For airlines and aviation suppliers assessing operations involving Panama and Saudi Arabia, customs treatment can affect supply contracts, import costs, and operating budgets.
Panama’s Law 548 of September 9, 2026, approves the Air Services Agreement signed between the two countries in Paris on June 16, 2025. The agreement includes customs and tax exemptions for specified aircraft-related goods associated with designated airlines, subject to its conditions.
The practical starting point is to establish whether the airline, goods, and intended use fall within the agreement before pricing a transaction on the assumption that an exemption applies.
What Customs Exemptions Does the Agreement Cover?
Article 6 addresses aircraft, equipment, spare parts, fuel, lubricants, and onboard supplies used by designated airlines in international services. It also covers certain goods introduced for aircraft maintenance or provisioning, subject to conditions and customs control where applicable.
For businesses evaluating a shipment or supply arrangement, we recommend reviewing these questions together:
| Review area | Question to resolve |
| Airline status | Is the recipient airline designated under the agreement? |
| Goods | Which aircraft, equipment, parts, or supplies are involved? |
| Intended use | How will the goods be connected to the relevant air services? |
| Supporting records | Can contracts, invoices, and operational records demonstrate that connection? |
| Customs handling | Which procedures and controls apply to the specific transaction? |
A coordinated review through international tax advisory services can help businesses assess the cross-border aspects of the arrangement.
What Should Aircraft Parts and Maintenance Suppliers Review?
For a supplier, the key commercial question is how the proposed customs treatment affects the transaction it has agreed to perform.
Before issuing a final quotation, we recommend identifying the recipient airline, the goods supplied, their intended destination, and the party responsible for customs handling.
H3: Prepare a Transaction File for Aircraft Parts
As a practical measure, consider keeping the following records together:
- The purchase order or supply agreement.
- An invoice identifying the goods and purchaser.
- Available shipment and delivery records.
- Information linking the goods to their intended aircraft or operation.
- Correspondence supporting the proposed customs treatment.
This is a preparation checklist, rather than a statement that every item is a mandatory filing requirement. The documents needed for a particular transaction should be confirmed during the legal and customs review.
Separate Supplies for Different Customers
A supplier serving several airlines should consider maintaining records by customer and shipment.
This helps its advisers assess each transaction on its own facts and reduces the risk of applying the conclusions from one supply arrangement to another with different circumstances.
How Should Fuel and Provisioning Contracts Address Tax Treatment?
For fuel, lubricants, and onboard supplies, we recommend reviewing the contract before incorporating anticipated tax savings into the agreed price.
The parties should consider documenting:
- Pricing assumptions: Which taxes and charges are included in the quotation?
- Customs responsibilities: Who will coordinate the relevant procedures?
- Document delivery: What information will each party provide?
- Cost allocation: Who bears additional costs if the proposed treatment is unavailable?
- Price adjustments: How will the parties handle a change in the expected tax treatment?
These provisions can make the commercial consequences clearer while eligibility is being assessed.
Businesses can incorporate this work into their broader tax management and compliance review.
Are Airport Charges Also Exempt?
Article 5 addresses airport charges separately. It provides that charges must not exceed those applied to a country’s own airlines providing similar international services. This provision should be distinguished from the customs exemptions in Article 6.
For budgeting purposes, we recommend separating customs duties and related taxes from airport service charges. Each cost should have its own supporting analysis.
A financial model that groups every aviation-related charge under a single exemption assumption may produce an unreliable estimate of operating costs.
A Practical Checklist Before Relying on Customs Relief
Before confirming a shipment, signing a supply contract, or approving an operating budget, we recommend:
- Confirming the airline’s status under the agreement.
- Identifying the goods and intended use for the specific transaction.
- Reviewing customs handling with the relevant advisers.
- Documenting the commercial assumptions behind the quoted price.
- Assigning responsibility for records, procedures, and additional costs.
- Keeping other transactions separate when they involve different recipients or uses.
Where a business also conducts local transactions, those activities should receive a separate assessment through domestic tax advisory services in Panama.
Frequently Asked Questions
1. Which Panamanian law approves the agreement?
Law 548 of September 9, 2026, approves the Panama–Saudi Arabia Air Services Agreement.
2. What is the main customs issue for an airline?
Determining whether its status, the goods involved, and their intended use meet the agreement’s conditions.
3. What should a spare parts supplier check first?
We recommend identifying the recipient airline and documenting the connection between the parts supplied and the intended operation.
4. What records should a business prepare for its review?
Purchase orders, contracts, invoices, delivery records, and available information on the goods’ intended use are useful starting points.
5. Does supplying an airline establish eligibility by itself?
A business should assess the specific transaction against the agreement’s conditions before relying on an exemption.
6. How should a quotation reflect expected customs relief?
We recommend stating the tax assumptions and explaining how the price will change if the anticipated treatment is unavailable.
7. Why should airport charges be reviewed separately?
The agreement addresses airport charges and customs exemptions in different provisions. Keeping them separate also improves cost estimates.
8. Which teams should participate in the assessment?
As a management recommendation, involve the legal, tax, procurement, logistics, and finance teams responsible for the transaction.
9. Where can businesses find the official legal text?
The Spanish-language text is available in Panama’s Official Gazette: Law 548 of 2026.
10. When should a business obtain advice?
Ideally, before finalizing prices, committing to delivery terms, or approving budgets that depend on the anticipated customs treatment.
Assess Your Aviation Transaction with LAC Tax
If your airline or supply business is evaluating a transaction connected with the Panama–Saudi Arabia Air Services Agreement, LAC Tax can help assess the relevant tax provisions and review the supporting documentation.
Our tax advisory team in Panama supports businesses with local and international tax matters.
Contact LAC Tax to discuss your transaction.
Specialist contact: Raúl González Casatti
Email: rgonzalez@lacgrp.com
Legal source: Law 548 of September 9, 2026, approving the Panama–Saudi Arabia Air Services Agreement, particularly Articles 5 and 6.