Serious Problems With ATP's New Restrictions on Short Term Rentals
By DON WINNER for Panama-Guide.com - It's looking more and more like this resolution handed down on 13 August 2009 by the new Administrator of Panama's Tourism Authority (ATP), Salomon Shamah, is full of all kinds of problems. Several representatives of the industry who actively manage short term apartment rentals for their clients met with Fernando de León, the ATP Sub Director, to voice their concerns about this resolution. First of all, the resolution was dated 13 August 2009 and I just did a search of the Gaceta Oficial - this resolution has not yet been published for public consumption. Since this resolution has the "effect of law" then it must appear in the Gaceta Oficial before any action can be taken. However, the ATP apparently jumped the gun. They reportedly distributed copies of this resolution to all of the building administrators of high rise buildings in Panama City, together with instructions saying they are now responsible for the enforcement of this resolution. In other words, Salomon Shamah wrote a very broad resolution that could potentially impact each and every owner of private property in the Republic of Panama (because anyone could decide to rent their property for a short term, right?), and then he took action to single handedly implement this law, without ever officially notifying the public that the resolution had been published. Some people have basically panicked and have already put their investment property up for sale. Guests have been evicted from short term rental properties with no notice by building administrators, who were acting on what they thought were current and valid orders from the ATP. In short, it looks like Salomon Shamah might have broken the law here. (more) Want Your Own Copy? Please click this link if you would like to download a copy of the Panama Tourism Authority resolution in PDF form so you can read it yourself.
Conflict of Interest? My little birds are telling me it's possible Salomon Shamah might be a part owner of a hotel somewhere. I have not confirmed or validated that information yet and I don't know if it's true. I put a call into the ATP this afternoon but they had all apparently left for the afternoon. I'll call tomorrow, and I already have several questions for them. Like, does Salomon Shamah own a hotel? If so, then this entire thing would represent a tremendous conflict of interest on his part. Again, that remains to be seen, and at this point it's little more than rumor, so take it for what it's worth.
Is This On Martinelli's Radar? I don't think so. I think it will be soon enough.
ATP or MIVI? This area that Salomon Shamah and the ATP is attempting to regulate actually crosses over between the two agencies. There is currently nothing in MIVI laws or regulations preventing short term rental of private property, The ATP is assuming the property is being rented to tourists, but in reality about 70% of these properties are rented to short and medium term businessmen who are going to be staying in Panama for more than a couple of weeks but less than a year. So, are they tourists? Yeah, I know, they are here on a tourist visa so you could make that argument. However, this entire argument also deals with issues of private property ownership. For example, a couple of years ago I was selling my apartment and buying another. The sale went through just fine but the purchase got hung up, and in effect for a couple of months my family was virtually homeless. I rented one of these short term executive apartments as a solution, which was much better for my family than living in a hotel for a couple of months. Am I a tourist? Anyway, any actual law regarding this issue will have to be a joint product from both the ATP and MIVI.
Why Not Just Regulate The Activity? Did you know hotels don't pay income tax? They just pay the 10% up-front hotel tax on their gross receipts, but they don't have to pay any income tax whatsoever on the back end of their profits. So, if these individual property owners are organized, authorized, and regulated, they would eventually end up paying less taxes than they are right now. As it stands, anyone who makes money from a rental property has to pay 30% tax on the profits as income tax. If they were recognized as a kind of little mini hotel operator, then they could just pay the 10% and keep the rest. That would be a good thing for them, easier, less fuss and muss, etc.
Require Professional Management Company Involvement: The government of Panama could issue a law saying this kind of activity is authorized and legal, as long as the properties are professionally managed. Most of the serious complaints and bitches come when the properties are not professionally managed, and the drunk and rowdy tenants create problems for the rest of the people in the building. Think of the other residents of the building as being the rest of the guests in the hotel - drunk and rowdy tenants are a problem no matter where they are. If the building adminstration had a single point of contact such as a professional administration company, then they could just lift the phone and dial. The drunk and rowdy tenants could then be evicted from the room, problem solved, in exactly the same fashion as it's handled in the hotel industry - call security. If they let MIVI deal with this, then it takes three months or more to evict someone who doesn't want to leave. It can be a nightmare.
The Hotel Industry Is Beating ATP Up: The ATP started this action because the hotel industry is creating as much heat as possible to have this activity turned off. Right now there are several professional management companies that are working with the ATP to find a middle ground, but apparently they still want to stick to a 45 day minimum stay for short term rentals. That would kill the weekend and beach side, none of which is 45 days or more.
Expect More, Not Less: This isn't a done deal yet. I know a lot of people are going to be following this issue closely. For me right now the issue of "did Salomon Shamah break the law" is the most important, particularly because the administation of Ricardo Martinelli is supposedly trying to get it right. But, if Salomon Shamah jumped the gun and is running around without adult supervision, then he needs to be reeled in. Even thought the ATP resolution would have the "effect of law" (if it ever gets published in the Gaceta Oficial) I think eventually the National Assembly will debate and eventually pass a law to clearly define all of these issues. Right now, it's up for grabs. And since even this resolution has not been published, it cannot be enforced at this point. Stay tuned.
Copyright 2009 by Don Winner for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Salud.
