Panama’s National Assembly approved a law that requires multinational entities domiciled in the country to demonstrate real local operations or face a 15% tax on passive foreign income, the Ministry of Economy and Finance said on Wednesday.
- The law is intended to help satisfy European Union tax transparency requirements and support the country’s removal from EU monitoring lists.
- “At the fiscal level, it requires multinationals to demonstrate that they have physical operations and real activity in a country, beyond just seeking tax advantage,” the National Assembly said in a separate statement on Wednesday.
- Entities that fail to prove economic substance — qualified personnel, adequate facilities, strategic decision-making and real operating expenses in Panama — face a flat 15% rate on net taxable passive foreign income.
- Passive income covered by the law includes dividends, interest, royalties, capital gains and real estate income earned abroad by members of multinational groups.
- The legislation, which President Jose Raul Mulino must sign into law, takes effect from fiscal year 2027 and gives the executive branch 90 days to issue implementing regulations.
- The law grants special treatment for income from intangible assets developed in Panama, such as patents, trademarks and copyrights, to encourage innovation.
- The merchant marine sector and financial entities supervised by the banking, securities and insurance regulators are expressly excluded from the regime.
US efforts to end the war with Iran were dealt a setback after a commercial vessel was apparently seized by unauthorized personnel near the United Arab Emirates, increasing uncertainty over control of the critical Strait of Hormuz.
The ship, whose identity wasn’t immediately clear, was taken 38 nautical miles off the UAE coast and is now bound for the Islamic Republic, the UK Maritime Trade Operations said in a statement on Thursday.
The incident came amid an apparent uptick in vessels transiting the strait, which usually handles about a fifth of the world’s oil and liquefied natural gas supply. Its effective closure since the US and Israel began bombing Iran in late February has upended energy markets and led to global supply shortages.
US Secretary of State Marco Rubio urged China to persuade Iran to help reopen Hormuz, saying a protracted closure threatens the economies of countries that Beijing relies on for exports.
“We made the argument to the Chinese — it’s in their interest to resolve this,” Rubio told Fox News on Air Force One as he traveled to China with President Donald Trump. “We’re hoping to convince them to play a more active role in getting Iran to walk away from what they are doing and trying to do now in the Persian Gulf.”
Rubio’s remarks signal the war in Iran is high on the agenda for talks between Trump and Chinese President Xi Jinping over the next two days. China is the Islamic Republic’s largest oil buyer and a key diplomatic partner, supplying Tehran with goods from consumer products to electronics.
The US sees that relationship as an opportunity to enlist Beijing’s help in reaching a deal with Iran to end the war, which has been locked in stalemate since a ceasefire was agreed just over a month ago.
