de Exportación, or IMMEX program (former
Maquiladora regime), by introducing anti-
abuse measures that may affect certain
companies operating under this regime.
Regional Hubs
Although many companies still use non-
Latin American “hubs” for the region, such
as Switzerland and the Netherlands, multi-
nationals are increasingly looking at estab-
lishing local regional hubs due to higher
demand and in an effort to optimize logis-
tics. Other multinationals have organically
established hubs in their largest markets
such as Brazil, Mexico or Argentina, which
can result in increased tax costs.
The usual suspects for regional hubs
have been territorial jurisdictions such as
Panama or Uruguay. The latter taxes only 3
percent of the net income earned from for-
eign operations—its “trading regime”—
leading to an effective rate of less than 0.75
percent. Panama is perceived as a regional
hub due to its strategic location, favorable
tax jurisdiction (free trade zones, territorial
manian headquarters is exempt from
income tax for those services rendered to
residents abroad that do not generate tax-
able income in Panama, provided such
services are rendered only to non-residents.
In addition to the common corporate
exemptions, there are additional tax bene-
fits that may be obtained for expatriate indi-
viduals meeting certain requirements and
operating under a particular type of visa.
FTZs and Manufacturing Programs
Most countries in the region generally have
some form of free trade zone (FTZ) or man-
ufacturing programs for exports—regimes
primarily intended for export manufactur-
ing or development of a particular industry
or geographical area. However, these pro-
The right supply chain strategies can provide
the opportunity to streamline cross-border
transactions, while optimizing the structure
from a tax and treasury perspective
tax system) and capable infrastructure.
Until recently Panama had not con-
cluded any tax treaties. In the past year,
however, Panama has been negotiating
treaties with several jurisdictions, and it
recently signed treaties with the Nether-
lands, Portugal, Mexico and Barbados.
Starting in 2010, Panama introduced some
changes to the Colon Free Zone companies,
such as levying a 5-percent withholding tax
on dividends that had previously been
exempt. The tax exemption on most foreign
source income still remains in effect, to the
extent that certain conditions are met. In
addition, a commercial license tax (up to
$50,000 a year) is also applicable for com-
panies operating in the Colon Free Zone.
Panama also has a headquarters com-
pany regime for regional HQ operations.
Under the regime, a company with a Pana-
grams have varying qualifications. For
example, to qualify for Brazil’s Drawback
Regime, a manufacturer must meet certain
minimum value-added requirements and
carry out only specific activities. Under this
program it is possible to import raw materi-
als through a buy-sell operation or a con-
signment agreement (tolling operation).
Today, local raw materials can also be
acquired using this Drawback Regime in
order to suspend the VAT (indirect taxes) on
the local acquisition.
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