Update to FECI Commission Interpretation Criterion No. 45 on External Loans

19 October 2026
SBP-DS-FECI-CIRCULAR-2026-0113

Mr./Ms.
General Manager
E. S. D.

Reference: Update of the
Criterion of
Interpretation of the FECI Commission
No. 45 related to external loans.

Mr./Ms. General Manager:

In accordance with the provisions of article 3 of the Single Text of Law 4 of 17 May 1994, it corresponds to the FECI Commission to establish the criteria for the application of said Law.

Based on the foregoing, with respect to the conditions that external loans must meet to qualify for the 1% FECI exemption, the FECI Commission has deemed it appropriate to review and update the current criterion No. 45, in order to establish the guidelines that must be verified for the qualification of external loans, exempt from withholding.

Consequently, we inform you that interpretation criterion No. 45, which will apply, as of the date, for the qualification of external loans that qualify for the FECI exemption, is as follows:

"45. For the exclusive purposes of the application of the FECI exemption, a loan shall qualify as external if it meets all of the following conditions: (i) that it is granted to a non-resident natural person or legal person that, even if domiciled or incorporated in Panama, does not carry out operations in this country, and that consequently, does not generate any Panamanian-source income, whether taxable or exempt, and (ii) whose funds disbursed as a result of the financing are used in their entirety abroad, not in Panama, under no concept that implies that they had any economic or commercial effect within the national territory.

The client may request that all or part of the funds be disbursed in an account maintained at the same bank, provided that said account is operationally restricted and destined exclusively for the transfer of those monies abroad or to receive payments inherent to said financing, with any local transaction being prohibited. It shall be up to the entity to implement and execute the appropriate policies, procedures and automated controls, which guarantee the traceability of the external use of the funds, as well as to apply due diligence based on the financial and transactional profile of the client.

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SBP-DS-FECI-CIRCULAR-2026-0113

Likewise, the evidence shall be kept in the credit file, such as: proof of the disbursement and of the international transfer of the funds, a Sworn Declaration from the client, natural or legal person, duly notarized or a Certification issued by the General Directorate of Revenue (DGI), if applicable, accrediting that the company incorporated or domiciled in Panama does not generate local-source income (taxable or exempt) in the Republic of Panama, Certification from the debtor's external auditors, stating that the company does not carry out local operations and does not generate taxable income in the Republic of Panama, audited Financial Statements, among others.

When a debtor requires funds for use in Panama, including the cancellation of local debts, payment to local suppliers, purchase of supplies in the country or local investments, among others, said financing must be structured and granted separately from those loans destined for use abroad. The loan for local use shall be subject to the 1% FECI withholding."

We thank the Mr./Ms. Manager for instructing the personnel under their charge with the pertinent instructions for compliance with this.

Sincerely,
Milton Ayón Wong
Superintendent