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Panama

Legal framework

 

It aims to evaluate whether the national legislation in place supports or hampers the development of cooperatives, and is therefore “cooperative friendly” or not, and the degree to which it may be considered so, also in comparison to the legislation in force in other countries of the ICA region, or at the supranational level.

In addition, the research aims to provide recommendations for eventual renewal of the legal frameworks in place in order to understand what changes in the current legislation would be necessary to improve its degree of “cooperative friendliness”, which is to say, to make the legislation more favourable to cooperatives, also in consideration of their specific identity. This webpage presents a snapshot of the legal framework analysis results for Panama.

 

 

The national cooperative legislation is covered by Article 288 of the Political Constitution of the Republic of Panama. The Law 17 of May 1, 1997, defines cooperatives as private associations made up of natural and legal persons, which constitute companies that, without pursuing for-profit, aim to plan and carry out work or services activities of socio-economic benefit, aimed at the production, distribution and cooperative consumption of goods and services with the economic, intellectual and moral contribution of their partners. 

 

Cooperative Friendliness

In Panama there are no legal barriers to the development of cooperatives, except in the tax legislation, which regards cooperatives as taxable subjects, although it is fair to acknowledge that there is a broad exemption on income and other items, already set out in this report, but these exemptions do not reach the consumption tax (ITBMS), or the real estate transfer tax. The latest cooperative legislation in Panama is around 20 years old and at that time you could say that it was legislation that "Is more in favor of cooperatives than against"; but globalization brought with it major changes in the way trade unfolds, which now has more competitive demands, while the promotion of cooperatives has lost momentum. 

 

Key recommendations for improvement

  • A body composed of public sector partners and cooperative partners should be established by law to advise the national government in the setting of cooperative policies.
  • The Panamanian Cooperative Autonomous Institute must implement plans, which promote the constitution of youth cooperatives, as a means of maintaining generational relief towards cooperative solidarity.
  • To provide in the law that any dispute between cooperatives or between one of these and any partner, is addressed in an arbitration court or in an alternative dispute resolution center, in a private manner.
  • In Panama, cooperativism has focused on savings and loans, although it would be more beneficial for cooperatives, that by law, incentives were established for consumer, service, housing and agricultural production cooperatives, which have a strong impact on the quality of life of partners.

 

Conclusions

For our country, the study of the Latin American cooperative legal framework at this moment has proved very beneficial, because it is on the national agenda, the need to introduce reforms to the National Constitution; public clamor that has materialized in a draft reform, prepared by a group of experts, which has already been approved by the Executive Body and delivered it to the National Assembly, for dissemination, consultation and approval, previous to the national referendum. The opportunity will be seized, using cooperative organizations as a means, to bring to the National Assembly our recommendations aimed at benefiting cooperatives.

For several years now, the need to reform the CL has been discussed in our country, in order to adapt it to the dramatic changes in the economic and social field, which have occurred in the present century. The study promoted by the ICA will also be of great use, to incorporate it as working documents, to produce a bill that updates cooperative legislation.

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