Panama, December 7, 2018. Morgan & Morgan represented certain investment funds managed by the Merchant Banking Division of The Goldman Sachs Group Inc. (“Goldman Sachs”) in the negotiation of a Security Purchase Agreement pursuant to which Goldman Sachs acquired for US$300 Million, 12% Redeemable Preferred Stock of McDermott International, Inc., a Panamanian corporation (the “Company”), and a warrant to purchase a number of shares of the common stock of the Company.

Partner Francisco Arias G. and Senior Associate Roberto Vidal, participated in this transaction.

Jazmina Rovi y Francisco Linares, partners of Morgan & Morgan, contributed to the Panama chapter of the second edition of Getting the Deal Through: Market Intelligence-Shipping, a publication that invites leading professionals in their jurisdictions to conduct a thorough analysis of the evolution and the regulatory scenario of the maritime industry globally.

Mrs. Rovi has over 20 years of experience representing ship owners, charterers and leading financial institutions on all types of registration schemes under Panama flag and ship finance structures including ship mortgages and pledge of shares of Panama ship owning companies.  She is listed as a leading lawyer in the Shipping chapters of Chambers & Partners and Latin Lawyer 250.

Mr. Linares’ career includes over 20 years of experience in all aspects of maritime dispute resolution and claims at the Maritime Courts of Panama, dealing with collisions, cargo claims, oil spills and pollution, charter party disputes, personal injury, maritime liens, marine insurance claims, ship mortgage executions, among others. Currently, he is the President of the Maritime Law Association of Panama.

To read the Panama article, click on the following link: https://gettingthedealthrough.com/intelligence/155/article/5703/shipping-panama

Panama, November 20, 2018. Adolfo Campos, senior associate and tax specialist, took part as speaker in the Seminar on Property Taxes in Panama-New Law 66 of 2017.

During the event the speakers talked about the most relevant aspects of Law 66 of 2017 which will begin to take effect on January 1st, 2019.

The activity was organized by the National Bar Association of Panama.

About Morgan & Morgan

Morgan & Morgan advises companies and individuals in matters pertaining to the Panamanian taxation system, including special taxes regimes. The firm has an experienced team of attorneys with broad knowledge in tax law addressing all sorts of industries, such as, financial services, technology, shipping, energy, real estate, intellectual property, retail and wholesale business, who can readily identify obstacles and solutions but mostly the opportunities clients can expect to achieve upon making business in Panama.

Panama, November 14, 2018. We are proud to announce that Morgan & Morgan, through the work carried out by its Community Legal Assistance Program, received the international recognition “Regional Best Practices Award for Sustainable Development in Latin America and the Caribbean” for the work the organization has been doing on the Sustainable Development Goal (SDG) # 5: Gender Equality.

The award ceremony was held on November 14th in the city of Bogotá, during the “Making Global Goals Local Business” event, organized by the Global Compact Network-Colombia.

What are the SDGs?

On September 25, 2015, world leaders adopted a set of global goals to eradicate poverty, protect the planet and ensure prosperity for all as part of a new sustainable development agenda. Each objective has specific goals that must be achieved in the next 15 years. To achieve these goals, everyone has to do their part: governments, the private sector, civil society and all people.

About the Community Legal Assistance Program

Morgan & Morgan confirmed its commitment to sustainability as a signatory of the United Nations Global Compact in 2001. Then in 2007, Morgan & Morgan became the only organization in Panama to legally assist the scourge of domestic violence. The Community Legal Assistance Program run by Fundamorgan is a unique project that offers people of limited economic resources, legal counselling and representation with no charge of professional fees, in Family Law and Domestic Violence proceedings.

In addition, the foundation focuses on issues of:

  • Prevention of violence through workshops on human rights, equity and gender equality for all sectors of the country.
  • Generate strategic and public-private partnerships to achieve an integral impact.
  • Promotion of laws and policies that protect the rights of women, children and young people, advocating from areas of relevance.
  • Support to users of the foundation with scholarships for courses that allow them to strengthen their self-esteem and empower themselves, managing to start small businesses to generate income that break the economic dependence.

Since the program began, more than 2,500 legal proceedings have been managed and more than 8,000 persons have received training on the subject, beneficiating specially women and children in the country.

Congratulations to the entire team of the Community Legal Assistance Program, whose daily work and effort actively contribute to a fairer and more equitable Panama.

Panamá, November 6, 2018. On the basis of the Sustainable Development Goals, Morgan & Morgan submitted before the United Nations Organization (UN) Forum, the Sustainability Report from the last period of work.

In this new edition, the organization shows its social commitment with its professional staff as well as externally with the community.  All based on its sustainability: Corporate Standards, Corporate Wellness, Environment, Education and Access to Justice.

To download the complete report please click here: Annual Sustainability Report


Giselle Moncada de Vasquez, senior associate, Morgan & Morgan

The loan agreement secured by mortgage is a legal and financial concept that has undoubtedly been a pillar of world economic progress. Hence, the Supreme Court of Justice of Panama in some of its judgments has given it its importance as part of the economic public order.

Certainly, this optimal progress is possible as long as the majority of the debtors pay off the loan punctually, and in cases when they are not able to comply with said payment to its creditor, by activating a mechanism to achieve the expedited collection of the real mortgage loan through a safe conversion system.

Mortgage loan or security trusts

It is important to mention that in recent years the lenders have increased the use of security trusts to guarantee their loans, instead of loans secured by mortgages. Despite of the benefits offered by security trusts to creditors and customers, there is another sector of the market that keeps using the loan agreement secured by mortgage. 

Recovery process of mortgage debt

The success of the legal concept of mortgage loan requires the summary proceeding of the real estate guarantee, for cases in which the loan falls into arrears. In the Panamanian legal system, the judicial process generally used for the collection of this type of mortgage debt is the so-called “executory process with waiver of procedures”, thus we have a process that is very special and very summary at our disposal.

The reality is that the aforementioned process is not usually as expeditious as it faces delays both in the processing of the judicial process itself, in the procedure following the registration of the award (mainly in the physical taking of the auctioned property), until achieving the actual sale that is when the collection shall be satisfied.

This time we will list five lines of action that would reduce the harmful damages of a delayed and deficient conversion of the liquid asset through the aforementioned collection process:

  1. To apply to the Judicial Branch for an adaptation to the regulation of the way these processes are distributed in the Single Window System [known as Registro Único de Entrada (RUE)] so that judges who have links with credit entities, when the latter are executors, can be previously excluded from each distribution. In practice, the processing of a judicial impediment of this type can delay the admission of a process more than two months. The foregoing would even enhance the valuable time of our judicial officers.
  2. To insist on a procedural reform that empowers the Judge who is acquainted with the execution process, to order the eviction of occupants who do not hold an ownership title of the auctioned property. In comparison to the handling that was given by officials named Corregidores, the eviction proceeding to remove squatters, which is currently the responsibility of the Justices of the Peace, has not presented the improvements in response times expected by users. There are cases in which foreclosed properties are invaded by opportunists who then try dilatory actions in bad faith, postponing the proceeding indefinitely.
  3. To urge the corresponding authorities (Judicial and Executive Branch) to have the necessary funds for the implementation of Law 12 of May 19, 2016 (Insolvency Law), which creates the Insolvency Circuit Judges and the Fourth Court of the First Judicial District, which would have the power exclusively to hear the bankruptcy proceedings and all executory processes for major claims (that is, also the executory process with waiver of procedures). Despite the fact that the Law came into force on January 2, 2017, the aforementioned judicial offices have not yet been created nor have their personnel been hired.
  4. To benefit the real estate tax situation of the guarantees auctioned or granted as payment in kind. At the moment, the cadastral value of a property is raised considerably with interest, fees and legal expenses when auctioned or granted as payment in kind. The clearance of said property becomes even more difficult for its later sale if the debtor of the loan omitted to declare the improvements before the auction. This hinders its immediate sale while trying to resolve the tax situation.
  5. To promote in the population the culture of managing their budget properly and emphasize this teaching from school education. Although sometimes an unpaid debt can be due a health problem or loss of employment, the vast majority of cases seem to be resulting from consumerism.

Let us consider for a moment the economic repercussions that a high default rate in the payment of mortgage loans and the impossibility of making the real estate guarantee effective can have at the national level. It is imperative to take the corrective actions mentioned above.

New Rules for SEM Companies




With the enactment of Law 57 of October 24th, 2018 that modifies Law 41 of 2007, creating a Special Regime for the Establishment and Operation of Multinational Headquarters and the Commission of Multinational Headquarters, new rules applicable to SEM (for its acronym in Spanish) companies are established.


Income Tax (ISR)

  • Companies with SEM license will pay ISR at a 5% rate on the net taxable income applicable to the services it renders.
  • SEM companies, will file income tax return on an annual basis and may consider as deductible expenses: the remuneration of all employees including those exempted on their remuneration in accordance with Article 26 of the SEM Law.
  • Companies with SEM License may apply as credit to its ISR:
    • The amount paid for ISR or another analogous concept abroad (withheld) with respect to the net taxable income generated in Panama related with services rendered to non-residents.
    • The amount withheld by taxpayers in Panama as ISR according to Article 23 of the SEM Law.
  • When the tax credits are applied, the SEM entity must pay as a minimum of 2% of the net taxable income as ISR. Those credits may not be considered as accrued credits nor being subject to tax rebates.

ISR withholdings

  • The taxpayer in Panama who benefits with a service from a SEM company must withhold 5% on the amount to be sent to the SEM company as long as the service is needed for the production or conservation of the source of income or is being considered as deductible expense for the beneficiary of the service.
  • The SEM company who benefits with a service, copyright, loans, financing, rendered by an entity outside of Panama must withhold 5% on 50% of the amount to be sent. It Will be subject to ISR in Panama as long as the service has an impact in the Panamanian source of income of the SEM. If the SEM company is in loss when the remittance is performed, the withholding is applicable on payments outside of Panama.
  • The remuneration of the SEM executive with Permanent Personnel SEM Visa will be exempted of ISR, social security contributions and education tax, only if such remuneration is paid, assumed and recognized as labour expense in the accounting records of the SEM company.

Transfer Pricing

  • As of 2019 tax period, persons who carry out operations with related parties that are SEM companies, will be subject to transfer pricing.
  • Transfer pricing regime is applicable as well to the operation of the SEM company with related parties in Panama, or that are tax residents in other jurisdictions, or that are established in the Colon Free Zone, or that operate in an Oil Free Zone, in the Panamá Pacífico Economic-Area, City of Knowledge, or that are SEM, or in any other free zone or special economic areas.

Dividends Tax

  • SEM companies are exempted from Dividend Tax, Complementary Tax and tax applicable to branches. Rules of Article 733-A of the Fiscal Code are not applicable to SEM companies.

Tax Printers

  • SEM companies are not subject to the use of fiscal printers, but must have support of their activities.

Operations License Tax

  • SEM companies are not subject to the Operations License Tax as they do not have the obligation to obtain an Operations License.

Capital Gains

  • The earning or loss in the transference of stock issued by the SEM company will be subject to the capital gains regime, but at a fixed rate of 2% where the purchaser has the obligation to withhold 1% from the total value of the transference.

Tax Agreements

  • Tax Agreements between SEM companies and the Ministry of Economy and Finances will no longer exist.

Services Provided by the SEM Company

  • Financial assistance services that SEM companies can provide to their related companies were expanded, including expressly technical, financial and/or administrative assistance, as well as other support services including, without limitation, risk analysis, credit analysis, due diligence, compliance, custody of documents, data processing center and/or document and corporate treasury services, as well as inter-company loans.
  • In case that the above services are provided to companies within the group that carry out banking, insurance, reinsurance and/or securities business in Panama or abroad, the SEM company must previously inform the respective regulator of its intention to obtain a license for the provision of these services to a regulated and related company.
  • The financial assistance services included under Law 57 of 2018 do not include or authorize any activity that requires obtaining a special license issued by the Superintendency of Banks, the Superintendency of Insurance and Reinsurance, the Superintendency of the Securities Market, or any other similar regulator, as it may be required in order to provide financial services or conduct any other regulated activities in Panama.

Recipient of Services

  • Law 57 of 2018 incorporates a change in form to Law 41 of 2007, for the purposes of clarifying that unless the expressly provided exceptions under the Law, SEM companies may only provide services to companies within their economic group.

SEM License Requirements

  • Companies interested in obtaining a SEM License must comply with the requirements set forth by the Licensing Commission of the Multinational Company Headquarters, which requirements shall be set forth taking due regard of the parameters provided in Law 41 of 2007 (which include the assets of the company group, places where it operates, activities carried out, and stock exchange listing), as well as the minimum number of full-time employees and annual operating expenses for the company applying for a SEM License, which must be appropriate for the operations.

Legal Stability of Investments

  • Companies obtaining a SEM License as of 1 January 2019, will automatically be subject to Legal Stability of Investments’ Regime, from the issuance of the SEM License, this is: tax stability on national taxes for 10 years, and in municipal taxes for 5 years, including indirect taxes (includes custom stability and labour stability).

Operations License

  • SEM companies are not required to obtain an Operations License for the purposes of providing services authorized by the SEM Law. This provision, however, is not new. By virtue of Law 49 of 2009 (which amended Law 5 of 2007 that regulates the Operations License), it was already provided that SEM companies do not require an Operations License.

License Cancellation

  • SEM companies that carry out activities other than those authorized by their License in accordance with the provisions of the SEM Law, will be sanctioned with the cancellation of their license and will also be liable for unpaid taxes, including fines, surcharges, interest and penalties, in accordance with the provisions of the Tax Code of the Republic of Panama.

Permanent Residency for SEM Employees

  • Permanent Residency for SEM Employees is included as a new to those foreigners working for a SEM company, after a five (5) year-period, counted from the date of the approval of the Visa for Permanent Personnel.
  • Foreigners that obtain this permanent residency, will be able to continue working for the SEM company.
  • It is clarified that this option is subject to the payment of ISR, social security and educational tax applicable to the salary and other labor remunerations earned by the foreigner employee, including salary in kind.
  • The employee that obtains permanent residency will not require to carry out any additional process to work in a SEM company, nor to reside in Panama.

1 January 2018:

Law 57 2018 will enter into force.

30 June 2021:

  • Termination date of Tax Agreements of SEM companies having these types of agreements.
  • Date when SEM companies must have implemented the modifications of article 12 of La 41 of 2007, this is: requirements for the license.

Variable date:

SEM companies that are registered under the Legal Stability of Investment’s regime, before 25 October 2018, will keep it until their respective expiration dates.

Executive Decree No. 612 of October 22, 2018 

As of October 23, 2018, the National Immigration Authority creates the Humanitarian Matters for the Venezuelans Residents in Panama Office, to facilitate the applications for family reunion.

Through this office, the Venezuelan resident in Panama will be able to submit the petitions for the stamped visas of their family members in the fourth degree of consanguinity and second degree of affinity, so they can travel to Panama.

The Panamanian Consulate abroad, will proceed to stamp the correspondent visa with the reference number that the Humanitarian Office in Panama will provide.


  • The Venezuelan resident in Panama will be able to request the stamped visa on behalf of their family members in the fourth degree of consanguinity and second degree of affinity.
  • The executive decree became effective as of October 23, 2018.

Executive Decree No. 613 of October 22, 2018 

As of October 23, 2018, the nationals from the Republic of Cuba, that are interested in coming to Panama to visit and shopping will be able to obtain in the Panama Consulate in La Havana, a tourist card.

This tourist card will be granted to the nationals of Cuba that demonstrate they possess a self-account card or demonstrate that have travel to Panama or to a third country before. This tourist card is valid for one use, for a term of 30 days and it will cost $ 20.00.

If the person possesses a stamped visa to enter Panama, it will not need to obtain this tourist card. The stamped visa will still be issued.


  • The tourist card will be issued to the nationals from Cuba that plan to come to Panama to visit or shopping.
  • The nationals from Cuba that already possess the stamp visa to enter Panama, will not need to obtain this tourist card.
  • The Tourist Card is valid for one entry and for a maximum stay of 30 days.

The executive decree became effective as of October 23, 2018.

Panama, October 12, 2018. Morgan & Morgan was the only Panamanian law firm ranked in the first version of the “Top Companies with the Best Corporate Reputation in Panama”. Likewise, Juan David Morgan G., CEO of the company, and Carlos Ernesto González Ramírez, partner of the firm, were selected within the “Top Corporate Leaders”, as part of the 100 businessmen and executives with the best professional reputation in the country.

The study was prepared by Merco, the most important corporate monitor in Latin America and Spain, presented by Summa Magazine and verified by KPMG. The drafting process used a multi-stakeholder approach in which 1,098 surveys were conducted to different sources of information, addressing aspects of the companies such as: commercial proposal, current and potential customers, ability to attract talent, support for the development of society, among others.

“We are very proud to be recognized as one of the companies with the best reputation in Panama. This confirms our commitment to offer an excellent service to our clients and the great work that our organization carries out through its sustainability programs”, said Juan David Morgan G.

The ranking is available here.


Panama, October 15, 2018. Morgan & Morgan represented Engie Solar in the sale of its ownership in PanamaSolar2, S.A., to Latin Renewables Infrastructure Funds managed by Real Infrastructure Capital Partners.

Engie Solar through its subsidiaries Solairedirect Global Operations and Solairedirect Panama  designed, procured, developed and built a photovoltaic power plant “Pocri” with an installed capacity of 16MW located in the Province of Cocle, Republic of Panama, owned and operated by PanamaSolar2, S.A.

PanamaSolar2, S.A., won a public bid for the sale of photovoltaic energy to all three distribution companies operating in Panama, for the supply of electricity to the national market. Even though the power plant is still undergoing operational tests, it is already generating and supplying renewable energy through the national grid.

Ramon Varela, Partner, and Ana Carolina Castillo, Associate, participated in this transaction.