Executive Decree No. 238 of June 10, 2019
REQUIREMENTS TO APPLY FOR PERMANENT RESIDENCY FOR EXECUTIVES OF MULTINATIONAL HEADQUARTERS OFFICES (“SEM” for its acronym in Spanish).
As of June 11th, 2019, the requirements to apply for the Permanent Resident Permit for Executives of SEM companies who i) continue working at a SEM company, and ii) no longer work for a SEM company.Read more
Executive Decree No. 249 of June 10, 2019
PROCEDURE AND REQUIREMENTS TO APPLY FOR PERMANENT RESIDENCY FOR FOREIGNERS WHO HAVE OBTAINED RENEWAL OF THEIR PROVISIONAL RESIDENCE PERMITS OF 10 YEARS AND 6 YEARS ARE ESTABLISHED.
As of June 13th 2019, the date on which this Executive Decree became effective, the procedure and requirements for applying to the Permanent Residency for foreigners who have obtained their 10 or 6-year Provisional Residence Permits are established.Read more
Executive Decree No. 237 of June 10, 2019
EXECUTIVE DECREE NO. 182 OF MAY 28th 2019, THROUGH WHICH THE TEMPORARY RESIDENCE PERMIT AS EMPLOYEE OF AVIATION COMPANIES WAS CREATED, IS MODIFIED.
As of June 11th 2019, the current Executive Decree for the Subcategory of Temporary Resident as Employee of Aviation Companies located in the Republic of Panama, is modified.Read more
In this edition of Chambers & Partners, the securities team of Morgan & Morgan summarized the key aspects and developments in Panama, where the activity in the securities sector has been performed in recent years as an alternative form of financing.
The guide is available here
As of May 28th, 2019, five (5) Executive Decrees were enacted to modify rules related to the granting of residence and work permits. The main changes are the following:
NATIONAL IMMIGRATION AUTHORITY.
- Stay Visa for citizens of the United States of America:
A new category of Stay Visa is created for citizens of the United States of America, for reasons of studies, investment, temporary or technical work, or labor transfer. It will be granted for a term of one (1) year, extendable annually up to five (5) more times.
- Temporary Resident as Employee of Aviation Companies:
The category of Temporary Resident is modified for Employees of Aviation Companies based in the Republic of Panama, who will be granted a residence permit for two (2) years, extendable for the same term, until completing a total period of six (6) years.
MINISTRY OF LABOR
- Work Permit for Permanent Residents:
A new category of work permit is created for permanent residents, which will be granted for a term of three (3) years, extendable for the same term.
- Work Permit for Foreigners married to a national:
It will be now granted for two (2) years the first time and the extension for three (3) years each time. Previously, it was granted for a term of one (1) year, extendable for one (1) year each time.
- Work Permit for Foreigners, within ten percent of the ordinary personnel:
It will now be granted for a term of two (2) years, extendable for the same time. Previously it was granted for a term of one (1) year, extendable for one (1) year each time.
- Work Permit for Expert or Technicians, within fifteen percent of the specialized personnel:
It will now be granted for a term of two (2) years, extendable for the same time. Previously, it was granted for a term of one (1) year, extendable for one (1) year each time until completing five years.
- Work Permit Marrakech Agreement:
The minimum number of workers that a company must have of less than ten (10) workers is established. The company must have a minimum of three (3) Panamanian workers and may only have as a foreigner the worker applying for the work permit.
- Work Permit for Professional Foreigner:
It will now be granted the term of two (2) years, the first time, and the extensions for three (3) years each time. You can apply for this work permit with a temporary ID card; that is, even by not having the resolution of approval of residence permit.
In the year 2000, the United Nations General Assembly designated April 26 as World Intellectual Property Day. The purpose of this is to highlight the role that intellectual property rights play in encouraging innovation and creativity.
Across the globe, and at the initiative of the World Intellectual Property Organization (WIPO), there is a campaign every year to attract public interest to issues related to Intellectual Property. In 2019, the World IP Day Celebration takes the name “Reach for Gold: IP and Sports” and looks closely at the world of sports and how innovation, creativity and IP rights support the development of this industry around the globe.
Within the framework of this celebration, two activities will take place in our country. WIPO, the General Directorate of the Registry of Industrial Property (DIGERPI), the World Customs Organization (WCO), the Patent and Trademark Office of the United States of America (USPTO), the Spanish Patent and Trademark Office (OEPM) and the Inter-American Association of Intellectual Property (ASIPI) have prepared a sub-regional Seminar on the enforcement of Intellectual Property (IP) rights for the agencies responsible for enforcing said laws. This Seminar aims to promote the importance of monitoring intellectual property rights in the trade of goods.
On the other hand, the University of Panama organizes an initiative that consists of the creation of a space for academic, scientific and cultural innovation of great impact to develop the topic of IP and sports. This activity will be aimed at making the general public aware of the importance of Intellectual Property Law in trademark registration and how it promotes the development of different economic sectors.
Intellectual Property, tech and the legal sector
On January 31, 2019, WIPO published its first study on “technology trends”, focusing on artificial intelligence (AI) and where there is already a marked growth in the number of applications for patents related to the technology sector. It is a reality that there is already a great variety of products that will change our lifestyle, better to say, that they are already changing it, for example “bitcoins”, and the “internet of things” (IoT), where you can see a clear example of where the world is heading to in relation to mass consumption through technological means. All this leads us to suppose that, although the majority of patents in the world come from industrialized countries, in Panama and in the rest of Latin America, we must be prepared for the demand for services that this sector could bring in the immediate future.
In the legal sector, the replacement of attorneys by artificial technology that provides “legal advice” is already a reality that aims to displace human intelligence with AI, but what is the result of these advances? We will have to wait and see, since the variables of a case cannot be considered by artificial intelligence, this without mentioning the emotional intelligence that should be key in any legal advice, especially in countries of our region.
Benefits of our IP legislation and situation with China
Our country has a highly developed legislation for the protection of Intellectual Rights in general, including trademarks, patents, industrial models, plant varieties and copyrights. Our laws allow the effective protection of intellectual rights by their legitimate owners and for their exclusive use.
Latin America is a very attractive market for producers in Asia (China, Japan and Korea), North America and Europe, whose products land in Latin American markets. Most of these products transit through the Panama Canal, Panamanian ports or the Colon Free Zone. Therefore, whether you plan to protect a brand, register it in Panama for later use in the country or region, or because Panama is the gateway to the rest of the emerging markets in Latin America, Panama should always be on the list of countries that register and use a brand.
In the special case of China, our country and the Asian giant held a fifth round of negotiations of the Free Trade Agreement (FTA) from April 24 to 26, 2019 in Beijing (China). This round consists of the chapters on financial services, market access and customs procedures. The Intellectual Property chapters were proposed and negotiated by Panama and they were already approved by both parties in the Fourth Round of negotiations in 2018. For this chapter, the negotiations made by Panama with the European Free Trade Association (EFTA) have been used as a basis; and the most important regarding the negotiation with China is that Panama fully complies with all the articles proposed in said negotiation and does not need to update its legislation which, in other words, is one of the most complete in the region, especially in matters of border protection against piracy.
Mrs. Jazmina Rovi, partner of Morgan & Morgan, took office as new Chairman of the Board of Directors of the Panama Maritime Law Association (APADEMAR, for its acronym in Spanish) for the 2019-2020 term.
The election took place on March 28, 2019 at the National Bar Association of Panama where over 80% of the members of APADEMAR exercised their right to vote in support of the new Board of Directors.
Mrs. Rovi has over 20 years’ experience representing ship owners, charterers, leading financial institutions and funds on ship financing and registration under Panama flag including drafting and legal advice on enforcement of ship mortgages and pledge of shares of Panama ship owning companies. She has also been involved in the drafting of various Panama maritime legislations, and this is the third time she is elected to lead APADEMAR.
The new Board of Directors is comprised also by Pilar Castillo (Vice President), Alexis Herrera Jr. (Treasurer), Maria Lourdes Galan (Assistant Treasurer), Ramon Franco (Secretary) and Joaquin De Obarrio (Assistant Secretary).
The 2019 edition of Latin Lawyer recommended Morgan & Morgan as the largest firm in Panama. “A large headcount and an established presence in the market gives Morgan & Morgan the manpower and experience required to guide some of Panama’s most significant transactions”, states the guide.
Partners Juan David Morgan Jr., Francisco Linares, Enrique De Alba, Jazmina Rovi, Inocencio Galindo, Francisco Arias, Ramon Varela, Roberto Lewis, Raul Castro, Ricardo Aleman, Albalira Montufar, Maria Teresa Mendoza, Mercedes Arauz de Grimaldo, Enrique Jimenez and Jose Carrizo, received mentions as key players.
Fanny Evans, associate at Morgan & Morgan
The British Virgin Islands (BVI) has passed legislation requiring certain legal entities carrying on relevant activities to demonstrate adequate economic substance in the BVI. The owners of any company or limited partnership registered or incorporated in the BVI should be aware of this legislation and consider how they may be affected.
The Economic Substance (Companies and Limited Partnerships) Act, 2018 (the Act) came into force on January 1st, 2019. It addresses the concerns of the European Union (“EU”) Code of Conduct Group for Business Taxation and recent OECD guidance around the economic substance of entities in jurisdictions with low or zero corporation tax. The Act demonstrates the BVI’s continued commitment to international best practice including the BVI’s implementation of the OECD’s Base Erosion and Profit Shifting (BEPS) framework and related EU initiatives.
The Act follows closely the approach taken to address the same issue by the Crown Dependencies of the UK (Jersey, Guernsey and the Isle of Man) and the other UK Overseas Territories including the Cayman Islands and Bermuda.
What is the effect?
The Act imposes economic substance requirements on all legal entities carrying on “relevant activities” unless they can evidence that they are tax-resident elsewhere. Entities which do not carry on a relevant activity are not subject to the economic substance requirements but may be subject to certain reporting obligations.
The relevant activities are:
1) banking business
2) insurance business
3) fund management business
4) finance and leasing business
5) headquarters business
6) shipping business
7) holding business
8) intellectual property business
9) distribution and service centre business
We look forward to further guidance by the government to assist in determining if a particular entity is carrying on a relevant activity or if exemptions may apply.
What are the reporting obligations and who will have access to information?
The information will be provided to the BVI International Tax Authority (ITA) via the BOSS system. BVI and foreign registered companies and limited partnerships will be required to report certain information to their BVI registered agent for this information to be uploaded onto the Beneficial Ownership Secure Search System regime (BOSS) so that the BVI International Tax Authority (ITA) can have access to it.
The ITA may use the information to discharge its duty to supervise and enforce the economic substance requirements. Information may be disclosed by the ITA to relevant overseas authorities in certain cases, including where there is breach of the economic substance requirements or where the entity claims to be tax resident in an EU member state.
What are the penalties?
Penalties are imposed for failure to provide required information or providing false or misleading information and for operating a legal entity in breach of the economic substance requirements + which may include fines, imprisonment and/or strike-off.
What is next?
The Regulations, Rules and formal Guidance Notes, will be issued within the following weeks. They will certainly provide further detail and a clearer picture so that all relevant entities will be able to undertake an internal review to determine what measures, if any, they should take in order to achieve compliance. We believe that, for many entities, the impact will be minimal and compliance will be straightforward.
We will leave, in our opinion, the best news for the end because we assume that after having read the above, the most important question to answer is:
Are these efforts being welcomed by the EU?
The EU has confirmed that the British Virgin Islands and Cayman Islands have not been included on the EU’s updated list of non-cooperative jurisdictions for tax purposes (known as the EU blacklist), which was published on March 12th, 2019. The EU’s decision confirms that both jurisdictions have implemented good tax governance principles which address the EU’s earlier concerns on the economic substance of certain entities in low or no tax jurisdictions.
BVI has overcome many pressures from various international organizations. This ability to respond demonstrates that is a highly regulated and stable jurisdiction willing to protect the wide array of services it offers. With the Economic Substance legislation BVI remarks its commitment to continue being the leading financial center.
The National Immigration Authority communicates new regulations for the immigration processes of Venezuelans in Panama
By means of Executive Decree No. 123 of March 26th, 2019, the nationals from Venezuela who currently live in Panama and hold an expired passport will be able to use this passport to file their immigration processes, provided they have an extension stamp issued by the Consulate of Venezuela.
- This Executive Decree only applies to nationals from Venezuela.
- The Venezuelans in Panama will be able to file their immigration processes, provided they have an extension stamp in their passports, issued by the Consulate of Venezuela.
- The Immigration Authority will accept the expired passports with the extension stamp up to 2 years after the original expiration date of the passports.
- This Executive Decree is effective as of March 27, 2019 for 6 months.
With the enactment of Law No. 81 on Protection of Personal Data, the Republic of Panama aims to establish the principles, rights, obligations and procedures that regulate the protection of personal data, also considering their interrelation with private life and other rights and fundamental freedoms of citizens, by natural or legal persons, public or private law, lucrative or not, that process personal data in the terms provided in the Law.
Storage or transfer of personal data:
The storage or transfer of personal data of a confidential, sensitive or restricted nature, outside the territory of Panama, by the company responsible for the storage of data or custody thereof, will be allowed, provided that the company and/or country of residence have standards of protection comparable to those of the Law or if the entity that transfers the data makes sure to adopt all the necessary steps so that it is protected. The following cases are excepted from the aforementioned requirements: (1) when the owner has granted its consent for the transfer; (2)when the transfer is necessary for the execution or enforcement of a contract by the interested party; (3) in cases of bank or money or stock exchange transfers; and (4) in case of information whose transmission is required by law or in compliance with international treaties ratified by Panama.
It establishes the obligation to develop procedures, protocols and processes for the management and transfer of data that includes the appropriate security methods.
Consent of the owner of personal data:
It is established that the processing of personal data can only take place as permitted in this Law, or with the consent of the owner of the data.
Definition of sensitive data:
Sensitive data refers to the private sphere of its owner or whose misuse could give rise to discrimination or entail a serious risk for him/her– for example, of racial origin, religious beliefs, union affiliation, political opinions, data related to the health, life, preference or sexual orientation, genetic data or biometric data, among others aimed at uniquely identifying a natural person.
Sensitive data can not be transferred except: (i) by explicit consent of the owner; (ii) when necessary to safeguard the owner’s life; (iii) when it is necessary for the recognition, exercise or defense of a right in a judicial proceeding; and (iv) when it has a historical, statistical or scientific purpose.
Rights of Access, Rectification, Cancellation, Opposition and Portability:
The rights of owners of personal data to exercise over those responsible for database processing are: (i) Access (to obtain the data and know the purpose and origin for which they were collected), (ii) Rectification (to access and request correction, modification or update), (iii) Cancellation (to request deletion of data), (iv) Opposition (refusal to provide or revoke its consent) and (v) Portability (right to obtain a copy of all personal data in a structure matter in certain circumstances).
The database custodians that transfer personal data stored in a database to third parties must keep a record of them, which must be available to ANTAI, if requested to do so.
Personal Data Protection Council:
The Personal Data Protection Council is created, which has the following functions: to advise ANTAI in relation to the Law, recommend public policies, evaluate cases submitted for consultations and develop internal regulations and it is composed by:
- the Minister of the Ministry of Commerce and Industries;
- the General Administrator of the Authority for the Protection of Consumers and the Defense of Competition (ACODECO);
- the General Director of ANTAI;
- the Ombudsman, or its nominee;
- a representative of the National Council of Private Enterprises (CONEP);
- a representative of the National Bar Association;
- a representative of the Panama Banking Association;
- a representative of Electoral Tribunal; and
- a representative of the Chamber of Commerce, Industry and Agriculture.
The National Government Innovation Authority will have the right to address the council as a technical advisor.
Duty to compensate for pecuniary and/or moral damages caused by the unlawful handling of personal data.
National Authority for Transparency and Access to Information (“ANTAI”):
Right to appeal against ANTAI in case of claims to any database storage operator to resolve differences in the exercise of the aforementioned rights. The competent body for the fulfillment of the obligations of this Law is ANTAI except in the case of estities regulated by special laws, in which case the claimant must first submit its claim to the competent regulatory authority. The ANTAI, through the Directorate established to consider the matter, is granted the powers to impose sanctions. The decision of the Directorate in the ANTAI established to consider these proceedings may be challenged through a reconsideration appeal. A subsequent appeal may be filed with the Director General of ANTAI.
The sanctions may be between US$1,000 and US$10,000, depending on the severity and recurrence and may be a written warning, citation before the ANTAI, fine, closure of the database registration or suspension and disqualification of the storage activity and/or treatment of personal data. There are minor infractions (for example: not sending the information required by ANTAI), serious infractions (for example: processing data without the owner’s consent) and very serious infractions (for example: the collection of personal data in a malicious way).
This law will take effect two (2) years after its promulgation.