Businessmen around the world are facing an economic crisis in their home countries. Whether it is caused by bank failures, slumping real estate market, factories going offshore to other countries, or companies outsourcing jobs offshore, many feel it is time to consider relocating to another country. If you are concerned about what is happening in your country economically or politically or simply want to preserve your wealth by living in a country which has half the cost of living to yours, Panama has a lot to offer.
This web page is dedicated to explaining the advantages of doing Business in Panama. But before explaining the advantages of relocating and doing business in Panama, it might be better to explain the concept of going “Offshore”.
“Offshore” is a term meaning to relocate assets, persons, or businesses to another country. Deciding which country to relocate to could be the most important decision in your life.
Why Do Business “Offshore”?
11 Essential Reasons
Picking a new country for offshore business activities should include the following 11 characteristics:
1. Avoiding Income Taxes: You may have heard of the term “Tax Haven”
which means a country with either no income taxes on domestic and worldwide
income or exempting income taxes on earnings from countries outside of the
country you and/or your company is based.
A Tax haven offers you the opportunity to increase your wealth by
keeping more of your profits by not taxing them.
2. Beneficial Incorporation Laws:
It should be easy and cost effective to set up a new corporation or
company while allowing you the option to create such entities anonymously
allowing you total privacy in your financial affairs.
3. Currency Stability: World currencies can fluctuate depending upon political or economic conditions in each country. Avoiding the problem with exchange rates can relieve worries and pressures. Some currencies have restrictions moving into and out of certain countries. Look for a country whose own currency is
stable while having banks which can handle deposits in different currencies.
5. Government Stability: Look for a country with a stable democratic
government with no political unrest.
6. Economic Stability: Seek a country whose economy has been
consistently growing with low inflation.
7. Strong Banks: A country with modern, high tech, online banking systems with little or no history of bank failures is desirable. The country should have good banking laws for regulating, auditing, and limiting the risks their banks can take while investing.
8. Good Communication & Infrastructures: Look for a country offering high speed internet and modern telephone communication systems. The international airport should be large and diverse allowing for easy travel to other countries. The internal infrastructure should allow for easy air, road, and water transportation throughout the country.
9. Free from Natural Disasters: Look for a country which does not have destructive earthquakes, hurricanes, tornadoes, tidal waves, or flooding. Such natural disasters will disrupt transportation, communications, and create havoc with electricity, food and housing needs.
10. Compatible Language: Your new country should have enough people
speaking your native language in order to allow for easier acclimation. Expatriates speaking your language and setting up expat communities and networks will make your adjustment to your country much smoother. The country’s language should be easy enough to learn while offering language schools to teach their native tongue.
11. Proximity to Your Home Country: Moving to a new country or just setting up a new business means leaving behind family members, business associates, and friends. Returning to your home country or traveling between both countries should be made easy by choosing a country with direct flights between the two countries.
Time zones should be compatible as the further you relocate from your home
country the greater time zone difference which can make simple phone calls or
online chats more difficult.
11 Reasons Why Panama is the Best Place for Offshore Business
Panama offers all of the above mentioned reasons for either relocating completely or starting a business in Panama and commuting between both countries. Let’s explore the 11 essential reasons in relation to Panama.
1. Avoiding Income Taxes: Panama is considered a “Tax Haven” because it does not tax income generated outside of Panama. For income generated inside Panama, all of the normal business deductions are available (rent, utilities, wages, equipment & supplies, business entertainment, etc.) while income tax rates are low.
2. Beneficial Incorporation Laws: Panama has one of the best anonymous corporate laws in the world. While one can be totally transparent by being named as a member of the Board of Directors and an Officer, the option exists
to become totally anonymous to protect your privacy. Anonymity can be accomplished by using “Nominee Directors & Officers” by having the law firm’s staff be appointed to those positions. Another way is to issue “Bearer Shares” instead of named stock certificates. Just like Bearer Bonds, the Bearer Shares simply state “Bearer” on the stock certificates. In addition, it’s very cost effective to set up a Panama corporation and to maintain it every year.
3. Currency Stability: Ever since Panama became a nation in 1903, the United States allowed Panama to be the first country to adopt the U.S. Dollar with its currency called the “Balboa”.
4. Privacy: As explained in #2, Panama offers the utmost in corporate privacy. Panama’s banking laws are amongst the strictest in the world in regards to making it a crime for any bank employee to acknowledge or reveal depositor’s names or banking information.
5. Government Stability: Panama has maintained democratically elected
governments since 1989 with no political instability.
6. Economic Stability: The current world economic crisis has not affected Panama in the least as its GDP has grown annually since 2005 with low
7. Strong Banks: Panama’s banks are strong with no bank failures for many years. That’s because the banking laws limit how much banks can invest in high risk securities and must maintain higher reserves than U.S. banks. Panama banks have always been conservative with their mortgages and loans requiring documentation of proof to repay with a careful loan to income ratio.
8. Good Communication & Infrastructures: Panama has high speed internet connections throughout the country along with modern telephone equipment for international calling. Panama City International Airport handles direct flights from over 30 international cities including the U.S., Canada, Europe, and the rest of Latin America. Panama has good roads with 4 lane highways connecting its capitol with all major provincial capitals into Costa Rica. The highway between the Pacific and Atlantic oceans makes road travel in less than 90 minutes. Every province has domestic airports allowing fast domestic air travel. The Panama Canal allows large ships to travel between both oceans since 1914.
9. Free of Natural Disasters: While Panama occasionally experiences minor earthquakes; it never has hurricanes, tornadoes, or tidal waves.
10. Compatible Language: While Spanish is the main language in Panama, English is very popular due to the large English speaking expat community and the fact that the U.S. had been heavily involved in the construction and maintenance of the Panama Canal from 1904 to the end of 1999 when the U.S. turned over the Canal to the Panama government and closed all of its numerous military bases.
11. Proximity to Your Home Country: Citizens of Canada, the U.S., Latin America, and Europe will find that Panama’s international airports have direct flights to these regions.
This section will include information about how to start a Panama business to explaining the different Panama entities, and other useful business in Panama information.