Executive Decree No. 7 on Semiconductors in Panama

The decree offers a comprehensive package that reduces costs (through incentives), mitigates risks (with a strategic framework and funding), facilitates operations (with immigration and legal flexibility), and aims to develop human capital for the industry.

Summary of Key Points

1. Long-Term National Strategy

Legal framework and state action plan that provides legal certainty for future technological investments.

2. Direct Tax Incentives

• 30% Income Tax Credit for investments in Research and Development (R&D).

• Income Tax Deduction for contributions to specialized training of Panamanian talent in STEM fields.

3. Attraction and Operational Flexibility

• Immigration benefits for hiring highly qualified foreign talent and for investors.

• Option to utilize existing special regimes (such as SEM or EMMA) to optimize fiscal and operational efficiency.

4. Support Financing

Creation of the National Semiconductor Fund, managed by SENACYT, to subsidize and finance projects in the sector.

5. Broad Scope of Eligible Activities

Incentives are not limited to chip manufacturing but cover the entire value chain, including:

• IC design

• Assembly and testing (ATP)

• Materials development

This makes investment attractive for companies of various sizes and specializations within the ecosystem.

The "Panama Digital Hub" National Strategy

1. State Policy and Legal Certainty

The decree formalizes the adoption of the National Strategy for the Development of the ICT Sector 2018–2022, elevating digital transformation to a state policy. This sends a clear signal of continuity and government support for long-term technology investments.

2. Focus on High-Value Niches

The strategy defines priority areas for investment, moving away from a generic approach. It focuses specifically on making Panama a regional leader in:

• Digital Logistics

• FinTech (financial technology)

• Software development for the services sector

3. Governance and Business Facilitation

It establishes a clear governance structure led by the Innovation Council and the AIG (National Innovation Authority). For investors, this means there is a centralized coordinating body responsible for eliminating bureaucratic barriers and streamlining the implementation of technology projects.

4. Ecosystem and Human Talent Development

The decree prioritizes not only physical infrastructure but also the development of human capital ("soft infrastructure"). It commits to strengthening technical and bilingual academic offerings to ensure that incoming companies have access to a skilled local workforce.

5. Leveraging Regional Connectivity

The central objective is to monetize Panama's geographic location and fiber optic connectivity (where seven submarine cables cross). The vision is to move from being a data "transit hub" to a value-added center where digital services are processed, stored, and distributed throughout Latin America.

Environmental Technologies in Panama

Clear incentives for renewable energy, decarbonization, and electric mobility, aligned with the national energy transition (Law 295 of 2022; Executive Decree No. 51 of 2023).

5 Key Factors for Investing in Technology and Innovation in Panama

1. Regional Platform to Scale Technological Operations
Panama allows you to start operations in a stable market and quickly scale to North America, Central America, the Caribbean, and South America from a single operational base.

2. Reliable Digital and Energy Infrastructure
International fiber optic networks, multiple submarine cables, and a stable electrical system support critical operations such as data centers, advanced manufacturing, and digital services.

3. Specialized regimes for high-value industries
Frameworks like EMMA and other special regimes reduce entry barriers, operating costs, and regulatory risks for technology and innovation companies.

4. Regulatory environment favorable to innovation
Panama combines regulatory flexibility with legal certainty, allowing the development of Fintech, the digital economy, and emerging technologies under clear rules.

5. Country's commitment to sustainability and innovation
The energy transition, electric mobility, and clean technologies are integrated into the national development agenda, creating long-term investment opportunities in green innovation.