Executive Decree No. 6 of April 13, 2023 (hereinafter the “Decree”) that regulates Labor Immigration and subrogates Executive Decree No. 4 of March 2, 2023, therefore replacing it entirely, with the objective of regulating Labor Immigration and repeal all regulations relating to work permits in Panama.
MOST RELEVANT CHANGES AND ADDITIONS:
A. Classification of Work Permits:
The Decree includes a new classification of work permits, for investors and in addition, it makes a distinction between those who hold work permits from Specific Countries (Friendly Countries) for labor reasons, versus those who obtained it for investment reasons.
A new work permit is established for Qualified Investors, which did not exist in the previous legislation.
Likewise, a work permit category is created for foreigners with Self Solvency, who before could only request work permits as permanent residents, but since this work permit was eliminated, the Decree creates a special category.
Within this classification, the following categories will apply:
Specific Countries that maintain friendly, professional, economic and investment relations with the Republic of Panama, in case of investment.
- Permanent Resident as a Qualified Investor.
- Self Solvency.
- Current special categories of special economic and investment policies.
To apply for these categories of work permits, foreigners must meet the common requirements established in the Decree.
For the extensions of these work permits, in addition to the common ones, the income statement with its respective good standing issued by the National Revenue Authority or payment of nine (9) installments of the Social Security Fund must be provided.
B. Categories of Work Permits Equivalent to Local Labor:
This classification already existed in the previous Decree, but now foreigners who have an Indefinite Work Permit, in accordance with Executive Decree No. 140 of August 2, 2012, granted under the category of national of Specific Countries (Friendly Countries) that maintain friendly, professional, economic and investment relations with the Republic of Panama, are also included.
In this way, it is established through a rule that, for all payroll calculation purposes, these foreigners will be considered as local labor, which was applied in practice as a criterion up to now.
This work permit was modified, in terms of its validity, on April 23, 2019, for which foreigners who obtained their permit before said date, with indefinite validity, will be recognized as local labor.
C. Work Permits for SEM and EMMA
The work permit categories for SEM and EMMA personnel are eliminated. This requirement was included in the subrogated Decree, for which it is now repealed, due to the provisions of the pertinent special laws. For this reason, it will no longer be necessary to apply for a work permit for Trusted Foreigners in Positions of Middle and High-Level Managers (Permanent Personnel) SEM as it is for the EMMA regime.
It is clarified that, as established in their special laws, Dependents from SEM and EMMA’s Personnel may request work permits within any of the recognized or existing categories in the country. In the subrogated Decree it had been limited to the categories of 10% and 15%.
D. Work Permits for Special Conditions:
- Friendly Countries (Specific Countries):
Within this category, that of Specific Countries (Friendly Countries) is maintained, but only for labor reasons; that is, through an employment contract. For investment reasons, they will comply with the classification of Special Economic and Investment Policies, detailed above in Section A.I.
In this sense, work permits from Specific Countries (Friendly Countries), for labor reasons only, from this Decree will be considered in the calculation within the percentages (10% and 15%), which differs from what was applied to the date.
In the subrogated Decree, it had been established that the foreigner who was developing, on his own account, an allowed economic activity or working for himself, directly, in economic units owned by him, without being in a relationship of legal subordination or economic dependency, had to apply for a work permit under self-employment conditions.
However, this Decree modifies the definition of self-employment as: “the income-generating activity carried out directly, without being subject to an employment contract, in conditions of economic dependence or legal subordination.”
In the same way, it is established that the work permit will be granted when, whoever requests it voluntarily, is carrying out said income-generating activity directly, but in a relationship of legal subordination or economic dependence.
This category can only be applied to as a natural person, and not through a legal person.
E. Business Activity Notifications:
It is established that only foreigners who enter the country to carry out business activities, such as traveling agents of commercial houses, administrators or international auditors at the managerial level for a maximum of fifteen (15) calendar days, provided that they do not generate local income, will be obliged to inform the Ministry of Labor by means of a note or memorial, together with the supporting documents, as a letter of responsibility from the company that receives it. This notification should not be made through attorneys.
In the subrogated Decree, this obligation was included, through an attorney, in general, for foreigners who entered the country to (i) carry out activities at the management level and (ii) those who had to carry out work, if they responded to compliance of terms of guarantees or similar cases of suppliers.
F. Extension of the Entry into Force:
The Decree will take effect thirty (30) days after its promulgation. That is, as of May 13, 2023.
- The Decree will take effect thirty (30) days after its promulgation. That is, as of May 13, 2023.