Law that creates a Special Regime for the establishment of transnational professional sports academies of baseball or other sport disciplines in Panama

The enactment of Law No. 219 of Thursday, June 3, 2021, seeks to promote the development of minor baseball categories and creates the Special Regime for the establishment of transnational professional sports academies of baseball or other sports disciplines in Panama.

The law indicates that its main purpose is found in:

• Promoting national and foreign investment for the construction of infrastructures for the comprehensive and high-performance training of athletes.
• Encouraging sports interest in young people between the ages of nine and eighteen, so that they can engage in the sports disciplines of professional baseball or other sports.
• Enhancing the sports capacities of national and foreign young people, both at a sports and educational level.
• Encouraging the establishment of transnational sports academies, so that they invest in the establishment of professional baseball academies or other sports disciplines.
• Providing alternatives beyond the playing field so that these young people have a greater chance of opting for sports scholarships at foreign universities.
• Stimulating the economy of the country with the development of all those activities that generate the construction, development and operation of professional transnational high performance sports academies at the national level.

In addition, the law provided for the creation of the Panamanian Baseball High Performance Center Patronage, as well as the assignment of its duties and attributions, patrimony, Board of Directors, and their functions, among others.  Additionally, it determines the exemption from the payment of taxes and levies of the Patronage; at the same time that it provides that any contribution or donation made to the Patronage will be deductible from the payment of tax on the donor’s income.

On the other hand, by Law 219 the Reinvestment Program for the Development of Minor Categories is also created to be administered by the Patronage to develop the foundations of minor category baseball.

Tax Regime | Tax Incentives

The law’s third chapter establishes a regime that provides tax incentives to transnational professional sports academies of baseball or other sports disciplines that are established in Panamanian territory.

Within these tax incentives we can find:

• 5% income tax on profits derived from carrying out its activities.
• Exemption from the payment of property tax on the construction of infrastructure for the development of said academies up to an amount of ten million dollars (US $ 10 million) for a period of 20 years, as of the date the construction permit is granted.
• Exemption from all taxes, contributions, fees, encumbrances or import duties on all types of merchandise, products, equipment, services and other goods in general introduced to the country and other sports equipment in general introduced and provided in its operations in Panama.
• Exemption from the payment of property tax on the land and the construction of the infrastructure for the development and operation of transnational professional sports academies, up to a maximum amount of ten million dollars (US $ 10MM) for a period of 20 years, from the date the construction permit is granted.  This exemption applies to local investors who build the academies and grant the infrastructure on lease.
• Up to 50% of the income from the operation generated by the leasing of the infrastructures may be considered non-taxable income from the local developer investor income tax.
• Exemption from the payment of tax on the transfer of personal property and the provision of services on all types or classes of merchandise, products, equipment, goods, services, and other sports equipment, for a period of ten years from the beginning of its operations.

Immigration Regime | Migration Incentives

The fourth chapter of Law 219 also establishes an immigration regime and incentives for sports teams of transnational professional sports academies for baseball or other sports that are established within national territory.

Among these immigration incentives there are:

• Executive Personnel Visa that grants the right to work only within the transnational professional sports academy to executive personnel and professional sports teams. It is valid for two years, renewable for the same period (unless the employment contract establishes a shorter term). The card also grants a multiple entry and exit visa and it will not be necessary to carry out any additional procedure to reside or work temporarily in Panama.
• Temporary Technical Staff Visa, granted to those foreigners who provide technical or training services for transnational professional sports academies of baseball or other sports disciplines, which allows them to reside and work temporarily in Panama for a renewable period of one year.  It also includes the multiple entry and exit visa and it will not be necessary to carry out any national procedure to reside or work temporarily in Panama.
• These visas may also include the applicant’s dependents, meaning spouse, children under 18 years – or 25 years, if they study and are economically dependent on the applicant; or the parents of the applicant, who remain within the national territory under his / her responsibility; and any minors whose guardianship is accredited by him / her. The validity of this visa cannot be longer than that of the applicant.
• Athletes Visa: granted to foreigners, either minors or adults, who are hired as students to be trained for a term of one year, renewable. The card also grants a multiple entry and exit visa and it will not be necessary to carry out any national procedure to reside or work temporarily in Panama.
• In order to turn Panama into a sports logistics hub and raise the level of athletes, a Special Short-Stay Migration Program is also created for regional events and coaching staff. In this way, the National Migration Service will ensure the development of the program so that professional teams can organize events with the participation of foreign coaches, technical teams and players.
• Whoever holds any of these types of visa will be exempt from paying income tax, social security and educational tax.
• These foreigners must have medical insurance for themselves, their dependents and guardians, and the sports academy will be responsible for such coverage.
• Likewise, these foreigners may not engage in activities other than those carried out by the sports academy.
• None of these visas grant permanent residence, and all these applications must be made through a legal representative at the special section made for this process at the National Directorate for Investment Promotion of the Ministry of Commerce and Industries of Panama.

You may access the law in Spanish in the following link: https://www.gacetaoficial.gob.pa/pdfTemp/29301/85402.pdf