Industrial Development Certificate

• Author: Rafael Amar L.
• Published date: 25 January 2024
• Law Firm: Blogs Alemán, Cordero, Galindo & Lee

Industrial Development

Certicate

To promote innovation and the development of the

industrial and agro-industrial sectors at the national

level, the Government of Panama established the

Industrial Development Certification program, better

known as “CIF.” Its main goals are renewal and industrial

innovation to diversify the productive apparatus,

industrial triggering, and linking to international markets.

Consequently, contributing to generating more jobs and

boosting the national economy’s development.

Legal Framework

Law 76 of 2009, which mandates the establishment of the

CIF, determines that once the certificate is authorized,

approved, and issued, it will provide the company

making an industrial investment with a non-transferable

tax credit, which does not earn interest and is exempt

from any tax.

General Requirements of CIF

Among the main requirements to apply for the CIF is that

he has made investments, among which are agricultural

businesses and manufacturing companies that carry out

the following activities:

• Invest in research and development;

• Invest in activities related to the implementation

of quality management and assurance systems and

environmental management;

• That they make a reinvestment of profits or

investment in the improvement of productive

processes in the creation of new products or

expansion of production capacity;

• Invest in training activities and qualification of their

human resources in the production area; and

• That they increase their production payroll.

The company will be able to apply for the CIF from

the fiscal year in which the corresponding investment

is made up to three years after such. Before applying

for the CIF, companies must register with the National

Industry Registry of the Ministry of Commerce and

Industries (MICI).

Benefits of being part of CIF

If the CIF is granted, a tax credit of up to 40% of the

investment cost will be recognized for eight years. This tax

credit may be used to pay all your national taxes, fees, and

own contributions. However, the CIF credit may not be

used to:

• Pay taxes, fees, or contributions caused in fiscal periods

before the issuance of the Resolution, except for the

fiscal period that generated the right to the CIF; or

• Pay minimum complementary taxes or dividends; or

• Pay Consumption Tax on Fuel and Petroleum

Derivatives; or

• Pay for taxes subject to the withholding system.

The CIF provides a tax benefit for those companies that

carry out essential investments in the Republic of Panama

within the applicable scope.

Author: Rafael Amar L. abogad0 en Alcogal