026-10-29

5. SEM licences are granted for an indefinite term and the licence number is the company's taxpayer registration (RUC) number. A licence may be cancelled if the activity ceases, operations do not start within six months of the licence (extendable six months), the multinational is taken over or declared bankrupt in its home country, or the law is breached; cancellation is appealable to the Commission.Ley 41 de 2007 arts. 15 (as worded by Ley 45 de 2012 art. 4), 18 and 19, arts. 15, 18 and 19, 2012-08-10 official text · verified 2026-10-29

6. SEM licensees pay income tax at 5 percent on net taxable income from the services rendered, through the annual return, and may deduct the salaries of all employees even if exempt. Foreign taxes paid and Panamanian withholdings can be credited, but then at least 2 percent of Panamanian net taxable income must be paid, and credits cannot be carried forward or refunded. Income from activities that drive group profitability is set at arm's length under the transfer pricing rules.
Example: Net taxable income of B/.2,000,000 from group services: B/.100,000 of income tax at 5 percent, against B/.500,000 at the general 25 percent rate. / US$2,000,000 of net income, US$100,000 tax under SEM versus US$500,000 at the general rate.Ley 41 de 2007 art. 21 as worded by Ley 57 de 2018 art. 5, art. 21, 2018-10-24 official text · verified 2026-10-29 · changed: Ley 57 de 2018, in force 1 January 2019, replaced the former exemption for services to foreign entities with the 5 percent rate.

7. SEM licensees are exempt from dividend tax, complementary tax and branch tax, whatever the source of profits; they are not required to use fiscal printers but must invoice, and they do not need an Aviso de Operación. Gains on shares of an SEM are taxed at 2 percent, with the buyer withholding 1 percent of the price, which the seller may treat as final.Ley 41 de 2007 arts. 21-B, 21-C, 21-D and 21-E as added by Ley 57 de 2018 arts. 7 to 10, arts. 21-B to 21-E, 2018-10-24 official text · verified 2026-10-29

8. A Panamanian taxpayer that deducts services from an SEM withholds 5 percent of the amount remitted. An SEM paying non residents for services, royalties or financing used in Panama withholds 5 percent on 50 percent of the amount, unless the non resident is registered as a taxpayer with the DGI. Transactions of an SEM with related parties are subject to the transfer pricing regime.
Example: An SEM pays a US licensor B/.400,000 of royalties used in Panama: it withholds 5 percent of B/.200,000, so B/.10,000. / US$400,000 royalty, US$10,000 withheld.Ley 41 de 2007 arts. 21-A and 23 as worded by Ley 57 de 2018 arts. 6 and 11, arts. 21-A and 23, 2018-10-24 official text · verified 2026-10-29

9. An SEM that in a fiscal year does not have the adequate number of full time employees and annual operating expenses in Panama, or does not carry out the income generating activities, pays income tax for that year at the general rate with fines, surcharges and interest; carrying on activities not covered by the licence leads to cancellation and liability for unpaid taxes.Ley 41 de 2007 art. 36 as worded by Ley 57 de 2018 art. 15 and Ley 66 de 2018 art. 6, art. 36, 2018-12-13 official text · verified 2026-10-29

10. Foreign staff obtain, through the Commission's Technical Secretariat, a Permanent SEM Staff Visa for five years, renewable for equal periods without limit, which carries the right to work and reside without other permits; dependants (spouse or partner of five years, children under 18 or up to 25 if studying, disabled children and parents) get dependant visas. Temporary visas for technical or training staff last up to three months, extendable once by three months. After five years staff may apply for permanent residence, and then pay income tax and social security on their salaries.Ley 41 de 2007 arts. 26, 27 and 28 as worded by Ley 45 de 2012 arts. 9, 10 and 12; art. 27-A as worded by Ley 57 de 2018 art. 14, arts. 26 to 28 and 27-A, 2012-08-10 official text · verified 2026-10-29

11. Salaries and other pay, including in kind, of Permanent SEM Staff Visa holders are exempt from income tax, social security and educational insurance contributions to the extent they are paid and booked as personnel expense by the SEM. Holders cannot work in other activities.Ley 41 de 2007 arts. 26 last paragraph (as worded by Ley 57 de 2018 art. 13) and 31, arts. 26 and 31, 2018-10-24 official text · verified 2026-10-29

12. SEM licensees obtain the ten year legal, tax, customs and labor stability guarantees of Ley 54 de 1998 automatically from the date of the licence.Ley 41 de 2007 art. 15-A as added by Ley 57 de 2018 art. 4, art. 15-A, 2018-10-24 official text · verified 2026-10-29

13. Workers who enter under the law and stay in Panama without actually working for the SEM may be fined up to B/.5,000, with the visa cancelled and repatriation at the company's cost; a company that fails to make the required notices or breaches other duties may be fined up to B/.100,000 by the Technical Secretariat.
Example: Fines up to B/.5,000 per worker and up to B/.100,000 per company. / Up to US$5,000 and US$100,000.Ley 41 de 2007, art. 37, 2007-08-24 official text · verified 2026-10-29

Item	SEM licensee	General regime	Source
Income tax on net taxable income	5 percent (2 percent floor with credits)	25 percent	Ley 41 art. 21; CF art. 699
Dividend and complementary tax	Exempt	10 percent Panamanian source, 5 percent foreign source or export	Ley 41 art. 21-B; CF art. 733
Aviso de Operación	Not required	Required	Ley 41 art. 21-D
Gain on sale of shares	2 percent, 1 percent withholding	General capital gains rules	Ley 41 art. 21-E
Expatriate salaries (permanent SEM visa)	Exempt from income tax and social security	Taxable	Ley 41 art. 26

SEM tax treatment compared with the general regime (Código Fiscal arts. 699 and 733).

Worked example

A US consumer goods group with US$5 billion of assets licenses its Panamanian subsidiary as an SEM to run Latin American finance, HR and marketing for twelve group companies.
It hires 40 full time staff in Panama and books B/.6,000,000 (US$6,000,000) of operating expenses there, which supports its substance.
Cost plus remuneration gives net taxable income of B/.600,000: tax at 5 percent is B/.30,000 (US$30,000), and profits can be distributed with no dividend tax.
Its regional CFO holds a five year Permanent SEM Staff Visa; the salary booked by the SEM is exempt from Panamanian income tax and social security.

Step by step

Check the group meets US$200 million of assets or more than forty countries under one brand, and that the planned services fit art. 4.
Incorporate the Panamanian company (or register the foreign company) with an SEM main object in its articles.
Assemble the Resolución 20-17 file: apostilled consolidated statements, sworn statements, bank reference, share certificate, group chart, translations.
File with the Technical Secretariat at MICI; the Commission recommends and the Secretariat grants the licence by resolution.
Start operations within six months, process staff visas through the Secretariat and set up transfer pricing documentation.
File the annual report and keep evidence of adequate employees and Panamanian operating expenses every year.

Common traps

An SEM serves its group; selling to unrelated clients takes the income outside the regime and can cost the licence.
The 5 percent rate depends on yearly substance: missing staff or operating spend in a year means the general rate, with fines and interest, for that year.
Services to Panamanian group companies are taxable in Panama, and Panamanian payers withhold 5 percent when they deduct them.
Permanent residence after five years ends the salary exemption: residents pay income tax and social security on their pay.
Activities licensed by the banking, insurance or securities superintendencies cannot be run through an SEM.

Sources

← Restricted activities for foreign investors in Panama: retail trade, land near the borders, islands, public utilities and gamingEMMA licence in Panama: manufacturing, assembly, repair and logistics services for a multinational group at 5 percent under Ley 159 de 2020 →

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