His Excellency Richard Austen

The ambassador of the United Kingdon is a man with a mission

From Mongolia to Panama, His Excellency, the Ambassador of the United Kingdom, Richard Austen has been a man with a mission: to promote not only good diplomatic relations but economic ties between Great Britain and the countries in which he has served during his 26-year career.

He has been in Panama for two years and in that time he has striven to strengthen the commercial ties of the two nations by helping British companies to import and export products and promote businesses.

"There are many companies interested in the widening of the Panama Canal development as well as the spin-off contracts which will come as a result of it. British companies and enterprises from all over the world are coming to Panama because of the business opportunities and many of them, such as JCB, are making this country their regional base due to its political stability and its reputation of being one of the safest countries in the Americas", Ambassador Austen told "The Visitor".

His Excellency Richard Austen,
British Ambassador.

Talking about why British holidaymakers are coming to Panama he pointed out that "Brits are very adventurous travelers who are always looking for new and exciting destinations. Panama is famous for its Canal and now people are finding other attractions such as Bocas del Toro, San Blas and visiting the interior. There is so much diversity, from the cool climate of Chiriquí to the interesting beach holidays they can have on the Pacific coast".

Ambassador Austen drew attention to three organizations which promote cultural and business relations: the Anglo-Panamanian Cultural Association, the Panamanian British Business Association and the British Panamanian Alumni Association.

The cultural association arranges concerts and art exhibitions. The business organization promotes business links and the Alumni Association is a group of people who studied in Britain and who get together to compare their experiences in the U.K. These three organizations are keen to attract new members. The Embassy will put you in contact with them.

The British Ambassador is also involved with organizations such as English for Life to develop programs for the teaching of English language. At the moment he is having discussions with the British Council, which does not have offices in Panama, to see if it can help create more effective learning programs.

He added that his government also has the prestigious "Chevening scholarship scheme" aimed at post-graduate students, who can become leaders in their countries. "We operate this scheme in 150 nations. It is extremely competitive, but we usually manage to get some Panamanian representation. There is no age limit, but it will benefit those professionals who are starting their careers".

Amended property law offers you lower taxes

By Steven Rich, Marketing Manager for Panama Offshore Legal Services

A recent amendment to Panama’s property tax laws gives owners the opportunity to lower their capital gains tax when they sell.

The government’s Catastro office of the Ministry of Economy and Finances now allows all property owners to register "private" appraisals. The government wants to update the registered value of all properties by providing property owners an incentive by applying a new Property Tax Tariff. This saves the government the time and expense of having all real properties appraised.

If your property currently has a low registered value, you will pay a higher capital gains tax when you sell. Now you can register a new appraisal of your property’s true market value enabling you to decrease your capital gains tax when it sells. As a further incentive, Panama offers lower property tax rates to those conducting private appraisals.

Registered Value vs. Market Value are important differences when it comes to paying taxes. In taxation terms, the registered value is known as the "basis" whereby the amount of capital gains tax will be calculated. The difference between the sales price (minus sales costs) and the "basis" results in the profits where the 10% capital gains tax applies.

An Example
Example: Let’s say you have a registered value of $100,000 and you sell your property for $250,000. You end up with a gain of $150,000 and subtracting the sales costs (escrow fee, real estate commissions, etc.) of $15,000 results in a taxable gain of $135,000 at a 10% capital gains tax rate equals $13,500 in taxes. Let’s say that a private appraisal raises your registered value to $200,000. When you sell the property for $250,000, your taxable gain will only be $35,000 resulting in a capital gains tax of only $3,500 instead of $13,500. Thus, you save $10,000 by getting an appraisal. These savings increase with properties that are more valuable.

Re-evaluation
Private property appraisal requires hiring an approved appraisal company registered with the Ministry of Economy and Finances to re-evaluate the current fair market value of your property.

Property taxes will be subject to the new registered value. If you bought your property under the various laws allowing for a 10, 15 or 20-year property tax exemption, then re-appraising your property will have no effect on property taxes since you don’t pay them anyway. On the other hand, if you are subject to property taxes, you will pay higher taxes because your property is now at a higher registered value. Usually, that could mean from 1.75% to 2.10% (depending on the registered value) higher property taxes every year. However, in order to encourage private appraisals Panama reduced the property tax by 50% or more. Now you can reduce your capital gains tax and your property tax too.

Register improvements
Land value and Improvements determine the amount of property taxes owed. When you buy raw land, the government bases the property tax on the value of the land. When you build structures on the land, you are required to register these improvements so the government can tax their value as well.

Property tax exemptions only apply to the improvements and never to the land.

Improvements with construction permits issued before September 1, 2006 and occupation permits issued before August 31, 2007 receive a 20-year tax exemption applicable to the improvements. After those deadlines, all new purchases and improvements are subject to normal property taxes.

The Deadline for filing a new private appraisal is December 31, 2007. Take advantage of these tax savings and enjoy a Happy New Year by paying fewer taxes.

Reader’s Letter

The Travellers’ Palm doesn’t show the way

The Editor

Dear Sir,

I would like to draw your attention to an error in your article about Sitio Barriles the pre-Colombian site in Chiriquí in which the writer described the Travellers’ Palm, saying that it is so named because its fan-like crown of leaves aligns so that a compass direction can be determined.

This is a common miscon-ception. The Travellers Palm (scientific name Ravenola Madagascariensis) gets its name from the copious amount of rainwater and liquid plant secretions that collect in the leaf bases and flower bracts, forming a reservoir for the thirsty traveller. It being related to the banana family, the seeds are also edible.

Yours etc.

Ray Stockhausen