Incentives Law for Recycling Industry
Monday, June 14, 2021
On June 8, Law 223 was published in Panama's Official Gazette, a legal framework that establishes environmental tax exemptions for the recycling industry; these incentives will take effect as of 2022.
The purpose of this legal framework is to promote sustainable business practices, the reconversion of companies and the development of the recycling industry in the country.

Article 4 details that "... natural and legal persons that reconvert their activity, replacing their plastic products with biodegradable materials that do not contain plastic, and are duly endorsed by the Ministry of Environment will enjoy the following benefits for a period of five years:

1. Exemption from import taxes on equipment and machinery.
2. 15% discount of the income tax."

The incentives of this Law shall not be applicable to natural or juridical persons whose replacement materials are synthetic plastic options labeled as degradable, biodegradable, oxo-biodegradable, bioplastic, bio-based, recycled or any other plastic derived from petroleum and other hydrocarbons.

Legal entities engaged in the collection of recyclable materials for export are not eligible for the exemptions either. Recycling must take place directly within the territory of the Republic of Panama, according to the text of the law. See publication in the Official Gazette.

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