Global

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  • Service: Tax, International Corporate Tax, Global Indirect Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 9/4/2012

Panama - Tax incentives available for natural gas power plants 

September 4: A new law (effective 7 August 2012) establishes incentives for the construction and operation of natural gas power plants generating electricity.

Under Ley No. 41 (Spanish) [PDF 712 KB], published in the official gazette (Gaceta Oficial) on 6 August 2012, taxpayers that hold the appropriate license for the construction and operation of natural gas power plants generating electricity can benefit from the following tax incentives:


  • A maximum income tax credit of 5% with respect to direct infrastructure investments for the construction of natural gas power plants built after the law’s effective date (7 August 2012)
  • A customs duty exemption on equipment, machinery, materials, and other items required for the construction, operation, and maintenance of the power plant (a six-month transition period is available for construction beginning before 7 August 2012 during which taxpayers may request the exemption)
  • An exemption from tax for a period of 20 years with respect to the production and / or mechanical, electronic, electromechanical, metallurgic and electrical equipping activities by domestic or international businesses (already established or to be established) destined for manufacturing natural gas generators in Panama
  • An accelerated method of depreciation for equipment used in producing natural gas for businesses generating electric power or re-gasifying liquefied natural gas

Read an August 2012 report (Spanish) [PDF 171 KB] prepared by the KPMG member firm in Panama: Régimen de incentivos para el fomento de la construcción y explotación de centrales de generación a base de gas natural destinadas a la prestación del servicio público de electricidad




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