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Panama Reforestation Incentive Law
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LEGISLATIVE ASSEMBLY LAW 24
(November 23, 1992).
By which, incentives for
reforestation are established and
reforestation activities are
regulated in the Republic of Panama"
THE LEGISLATIVE ASSEMBLY DECREES
THAT:
Article 1. The present Law regulates
everything concerning reforestation.
The following definitions apply to
the present law:
1. Reforestation: The action of
planting FOREST SPECIES on land
lacking trees, whether for purposes
of commercial, scenic,
environmental, tourism,
agricultural, forestry, creation of
forested pastureland, energetic
pursuits, or for any other purposes.
2. Forest Investment: The disbursed
monies used for the purchase, rental
or lease of land, equipment,
machinery, motorized equipment,
farming and forest vehicles and
tools, nurseries, existing forest
plantations, research,
industrialization, insurance,
contracting and subcontracting for
the completion of the forest
development plan, sawmills, roads,
bridges, and other construction
projects necessary for the
development of reforestation, and to
cover all other common and
administrative expenses for the
operation and maintenance of
reforestation.
3. Indirect Forest Investment:
Monies disbursed for the purchase of
bonds, shares, and assets of
companies dedicated to reforestation
and all derived and related
activities.
Article 2. The Executive Branch,
conscious of its responsibility to
all associates and taking into
consideration the current growing
rate of deforestation and its grave
consequences for the country,
declares the following as necessary:
1. To increase all forms of
reforestation in the Republic of
Panamá.
2. To regulate the incentives this
Law refers to, through the National
Institute of Natural Resources (INRENARE)
and the Treasury Ministry, in
consultation with related
organizations.
These aforementioned regulations
must be in forced within six (6)
months from the enactment of this
Law, in order to stimulate and
encourage reforestation in all
forms.
3. To establish a thirty (30) year
period during which private
reforestation is given priority and
full support.
4. To promote the companies,
associations, community groups and
cooperatives involved in
reforestation activities.
5. To promote the establishment,
development, and improvement of the
forest industry so that
reforestation products are used as
raw materials.
6. To study, investigate and
promulgate all forms of
reforestation and the means to
accomplish same.
Article 3. Forest plantations are
considered to be forest crops, and
as such have the freedom to be
utilized and commercialized as
forestry products, nationally and
internationally.
Nevertheless, owners of forest
plantations should contact INRENARE
for market guidelines and the
corresponding transportation tables,
which are provided at no charge, the
data of which is used for
statistical records.
Forest plantations are the property
of a person or company that has the
corresponding property rights,
except for the restrictions
established by the Constitution
regarding private property.
Article 4. The benefit to persons or
companies derived from the
commercialization of products
obtained from forest plantations,
until the final cut of the forest
plantation, and whose establishment
is carried out within twenty-five
(25) years from the enactment of
this Law, will be exempt from income
tax, as long as the owners of these
plantations are registered in the
Forest Register of the National
Institute of Natural Resources (INRENARE).
Article 5. Forest investment or
indirect forest investments made by
a person or company will be one
hundred percent (100%) deductible
from income tax, as long as the
invested money is destined for the
reforestation activity.
For indirect forest investments, the
benefits established in this article
may be used just once; the persons
or companies who receive the
benefits described in this article
for their indirect forest
investments, will be obligated to
maintain their investments for a
minimum of five (5) years.
Forest investments and indirect
forest investments made in
organizations, private institutions
or educational institutions,
dedicated to the investigation and
research of forestry, the forest
industry or the promotion of the
forest sector, will be considered as
expenses which are one-hundred
percent (100%) deductible from
income tax, as long as the invested
money comes from a source other than
the reforestation activity.
The company that illegally sells
bonds, shares and assets which
benefit from this Law and does not
fulfill the objectives of this Law
is committing fiscal fraud.
Article 6. The following items are
exempt from import duty and other
duties when introduced to the
country: agricultural, forest,
industrial and motorized machinery
and equipment, materials, tools,
agricultural chemicals, forest
research equipment, seeds, cuttings
and other forest plants, and any
other elements necessary for the
exclusive us of reforestation
activities, handling and/or use of
forest plantations. The Treasury
Ministry will dictate the respective
regulations.
Article 7. The farms that use more
than fifty percent (50%) of their
land for reforestation or that have
a minimum of two hundred (200)
hectares reforested are exempt from
real estate tax and real estate
transfer tax.
Article 8. The profits generated by
bonds, shares and assets of
associations dedicated to
reforestation and its derived and
related activities, and the gains
obtained from the sale of these
bonds, shares, and assets, will be
exempt from income tax.
The owners of these bonds, shares
and assets, may use these
instruments as a guarantee for
banking transactions.
Article 9. The Executive Branch will
promote the creation of credit lines
with preferential interest rates and
"Preferential Forest Loans" for
reforestation, through official
credit institutions and private
banks, savings and loan
associations, finance companies or
any other company previously
registered in the Treasury Ministry,
whose commercial activity is to give
loans. The Executive Branch will
offer full support to hasten,
develop and strengthen this
activity.
The "Preferential Forest Loans" will
have a "Preferential Bond" of four
(4) percentage points lower than the
local market interest rate. The
persons or companies who make these
loans will receive a fiscal credit
every year for the first ten (10)
years of the loan; this fiscal
credit will be applicable to the
payment of national taxes, for an
amount equivalent to the difference
between the revenues the Bank would
have obtained if it had charged the
local market interest rate, and the
revenues received from the interests
of each of the "Preferential Forest
Loans." The Treasury Ministry will
dictate the respective regulations.
The interest earned by those
referred to in the first paragraph
of this article will be exempt from
income tax on loans granted to
finance forest investments or
indirect forest investments.
The interest paid for financing
reforestation and its derived and
related activities are one hundred
(100) percent deductible from income
tax.
Article 10. To encourage investments
in reforestation, the Executive
Branch will support alternatives to
convert forest plantations, either
through mortgage guarantee, bank and
commercial guarantees, Tax Payment
Certificates (Certificados de Abono
Tributarios-CAT), bonds, exchanges,
transfer of existing plantations,
participation in stock exchange,
trust funds and others.
Article 11. Every foreign
investor that makes a forest
investment or an indirect forest
investment of forty thousand balboas
(B/. 40,000) or more, within the
Republic of Panamá, will be eligible
for an immigrant visa as an
investor, through the purchase of
shares, bonds, assets or investments
of his own.
The investor must maintain the
forest investment until the final
cut of the forest plantation, and
the case of indirect forest
investment, must maintain the
investment for a minimum of ten (10)
years.
Article 12. The Executive Branch
will create all legal mechanisms in
the shortest time possible, to
conduct and make possible the
exchange of external public debt for
reforestation, in order to find
funds, nationally and
internationally, to finance private
reforestation through a five (5)
year cycle.
Article 13. The Ministry of
Agricultural Development, through
the Agrarian Reform Directorate,
will provide the proper protection
against squatting in every forest
plantation and every area destined
by its owners for reforestation. It
is a felony to invade reforested
land, so that there exists security
for the investment and incentives
for reforestation.
Article 14. Following a technical
study between the insurance
superintendent, insurance companies
and INRENARE, a system of Forest
Insurance will be developed to
indemnify forest plantations against
fires, plagues, diseases and other
damages.
Article 15. The Executive Branch,
for the purposes of this Law, will
improve and facilitate, as quickly
as possible, the transfer of
relevant technologies between
national and international
organizations, which contribute to
the development and optimum use of
forest resources.
Article 16. All the norms and
guidelines of the present Law will
also apply to forest plantations
created, or to be created, in the
deforested areas of the Panamá Canal
Water Basin and the protected wild
area, as long as the category and
norms for handling and development
established by INRENARE permit. For
these purposes, INRENARE will
establish the minimum requirements,
which the forest management plan
should fulfill for such areas, in
order to protect these areas and at
the same time, ensure the best
possible commercial use of
plantations under these conditions.
Article 17. All norms and guidelines
of the present Law will also apply
to the following deforested areas:
1. Areas surrounding water sources
that spring within a radius of one
hundred (100) meters in hilly areas,
and fifty (50) meters if they spring
in flat land.
2. In rivers and streams, the width
of the riverbed will be taken into
consideration; the riverbed width
will be left the same of both sides,
and be a strip of no less that ten
(10) meters.
3. Areas of water accumulation
within a radius of fifty (50) meters
from the water spring where the
water is used for local consumption.
4. Natural or artificial reservoirs
up to ten (10) meters from the
maximum level of water.
In these areas, the necessary
procedures for the cutting of mature
trees may be carried out, that is,
cutting tress that have reached the
plantation rotation cycle, and have
been previously marked by INRENARE.
The owner or investor will be
obligated to reforest the latter by
the next rainy season.
Article 18. Forest plantations
existing at the time of the
enactment of this Law, as well as
all others that will be established
while this Law is in force, shall
benefit from these incentives. For
these purposes, the owners of forest
plantations should inscribe in the
Forest Register of INRENARE. In the
case of forest plantations
established before the enactment of
this Law, the deadline to register
is five (5) years from the time this
Law comes into force.
Article 19. The owners of
plantations who refuse to comply or
who repeatedly fail to comply with
the guidelines of this Law and its
regulations, will be removed from
the Forest Register of INRENARE for
up to five (5) years and will have
the rights to incentives and
benefits granted by this Law
suspended for the same length of
time.
Article 20. This Law will come into
force at the time of its enactment. |
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