Environmental Incentives in Panama for Recycling Plants and Companies.

Since 2021, Panama has enacted environmental benefits, including exemptions and tax incentives effective from fiscal year 2022. These measures are designed to promote sustainable business practices, facilitate corporate environmental conversions, and support the development of the recycling industry within the country.

Tax Exemptions for Industrial Recycling Plants

The following exemptions and benefits are established for a period of 5 years for the operation of Industrial Recycling Plants in Panama:

  • No income tax (though annual income tax returns must be filed for informational purposes).
  • No dividends or participation tax among partners and shareholders.No dividends or participation tax among partners and shareholders.
  • No import tax on equipment and machinery related to recycling.

Tax Exemptions for General Commercial Companies

Local companies that convert and replace their plastic products with biodegradable materials, endorsed by the Ministry of Environment and the Panama Tax Authorities, will enjoy the following incentives for a period of 5 years:

  • No import tax on equipment and machinery related to recycling operations.
  • 15% discount on income tax within their Company Tax Returns.

Incentives under the law do not apply in the following cases:

  • When replacement materials are synthetic plastics labeled as degradable, biodegradable, oxo-biodegradable, bioplastic, bio-based, recycled, or any other plastic derived from petroleum and other hydrocarbons.
  • When recyclable materials are collected from abroad, as the law stipulates that recycling must occur within the territory of Panama

Applicable Law:

  • Law 223 of 2021


  • Law 76 of 2019 does not contain specific incentives for environmental activities. It regulates Panama’s administrative tax processes related to claims and judicial proceedings for individuals and companies with the Panama Government.

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