Doing Business Report, 2015 – The World Bank

Resumen Económico

Region	Latin America & Caribbean
Income Category	Upper middle income
Population	3,864,170
GNI Per Capita (US$)	10,700
City covered	Panama City

Doing Business 2015 Rank	Doing Business 2014 Rank***	Change in Rank
52	55	Up 3

Doing Business 2015 DTF** (% points)	Doing Business 2014 DTF** (% points)	Change in DTF** (% points)
69.22	67.68	Up 1.54

Rankings / Distancia hacia la Frontera

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[tab title=”Rankings”]

Topics	DB 2015 Rank	DB 2014 Rank	Change in Rank
Starting a Business	38	36	-2
Dealing with Construction Permits	63	63	No change
Getting Electricity	29	30	1
Registering Property	61	66	5
Getting Credit	17	45	28
Protecting Minority Investors	76	75	-1
Paying Taxes	166	165	-1
Trading Across Borders	9	8	-1
Enforcing Contracts	84	85	1
Resolving Insolvency	132	131	-1

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[tab title=”Distance to Frontier”]

Topics	DB 2015 DTF** (% points)	DB 2014 DTF** (% points)	Change in DTF** (% points)
Starting a Business	91.93	91.85	+0.08
Dealing with Construction Permits	75.97	75.93	0.04
Getting Electricity	86.39	86.38	0.01
Registering Property	74.65	73.64	1.01
Getting Credit	75.00	60.00	15.00
Protecting Minority Investors	55.83	55.83	No change
Paying Taxes	48.60	48.70	-0.10
Trading Across Borders	91.25	92.09	-0.84
Enforcing Contracts	58.87	58.87	No change
Resolving Insolvency	33.66	33.55	0.11

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Más Detalles

[tabs]
[tab title=”Starting a Business”]

Starting a Business

DB 2015 Rank	38	DB 2014 Rank***	36	Change in Rank	-2

DB 2015 DTF** (% points)	91.93	DB 2014 DTF** (% points)	91.85	Change in DTF** (% points)	up0.08

Indicator	Panama	Latin America & Caribbean	OECD
Procedures (number)	5.0	8.3	4.8
Time (days)	6.0	30.1	9.2
Cost (% of warehouse value)	6.4	31.1	3.4

No.	Procedure	Time to Complete	Associated Costs
1	Hire a registered agent	1 day	USD 200
2	Request and obtain environmental study	1 day	USD 75
3	Register at the Mercantile Division of the Public Registry and pay Annual Franchise Tax	2 days	—
4	Obtain a notice of operation (“aviso de operación”) through the “Panama emprende” website	1 day	USD 55 for legal entities
5	Request an employers’ inscription number from the Social Security Administration	1 day	No charge

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[tab title=”Dealing with Construction Permits”]

Dealing with Construction Permits

DB 2015 Rank	63	DB 2014 Rank***	63	Change in Rank	0

DB 2015 DTF** (% points)	75.97	DB 2014 DTF** (% points)	75.93	Change in DTF** (% points)	0.04

Indicator	Panama	Latin America & Caribbean	OECD
Procedures (number)	15.0	13.3	11.9
Time (days)	101.0	178.3	149.5
Cost (% of warehouse value)	2.1	2.7	1.7

No.	Procedure	Time to Complete	Associated Costs
1	Request and obtain a good standing certificate (certificado de paz y salvo)	2 days	USD 30
2	Request and obtain environmental study	23 days	USD 2,500
3	Notarize form to deposit the environmental study	1 day	USD 3
4	Submit drawings (anteproyecto) to the Municipality and obtain clearance	7 days	USD 1
5	Hold consultation with the Municipality to determine approvals	6 days	USD 370
* 6	Request and obtain signature of certified fire specialist	2 days	no charge
* 7	Request and obtain preliminary approval from Ministry of Public Works and Fire Department Safety Office	1 day	USD 10
* 8	Request and obtain preliminary approval from the Environmental Authority	15 days	USD 350
9	Request and obtain construction permit	15 days	USD 5,487
10	Request and connect to water and sewerage services	14 days	USD 287
* 11	Receive inspection from Fire Department Safety Office	1 day	no charge
12	Obtain permit by Fire Department Safety Office	2 days	USD 400
13	Request and obtain occupancy permit	10 days	USD 320
14	Notary notarizes “declaration of improvement” (declaración de mejora)	2 days	USD 100
15	Register building with the Central Property Registry	7 days	USD 1,646

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[tab title=”Getting Electricity”]

Getting Electricity

DB 2015 Rank	29	DB 2014 Rank***	30	Change in Rank	1

DB 2015 DTF** (% points)	86.39	DB 2014 DTF** (% points)	86.38	Change in DTF** (% points)	0.01

Indicator	Panama	Latin America & Caribbean	OECD
Procedures (number)	5.0	5.5	4.7
Time (days)	35.0	67.4	76.8
Cost (% of warehouse value)	9.3	444.5	73.2

No.	Procedure	Time to Complete	Associated Costs
1	The customer must obtain an occupancy permit that includes a certification of the internal wiring and verification of the required electricity load from the Fire Department	21 calendar days	USD 250
2	In preparation for the certification of internal wiring the Fire Department conducts a visit of the work	7 calendar days	USD 45
3	The client sends a request for electricity connection to Unión FENOSA	7 calendar days	USD 726.23
4	Unión FENOSA subcontracts a company to carry out an external inspection	2 calendar days	USD 0
5	The client signs the supply contract and Unión FENOSA’s subcontractor performs the works of the external connection	7 calendar days	USD 0

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[tab title=”Registering Property”]

Registering Property

DB 2015 Rank	61	DB 2014 Rank***	66	Change in Rank	5

DB 2015 DTF** (% points)	74.65	DB 2014 DTF** (% points)	73.64	Change in DTF** (% points)	1.01

Indicator	Panama	Latin America & Caribbean	OECD
Procedures (number)	7.0	7.0	4.7
Time (days)	22.5	63.3	24.0
Cost (% of warehouse value)	2.4	6.1	4.2

No.	Procedure	Time to Complete	Associated Costs
1	Obtain a non-encumbrance certificate at the Public Registry Office	1-2 days (simultaneous with Procedures 2 & 3)	USD 30
2	Obtain a certificate of good standing online from the Autoridad Nacional de Ingresos Públicos	Less than a day (online procedure and simultaneous with procedure 1 and 3)	no cost online
3	Obtain a non-debt water certificate (“certificado de Paz y Salvo”)	1 day (simultaneous with Procedures 1 & 2)	USD 1.25
4	A lawyer prepares the sale agreement	2 days	USD 200 (lawyer’s fees)
5	Payment of the Transfer and Capital Gains Taxes	2 days	2% of property value (transfer tax) + 3% of property value (capital gains tax, not included in the cost calculation)
6	Notarization of the sale agreement and preparation of the public deed	2 days	USD 100
7	The public deed is filed and recorded at the Public Registry Office under the name of the buyer	2 weeks	0.3% of property price (registration fee) + USD 5 for filing + USD 10 for analyzing the document

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[tab title=”Getting Credit”]

Getting Credit

DB 2015 Rank	17	DB 2014 Rank***	45	Change in Rank	28

DB 2015 DTF** (% points)	75.00	DB 2014 DTF** (% points)	60.00	Change in DTF** (% points)	15.00

Indicator	Panama	Latin America & Caribbean	OECD
Strength of legal rights index (0-12)	7	5	6
Depth of credit information index (0-8)	8	5	7
Credit registry coverage (% of adults)	0.0	12.6	12.1
Credit bureau coverage (% of adults)	63.0	39.3	67.0

Depth of credit information index (0-8)	Private credit bureau	Public credit registry	Score
Are data on both firms and individuals distributed?	Yes	No	1
Are both positive and negative credit data distributed?	Yes	No	1
Are data from retailers or utility companies – in addition to data from banks and financial institutions – distributed?	Yes	No	1
Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.)	Yes	No	1
Are data on loan amounts below 1% of income per capita distributed?	Yes	No	1
By law, do borrowers have the right to access their data in the credit bureau or credit registry?	Yes	No	1
Can banks and financial institutions access borrowers’ credit information online (for example, through an online platform, a system-to-system connection or both)?	Yes	No	1
Are bureau or registry credit scores offered as a value-added service to help banks and financial institutions assess the creditworthiness of borrowers?	Yes	No	1
Score (“yes” to either public bureau or private registry)			8

Strength of legal rights index (0-12)
Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents to security interests in movable assets exist in the economy?	No
Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description of collateral?	Yes
Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of collateral?	Yes
May a security right extend to future or after-acquired assets, and may it extend automatically to the products, proceeds or replacements of the original assets?	No
Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered?	Yes
Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an electronic database indexed by debtor’s name?	Yes
Does a notice-based collateral registry exist in which all functional equivalents can be registered?	No
Does a modern collateral registry exist in whichregistrations, amendments, cancellations and searches can be performed online by any interested third party?	No
Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure?	Yes
Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated?	Yes
Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and/or sets a time limit for it?	No
Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell the collateral through public auction and private tender, as well as, for the secured creditor to keepthe asset in satisfaction of the debt?	Yes
Score (number of “yes” responses)	7

Coverage	Private credit bureau	Public credit registry
Number of individuals	1,497,048	0
Number of firms	73,036	0
Total	1,570,084	0
Percentage of adult population	63.0	0.0

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[tab title=”Protecting Minority Investors”]

Protecting Minority Investors

DB 2015 Rank	76	DB 2014 Rank***	75	Change in Rank	-1

DB 2015 DTF** (% points)	55.83	DB 2014 DTF** (% points)	55.83	Change in DTF** (% points)	0.00

Indicator	Panama	Latin America & Caribbean	OECD
Extent of disclosure index (0-10	4.0	3.9	6.6
Extent of director liability index (0-10)	4.0	5.1	5.4
Ease of shareholder suits index (0-10)	8.0	6.4	7.2
Extent of conflict of interest regulation index (0-10)	5.3	5.1	6.4
Extent of shareholder rights index (0-10.5)	10.5	6.4	8.0
Strength of governance structure index (0-10.5)	1.5	2.9	4.6
Extent of corporate transparency index (0-9)	5.5	3.0	6.1
Extent of shareholder governance index (0-10)	5.8	4.1	6.2
Strength of minority investor protection index (0-10)	5.6	4.6	6.3

	Score	Score Description
Extent of disclosure index (0-10)	4.0
Which corporate body can provide legally sufficient approval for the Buyer-Seller transaction? (0-3)	1	Shareholders or board of directors including interested parties
Is disclosure by the interested director to the board of directors required? (0-2)	0	No disclosure obligation
Is disclosure of the transaction in published periodic filings (annual reports) required? (0-2)	2	Disclosure on the transaction and on the conflict of interest
Is immediate disclosure of the transaction to the public and/or shareholders required? (0-2)	1	Disclosure on the transaction only
Must an external body review the terms of the transaction before it takes place? (0-1)	0	No
Extent of director liability index (0-10)	4.0
Can shareholders sue directly or derivatively for the damage caused by the Buyer-Seller transaction to the company? (0-1)	1	Yes
Can shareholders hold the interested director liable for the damage caused by the transaction to the company? (0-2)	1	Liable if negligent
Can shareholders hold members of the approving body liable for the damage cause by the transaction to the company? (0-2)	1	Liable if negligent
Must the interested director pay damages for the harm caused to the company upon a successful claim by a shareholder plaintiff? (0-1)	1	Yes
Must the interested director repay profits made from the transaction upon a successful claim by a shareholder plaintiff? (0-1)	0	No
Can both fines and imprisonment be applied against the interested director? (0-1)	0	No
Can a court void the transaction upon a successful claim by a shareholder plaintiff? (0-2)	0	Only in case of fraud or bad faith
Ease of shareholder suits index (0-10)	8.0
Before filing suit, can shareholders owning 10% of the company’s share capital inspect the transaction documents? (0-1)	1	Yes
Can the plaintiff obtain any documents from the defendant and witnesses during trial? (0-3)	3	Any relevant document
Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1)	1	Yes
Can the plaintiff directly question the defendant and witnesses during trial? (0-2)	2	Yes
Is the level of proof required for civil suits lower than that of criminal cases? (0-1)	0	No
Can shareholder plaintiffs recover their legal expenses from the company? (0-2)	1	Yes if successful
Extent of shareholder rights index (0-10.5)	10.5
Can shareholders amend company bylaws or statutes with a simple majority?	1.5	Yes
Can shareholders owning 10% of the company’s share capital call for an extraordinary meeting of shareholders?	1.5	Yes
Can shareholders remove members of the board of directors before the end of their term.	1.5	Yes
Must a company obtain its shareholders’ approval every time it issues new shares?	1.5	Yes
Are shareholders automatically granted subscription rights on new shares?	1.5	Yes
Must shareholders approve the election and dismissal of the external auditor?	1.5	Yes
Can shareholders freely trade shares prior to a major corporate action or meeting of shareholders?	1.5	Yes
Strength of governance structure index (0-10.5)	1.5
Is the CEO barred from also serving as chair of the board of directors?	0	No
Must the board of directors include independent board members?	0	No
Must a company have a separate audit committee?	0	No
Must changes to the voting rights of a series or class of shares be approved only by the holders of the affected shares?	1.5	Yes
Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of a company?	0	No
Is cross-shareholding between 2 independent companies limited to 10% of outstanding shares?	0	No
Is a subsidiary barred from acquiring shares issued by its parent company?	0	No
Extent of corporate transparency index (0-9)	5.5
Must ownership stakes representing 10% be disclosed?	0	No
Must information about board members’ other directorships as well as basic information on their primary employment be disclosed?	1	Yes for listed companies
Must the compensation of individual managers be disclosed?	1	Yes for listed companies
Must financial statements contain explanatory notes on significant accounting policies, trends, risks, uncertainties and other factors influencing the reporting?	1.5	Yes
Must annual financial statements be audited by an external auditor?	1	Yes for listed companies
Must audit reports be disclosed to the public?	1	Yes for listed companies

[/tab]
[tab title=”Paying Taxes”]

Paying Taxes

DB 2015 Rank	166	DB 2014 Rank***	165	Change in Rank	-1

DB 2015 DTF** (% points)	55.83	DB 2014 DTF** (% points)	48.60	Change in DTF** (% points)	48.70

Indicator	Panama	Latin America & Caribbean	OECD
Payments (number per year)	52.0	29.9	11.8
Time (hours per year)	417.0	365.8	175.4
Profit tax (%)	12.4	20.7	16.4
Labor tax and contributions (%)	20.0	14.7	23.0
Other taxes (%)	4.8	12.9	1.9
Total tax rate (% profit)	37.2	48.3	41.3

Tax or mandatory contribution	Payments (number)	Notes on Payments	Time (hours)	Statutory tax rate	Tax base	Total tax rate (% profit)	Notes on TTR
Employer paid – Social security contributions	12	paid jointly	144	12.25%	gross salaries	13.82
Corporate income tax	4		83	25%	taxable profit	12.39
Employer paid – Professional risk insurance	0			2.1%	gross salaries	2.37
Employer paid – Workers’ severance payments	4			1.92%	gross salaries	2.17
Employer paid – Education contribution	0			1.5%	gross salaries	1.69
Commercial license tax	0	paid jointly		2%	net worth	1.59
Real estate tax	3			0% to 2.1%	real estate value	1.24
Transfer tax	1			various rates	sales price	1.21
Municipal Business Tax	12			375 per month	fixed fee	0.67
Capital gains tax	1			various rates	capital gains	0.51	included in other taxes
Advertising tax	0	paid jointly		USD15 per ad per month		0.03
Vehicle tax	1				fixed fee	0.02
Stamp tax on check transactions	1			10 cents per check	number of checks	0.00
Value added tax (VAT)	12		190	7%	value added	0.00	not included
Fuel tax	1			0.25 per gallon		0.00
Employee paid – Social security contributions	0	paid jointly		9.75%	gross salaries	0.00	withheld
Employee paid – Education contribution	0	paid jointly		1.25%	gross salaries	0.00	withheld
Totals:	52.0		417.0			37.2

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[tab title=”Trading Across Borders”]

Trading Across Borders

DB 2015 Rank	91.25	DB 2014 Rank***	8	Change in Rank	-1

DB 2015 DTF** (% points)	91.25	DB 2014 DTF** (% points)	92.09	Change in DTF** (% points)	-0.84

Indicator	Panama	Latin America & Caribbean	OECD
Documents to export (number)	3	6	4
Time to export (days)	10.0	16.8	10.5
Cost to export (US$ per container)	665.0	1,299.1	1,080.3
Cost to export (deflated US$ per container)	665.0	1,299.1	1,080.3
Documents to import (number)	3	7	4
Time to import (days)	9.0	18.7	9.6
Cost to import (US$ per container)	1,030.0	1,691.1	1,100.4
Cost to import (deflated US$ per container)	1,030.0	1,691.1	1,100.4

Nature of Export Procedures	Duration (days)	US$ Cost
Documents preparation	5	160
Customs clearance and inspections	1	50
Ports and terminal handling	1	65
Inland transportation and handling	3	390
Totals	10	665

Nature of Import Procedures	Duration (days)	US$ Cost
Documents preparation	6	150
Customs clearance and inspections	1	225
Ports and terminal handling	1	265
Inland transportation and handling	1	390
Totals	9	1,030

Export documents
Bill of Lading
Commercial Invoice
Customs Export Declaration

Import documents
Bill of lading
Commercial Invoice
Customs Import Declaration

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[tab title=”Enforcing Contracts”]

Enforcing Contracts

DB 2015 Rank	84	DB 2014 Rank***	85	Change in Rank	+1

DB 2015 DTF** (% points)	58.87	DB 2014 DTF** (% points)	58.87	Change in DTF** (% points)	0.00

Indicator	Panama	Latin America & Caribbean	OECD
Time (days)	686.0	736.9	539.5
Cost (% of claim)	38.0	30.6	21.4
Procedures (number)	32.0	39.8	31.5

	Indicator
Time (days)	686
Filing and service	30
Trial and judgment	291
Enforcement of judgment	365
Cost (% of claim)	38
Attorney cost (% of claim)	24.8
Court cost (% of claim)	13
Enforcement Cost (% of claim)	0.2
Procedures (number)	32

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[tab title=”Resolving Insolvency”]

Resolving Insolvency

DB 2015 Rank	132	DB 2014 Rank***	131	Change in Rank	-1

DB 2015 DTF** (% points)	33.66	DB 2014 DTF** (% points)	33.55	Change in DTF** (% points)	0.11

Indicator	Panama	Latin America & Caribbean	OECD
Time (years)	2.5	2.9	1.7
Cost (% of estate)	25.0	16.4	8.8
Outcome (0 as piecemeal sale and 1 as going concern)	0	0	1
Recovery rate (cents on the dollar)	27.7	36.0	71.9
Commencement of proceedings index (0-3)	2.0	2.2	2.8
Management of debtor’s assets index (0-6)	2.0	3.0	5.4
Reorganization proceedings index (0-3)	0.0	0.5	1.8
Creditor participation index (0-4)	2.0	1.9	2.2
Strength of insolvency framework index (0-16)	6.0	8.2	12.2

	Answer	Score
Commencement of proceedings index (0-3)		2.0
What procedures are available to a DEBTOR when commencing insolvency proceedings?	(b) Debtor may file for liquidation only	0.5
Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor?	(b) Yes, but a creditor may file for liquidation only	0.5
What basis for commencement of the insolvency proceedings is allowed under the insolvency framework?	(a) Debtor is generally unable to pay its debts as they mature	1.0
Management of debtor’s assets index (0-6)		2.0
Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the debtor?	No	0.0
Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts?	No	0.0
Does the insolvency framework allow avoidance of preferential transactions?	Yes	1.0
Does the insolvency framework allow avoidance of undervalued transactions?	Yes	1.0
Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of insolvency proceedings?	No	0.0
Does the insolvency framework assign priority to post-commencement credit?	(c) No priority is assigned to post-commencement creditors	0.0
Reorganization proceedings index (0-3)		0.0
Which creditors vote on the proposed reorganization plan?	N/A	0.0
Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as what they would obtain in a liquidation?	No	0.0
Are the creditors devided into classes for the purposes of voting on the reorganization plan, does each class vote separately and are creditors in the same class treated equally?	No	0.0
Creditor participation index (0-4)		2.0
Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency representative?	No	0.0
Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor?	No	0.0
Does the insolvency framework provide that a creditor has the right to request information from the insolvency representative?	Yes	1.0
Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting creditors’ claims?	Yes	1.0

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