Panama


QUIJANO & ASSOCIATES

Authors: Jorge Quijano (Associate) and Luis Miguel Rojer (Associate)
Contact: quijano@quijano.com


Overview of legal measures as of July 10th, 2020 as response to the coronavirus.

Please note: Due to the extraordinary situation, the legislation is in continuous evolution and may change very fast.

1. INTERVENTIONS AND RESTRICTIONS

1.1 Legal basis

Government of Panama established a National State of Emergency:

a. Resolution No. 11 of March 13, 2020

b. Objective: Facilitate resources and promote actions with the arrival and spread of the coronavirus in Panama

1.2 Boder

All international commercial flights are suspended from March 22 onwards. All commercial domestic flights since March 25.

Exceptions on the closure of international borders have been made for the repatriation of Panamanian citizens or in the case of foreign citizens wishing to return to their own countries. These exceptions are canalized through Panamanian consulates and embassies. Any international passenger arriving in Panamá is required to isolate him/herself for 14 days.

1.3 Visas

Effective June 8, Panama’s National Immigration Service started a 90-day period during which foreigners may submit applications to maintain or adjust their immigration status in Panama without incurring fines. This applies to applicants whose immigration status expired between March 13 and June 7.

1.4 Export control

Transport of goods is not affected by the measures.

Elimination of import tax for cleaning products, medical supplies, raw materials, cleaning installations.


1.5 Prohibition of crowds

All events and activities involving the agglomeration of people remain suspended until further notice.

1.6 Lockdown

Mobility restrictions (of three days a week two hour outside time, based on gender and ID number.

One week after lifting the quarantine measures on the 1st of June, the mobility restrictions (of three days a week two hour outside time, based on gender and ID number) were implemented again from the 8th of June onwards in the provinces of Panama and Panama Oeste. Women can go out their designated 2 hours on Monday, Wednesday, and Friday. Men on Tuesday, Thursday, and Saturday. There is a weekend curfew from Saturday 5 p.m. to Monday 5 a.m. The measure has been taken after an increase in cases and will last for an indefinite amount of time. In the whole country there is an evening curfew from 7 p.m. till 5 a.m. the next day.

1.7 Open Businesses, Industries and allowed Gatherings

As a preventive measure of COVID-19, through Executive Decree No. 500 of March 19, 2020, the closing of commercial establishments and natural or legal person companies was ordered for 30 days from 11:59 p.m. March 20, 2020. Then was modified by Executive Decrees 506 and 507 of 2020.

For the following sectors, the closing measures do not apply:

a. The entire chain of production, distribution, marketing and sale of food, medicines and hygiene products, safety equipment, construction materials, veterinary and agricultural supplies, companies for the maintenance, operation and distribution of medical equipment, packaging manufacturers and supplies from all the sectors listed above, printers and laundries.

b. Everything related to maritime, land and air transportation, logistics and the Panama Canal.

c. Everything related to private security.

d. Lawyers to defend people detained during the curfew period.

e. Restaurants only for delivery or take away orders.

f. Everything related to banking, finance, cooperatives, insurance and other financial services.

g. Companies that provide public services: communications and transportation; call centers; gas stations and their supply chains; light and electric energy and its transmission; energy distribution and operation; cleaning; provisioning and distribution of water to the population; toilets; hospitals; private clinics; veterinary clinics; funeral homes; cremation rooms; cemeteries.

h. Medical-hospital equipment, medications, vaccines, and any other public health items and supplies, including their manufacture, distribution, and maintenance.

On May 11, the Panamanian government announced a gradual opening of economic activity from Wednesday May 13. The opening goes according to a roadmap with six blocks of different types of economic activities.

There are currently two blocks that are open:

Block 1 (since May 13): e-commerce retail sales, mechanical workshops, technical service, industrial aquaculture, and artisan fishing.

Block 2 (since June 1st): construction of public works, non-metallic mining, and industry.

There is no date yet for the reopening of block 3 (non-essential wholesale & retail, professional services). To go to work, companies in the opened blocks need to apply for passes via this platform set-up by the Ministry of Trade & Industry (MICI).

The Health Ministry published guidelines that companies must comply with in order to “guarantee” a safe return for workers in the midst of the coronavirus pandemic.. When re-opening, companies must also inform the Ministry of Labor and Labor Development with a list with personal data of the workers who will return to their jobs.

Small companies of less than 51 workers are exempt from creating health and hygiene committees and protocols.

Violation of these provisions may result in labor penalties for workers and fines ranging from B/. 10,000.00 to B/. 100,000.00 for employers.


1.8 Shareholder's meetings and other meetings of companies

Article 203 of the Commercial Code allows meetings by electronic means.

1.9 Supply of essential medical goods

The Panamanian government guarantees the supply of essential medical goods to the healthcare workers. Private companies must provide essential medical goods to their workers.

1.10 Health care

The Panamanian government guarantees medical care access through the national system of health care.

1.11 Persons with a higher risk

Persons at higher risk are those over the age of 60 and people of all ages with certain health conditions, such as chronic diseases or pregnant women.

1.12 Others

Suspension of all public procurement procedures that were ongoing (RESOLUCIÓN N°DGCPDS-056-2020 by Dirección General de Contrataciones Públicas. The resolution does not cancel the ongoing procedures but suspends them until further notice.

2. SUPPORT OF BUSINESSES

2.1 Legal basis and Support Measures

1. A moratorium on payments to banks till 31 December 2020 regarding residential mortgage loans, personal and business loans, credit cards, loans to Small and Medium-Sized businesses (SMEs) and several other loans. Law 156, 30 June 2020.

2. A moratorium on payments for telephone, cell phone, internet, and electricity services for four months, retroactively applied from 1 March 2020. Beneficiaries also include SMEs affected in their income. After this period, ceased payments will be made pro-rated over three years. Law 152, 4 May 2020.

3. The extension of payment of bank loans including mortgages, credit cards, commercial loans to 31 December 2020 in Law 156 1 July 2020

4. A moratorium on municipal tax payments until 31 July 2020. Acuerdo Municipal No.94.

5. Suspension of evictions and freezing of rental fees regarding homes and real estate for commercial, educational, industrial, and professional use (during the state of emergency plus 2 months) of those affected by the crisis. The freeze includes rent increases and penalties for unilateral contract termination and interest for late payment. Executive Decree 145 of 1 May 2020.

6. Temporary modification of the working day (Regulated by Executive Decree 71 of 13 March 2020. Possibilities for modification of fees (wages) and work week (part-time work).

7. Suspension of employment contracts. Executive Decree 81, March 20, 2020, and extension with another 30-days via Executive Decree 97 and 30-days more via Executive Decree 100.

8. Extension of the term for payment of various 2019 taxes to DGI: Payment of income tax, ITBMS and dividend tax for natural and legal persons extended till July 17th. Executive Decree 251, March 24th, 2020 & Executive Decree 298, May 27th, 2020.

9. Extension of the term for filing the 2019 income tax declarations for natural and legal persons: extended till July 17th. Executive Decree 251 of March 24th, 2020 & Executive Decree 298, May 27th, 2020.

10. Small business taxpayers registered with AMPYME will enjoy 1 more year of exemption of income tax if expired in 2019/2020 – announcement by the Ministry of Economy & Finance (MEF) 19 March 2020.

11. Teletrabajo Law regulating working from home. Law 126 of 2020.


3. SUPPORT OF SPECIFIC SECTORS

3.1 Support measures

The Inter-American Development Bank Group has announced support in four areas:

a. Immediate response for public health.

b. Security networks for vulnerable populations.

c. Economic productivity and employment.

d. Fiscal policies to alleviate economic impacts.

e. $100 million loan with IADB to promote tourism.

4. TENANCY AND LEASE

4.1 Legal basis

Executive Decree Nº145 of 1st May 2020.

4.2 Measures

This provision suspends the effects of lease agreements in force during the quarantine period set forth by the Government of Panama. During this period, landlord is banned from raising the monthly lease installment and Tenant is protected from being evicted for default payment. Moreover, the Landlord is prohibited from shutting gas, electricity and water services as restrictive measure to collect the rent. Parties must enter into a payment agreement to guarantee the outstanding rent once the quarantine is lifted. This agreement must be registered at the Ministry of Housing.

5. LEGAL PROCEEDINGS

5.1 Legal basis

Official Statement of the Supreme Court of Justice of 18th June 2020

5.2 Measures

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Pursuant to this official provision, the judicial terms and labor duties were resumed on 22th June 2020. Nevertheless, further to this statement and upon findings of Coronavirus spread amongst certain officers, certain courts were shut down again.

6. DEBT COLLECTION

6.1 Legal basis

Law 156 of 30th June 2020

6.2 Measures

Pursuant to this new legislation, the National Assembly has granted a moratorium on home mortgage loans, car loans, personal loans, commercial loans, agricultural and farm loans, transportation sector loans, lines of credit and credit card payments to those employees whose contract have been suspended and to those independent contractors and companies affected by the economic consequences of the Coronavirus Outbreak until December 31st 2020.

In order to be entitled to the moratorium, the affected party must sign a sworn affidavit declaring the economic incapacity to support these loans. Private companies’ employees can provide proves such as termination letters, labor suspension letters and reduced work hours agreements.

7. MISCELLANEOUS

7.1 Legal basis

Law 152 of 4th May 2020.

7.2 Measures

Pursuant to this provision in force, the Government of Panama grants a moratorium on Electricity Services and Cable and Internet Services. This moratorium was recently extended by service providers until 30th July 2020.