How to Establish Your Multinational Company Headquarters in Panama

A Multinational Company Headquarters (SEM) is a corporate entity that coordinates and manages regional operations for a given multinational company. In Panama, the SEM regime was designed to attract global companies, facilitating their integration at the regional level under a solid and beneficial legal framework.

Choosing Panama as the epicenter of your multinational headquarters has multiple advantages:

• Strategic location: It connects North, Central and South America.
• Pro-business environment: Robust infrastructure, tax exemptions and ease of international trade.
• Competitive tax regime: SEM companies enjoy unique and attractive tax incentives.
• Stability: Panama has one of the most stable economies in Latin America.

Below, we guide you through the key steps you must follow to establish your Multinational Company Headquarters under the SEM regime in Panama:

1. Hire Legal Advice: Collaborate with business law experts, such as Limitless Legal, to ensure compliance with all legal requirements.
2. Submit an Application to the Ministry of Commerce and Industries (MICI): The request must meet the standards of the SEM Technical Secretariat.
3. Define your Core Operations: Make sure that your company provides services eligible under the SEM regime, such as financial support, logistics operations or inventory management.
4. Establish Your Physical Presence: Although you don't need complex infrastructure, SEMs are expected to have minimal physical space in Panama.
5. Get the SEM License: After the approval of your application, you will receive your license that allows you to operate as an SEM in Panama.

For your company to operate as an SEM, it is essential to meet the following requirements:

• Provide evidence that your multinational company operates in at least two countries other than the one in which it is headquartered.
• Explain the activities you will carry out in Panama and how these contribute to the development of regional operations.
• Prove a company's minimum equity (generally, this is several million dollars).
• Demonstrate contracts or investment plans that justify your interest in the SEM regime.
• Ensure the hiring of local employees and the training of human talent in Panama.

Once these requirements are met and the SEM license is issued, your company will be able to enjoy the extensive tax and immigration benefits that this regime offers.

The SEM regime not only facilitates the process of establishing a business headquarters in Panama, but it also guarantees unparalleled fiscal and operational advantages:

• Tax Exemptions: SEMs are exempt from income taxes and tax on dividends generated by their international activities.
• Migratory Benefits: Expedited work permits and special visas for employees and their families.
• Reducing Legal Costs: Exemption from certain import taxes for equipment related to SEM operations.
• Administrative Simplification: The SEM entity must meet only minimum financial reporting requirements.
• Access to Talent: Hiring local and international employees with optimized migration processes.

Many well-known brands are already operating under the SEM regime in Panama. Examples include:

• Procter & Gamble: With its regional center in Panama, this company manages operations for all of Latin America.
• Adidas: Its logistics headquarters in Panama manages distribution in multiple countries.
• Nestle: It uses Panama as a strategic base for operations in the region.

These companies have validated the stability and advantages of operating in Panama, demonstrating that this regime is ideal for multinationals seeking to maximize efficiency and benefits.