Panama: Offshore Jurisdiction and a
Place to live.
- Panama enjoys a stable, democratically
- Panama's economic performance is, year after
year, better than nearly every other Latin American country. For 40 years
Panama's inflation rate averaged less than 2% per year, unheard of south of
- Comparing its neighbours, Panama has more
amenities than traditional retirement in Mexico or Costa Rica -- but costs and
crime rates are far lower.
- There is far less red tape and less
interference from local authorities.
- The government of Panama and its laws
actually encourage foreigners to invest and live there.
1) tropical weather;
2) a low cost of living;
3) reliability and efficiency absent in other Latin American countries;
4) favourable offshore banking laws;
5) a stable economy, with the US dollar as currency;
6) government investment incentives that slash tax rates and fees for
7) a diverse geography from mountain ranges to tropical islands, from a
booming metropolis to vast jungles.
Now here's the kicker if you're looking for a
country of residency: Panama boasts one of the most attractive programs for
foreigners on offer anywhere in the world. As a Panama "pensionado," you are
eligible for discounts on just about everything you buy. If you buy or build a
house you pay no property taxes for 20 years. As a resident you pay no taxes
on foreign earned income.
Panama has excellent asset protection,
offshore corporation laws and the largest banking sector south of Miami.
Yes, It's Panama !
Selecting an offshore jurisdiction
is an integral part of establishing an offshore structure or financial
account. The jurisdiction that you choose should have at the very minimum,
the following 10 characteristics:
1. A Full Fledged Tax Haven - no
capital gains tax, no interest income tax, no inheritance tax, etc.
2. Favorable Incorporation Laws - the corporate laws of the country
should enable you to hold "Bearer Shares", have directors from any
country, inexpensive, and be able to incorporate Private Interest
3. Stable Currency With No Currency Restriction Regulations - there
should be no restrictions on the movement of funds in or out of the
4. Strict Privacy Laws - there should be strict privacy laws that
protect your banking information and corporate book information from
anyone, including foreign governments.
5. Stable Government - the government of the country should be
stable and should use the opposite legal system of your domestic country
(if your country uses common law, you should seek a country that uses
roman law). The country should be safe to visit.
6. Stable Economy - the economy of the country should be stable.
7. Excellent Banking System - the banking system of the country
should be advanced both in areas of banking infrastructure, government
auditing, and technology.
8. Excellent Communications System - the communications systems of
the country should be technologically advanced in comparison with first
9. Language Compatibility - the language of the country should be
suitable for your understanding.
10. Time Zone Compatibility & Close Location - the time zone of the
country should be such that you can contact your offshore provider or
financial institution during your normal domestic business hours & fly to
the country quickly if necessary to handle business.
After careful research, you will find
Panama to be the ideal jurisdiction for your offshore needs. The Panama
corporation law was promulgated over 70 years ago and has since been copied
by many of the other tax haven nations such as Bahamas, St. Vincent,
Bermuda, Belize, Isle of Man, etc.. Panama is one of the most popular places
in the world to incorporate, with currently over 350,000 registered
entities. Panama also offers the Panama Private Interest Foundation, which
is one of the most useful asset protection and estate planning vehicles
Panama offers the
following benefits and advantages:
1. Panama is a 100% Tax Haven:
Non-resident Panamanian International Business Corporations (IBC's) and
Private Interest Foundations do not pay tax on any of their income (as
indicated below), nor do they have any reporting requirements to the
- No tax reporting requirements.
- No income tax.
- No capital gains tax.
- No interest income tax
- No sales tax.
- No tax on issuance of corporate shares.
- No tax to shareholders.
- No stock sale or transfer tax.
- No capital stock tax.
- No property tax.
- No estate tax.
- No gift tax.
- No stamp tax.
- No succession tax.
- No inventory tax.
2. Panama offers the most
favorable and most flexible incorporation laws available in the world.
Private Interest Foundations are also available, and are one of the most
widely used estate planning structures in the world today.
- Panama is the registered domicile for
over 400,000 corporations & foundations, making it one of the most popular
jurisdiction to incorporate in the world.
- Panama does not impose any reporting
requirements for non-resident Panamanian corporations.
- Panama does not allow "piercing the
- Panama corporations share certificates
can be issued in Nominative or Bearer form (anonymous form of ownership),
with or without par value.
- Panama corporations do not require
Paid-In Capital, nor is there a time limit in which authorized capital
must be fully paid.
- Panama corporations directors, officers
and shareholders may be of any nationality and resident of any country.
- Neither the directors nor the officers
of Panama corporations need to be shareholders.
- Meetings of directors, officers, and
shareholders may be held in any country and accounting books may be kept
in any country.
- It is not necessary for the interested
parties to be present in Panama for the purpose of establishing a
- Corporations conducting business outside
of Panama do not require a commercial license for offshore business
3. Panama's circulating currency is the
US Dollar, and Panama has no currency exchange controls or currency
restrictions so funds can flow in and out of the country freely.
- Panama uses the U.S. dollar as its legal
tender (currency), instilling tremendous fiscal and monetary discipline
while keeping inflation very low - under two percent for the last 40
- A dollar economy insulates Panama from
global economic shocks. During the Asian monetary crisis of 1998, Panama
became one of the healthiest economies in Latin America.
- No currency exchange controls. Panama
has no restrictions on monetary remittances abroad, including dividends,
interests, branch profits and royalties.
- No restrictions on funds flowing in or
out of the country.
4. Panama continues to maintain
what we consider to be the most solid banking and corporate book secrecy
laws in the world, which are engraved in its' constitution. With Britain's
proposed regulation for removal of bank and corporate book secrecy in the UK
offshore territories, it is clear that Panama remains the most secure
offshore financial center - where privacy and confidentiality is not only
respected, but vigorously protected by constitutional law.
- Panama offers the best bank secrecy laws
in the world.
- Panama offers the best corporate book
secrecy laws in the world.
- There is no such thing as "piercing the
corporate veil" in Panama.
- Revealing banking information to third
parties is a crime, punishable by prison.
- Panama has no mutual legal assistance
treaties (MLAT's) for sharing of banking information with any other nation
and does not recognize court rulings from other countries. (Under the new
laws, they make exceptions in cases of drug money laundering or drug
- Panama Corporations offer "Bearer
Shares", allowing shareholders to maintain 100% anonymity and privacy.
- Panama Private Interest Foundations
allow for Private Protectorate Documents and Private Letters of Wishes,
enabling controllers (Protectors) and beneficiaries of Private Interest
Foundations to remain 100% anonymous and private.
5. Panama has what is considered
by government analysts to be the most stable government in all of Central or
- Democratic government since 1990. The
Government of Panama is headed by the executive branch, which is composed
of a president and two vice presidents, democratically elected for a
five-year term by direct vote.
- Mireya Moscoso, 52, assumed power on
Sept. 1, 1999 after winning the presidential elections held on May 2.
Moscoso is the country's first woman president and the leader of a country
at a moment of great historical importance as the Panama Canal begins a
new era under Panamanian administration.
- The Panamanian military was abolished by
constitutional amendment in 1994, and the government still has a unique
security arrangement with the U.S. due to the Neutrality Treaty of the
Panama Canal. As a result, the risks of going back to the earlier military
regime are virtually non-existent (Source: Euromoney Report/Lehman
Brothers, Feb. 26, 1999).
- Stable government with excellent
- Pro-business government attitude and
- Roman law system.
- Moody's has issued Panama a sovereign
debt ceiling of Ba1 and Standard & Poors has assigned a default-risk
rating of BB+.
- Panama is a peaceful country with no
military. Unlike many neighboring countries, personal security concerns
are limited. Panama has the lowest crime rate in all of Central and South
6. Panama's economy is one of the
most stable, prosperous, and most advanced in all of Central and South
- Panama is home to the second largest
international distribution and trade center (free trade zone) in the world
next to Hong Kong. Panama's Colon Free Zone has over 1500 international
import/export businesses operating within it, receives more than 250,000
visitors yearly, and generates exports and re-exports valued at more than
US$11 billion annually.
Trade Zone, Panama
Other tax haven nations such as
Bahamas, St. Vincent, Antigua, Cayman, St. Kitts, Nevis, Dominican
Republic, Vanuatu, Bermuda, Costa Rica, Belize, Isle of Man, Isle of
Man, etc. are nothing but tax havens that survive on tax evaders and
is a genuine international trade and banking center that is well known and
respected throughout the world.
- The banking and commercial trade
industry is alive in Panama with the US Dollar as it's circulating
currency. There are over 150 international banks in Panama.
- Virtually zero inflation - Panama's
inflation rate in 1998, 1999, and 2000 was under 1.5%.
- Panama's GDP is over US$7 Billion. In
recent years, the service sector has accounted for over 80% of the
country's GNP. The Panama Canal is also a large contributor to Panama's
overall economic success.
||Panama is at the top of
the list of the world's freest economies, according to Canada's Fraser
Institute (Economic Freedom of the World: 1998/9 Interim Report, Nov.
1998). Ranked eighth with Australia, Ireland, the Netherlands and
Luxembourg, Panama represents an environment conducive for the creation
of companies, jobs and prosperity.
Panama is a member of the World Trade Organization (WTO) and is a
beneficiary of the Caribbean Basin Initiative (CBI). Panama is negotiating
the Free Trade Agreement of the Americas (FTAA) and will become the
headquarters for the administrative offices between the years 2001 and 2003.
Panama has initiated formal negotiations pertaining to free trade agreements
with numerous countries and regional groups.
Panama has been ranked first in Central/South
America for low cost of living, operational cost and index of labor by the
Tripartite Committee, which consists of the Economic Commission for Latin
America and the Caribbean (ECLAC), the Organization of American States (OAS)
and the Inter-American Development Bank (IDB).
Political Risk Services (PRS) placed Panama in the top three countries of
the hemisphere with the best risk-investment qualifications.
The Wall Street Journal/Heritage Foundation's annual Index of Economic
Freedom found Panama second in the region.
Panama's open economy offers the lowest tariffs in the region, which has
helped increase foreign investment in both the public and private sectors.
There are more than 40 laws and decrees that offer investors special import,
tax, and operational incentives. Sectors enjoying these incentives include
tourism, export processing zones, mining, reforestation, insurance and
re-insurance, agro-industry, petroleum free zones, infrastructure and
The Investments Stability Law (Law No. 54 of July 22, 1998) guarantees all
foreign and national investors equal rights, continuing Panama's
long-standing policy of providing a foreign-investment environment that
requires no special authorizations, permits or prior registration.
Major companies in Panama include Federal Express, DHL, Sears, Price Costco,
Bell South, Kansas City Southern Railways, Continental and American
Airlines, ICA (construction), Cable & Wireless, Evergreen and Hutchinson
Whampoa, and many others.
7. Panama City is home to the second
largest international banking center in the world next to Switzerland.
Panama has the most modern and successful international banking center in
Latin America, with more than 150 banks from 35 different countries.
the largest international banking center in the world next to
Approximately 150 international banks are located in Panama. Total
assets in Panamanian banks are over US$100 billion.
- Panama offers a
modern and technologically advanced banking system.
- Panama is one of
the most stable banking jurisdictions in the world. Panamanian laws
require over US$15 million in proven capitalization just to apply for a
banking license. Other tax haven countries issue banking licenses with as
little as US$50,000 in capitalization.
- There has not been
a bank failure in Panama in over 5 years. Only a few banks have failed in
Panamanian banking history. Switzerland had 5 bank failures just in 1999 -
2000, not to mention other tax haven's bank failure rates.
- The Panamanian
government has enacted strict bank auditing guidelines, to monitor banking
practices, credit guidelines, and overall bank administration. Each bank
must submit monthly auditing reports to Panama's Banking Superintendence,
which is under direct supervision by the Banco Nacional de Panama (BNP).
- The Panamanian
banking system is set up to ensure depositors the security of their
deposits, similar to the US banking system. The National Banking
Commission (NBC) and the Banco Nacional de Panama (BNP) execute the
functions of a central clearing bank. The NBC oversees the banking system,
sets the reserve requirements and regulates interest rates. The BNP
functions as the Panamanian governments principal depository, manages the
country's international reserves and is the clearing-house for the banking
- Panama's new
comprehensive banking law (Decree No. 9) meets the standards of leading
financial centers around the world for transparency and regulation, and
conforms to the statutes of the Basle Commission.
- Some of the banks
present in Panama's banking center are: Citibank, HSBC, Dresdner Bank,
Bank of Tokyo, Bank of Boston, Banco Nacional de Paris, International
Commercial Bank of China, Societe Generale, Banque Sudameris, BBVA, Banco
Uno, Banco General, PriBanco, Banco del Istmo, Global Bank, MultiCredit
Bank, PanaBank, ABN Amro, Banco Aliado, Banco Continental, BancoLat, BIPAN,
Lloyds TLB Bank, Bank of Nova Scotia, and much more.
- The Panama Stock
Exchange is the fastest growing in the region with an average total
trading volume of US$900 million.
- Some of the
brokerage firms present in Panama are (some through affiliates): Merrill
Lynch, Pershing / DLJ, Paine Webber, Solomon Smith Barney, Bear Stearns,
communications systems and infrastructure are the equivalent of any first
world country such as the USA, Canada, or the United Kingdom. Telephone,
fax, internet, and cellular communications are all offered in Panama by the
worlds largest communications companies.
- Panama has the
highest level of communications infrastructure for telephone, fax,
internet, and cellular communications in all of Central & South America,
including the Caribbean.
privatization efforts in the telecommunications sector were initiated in
1995, with the restructuring of the state-owned monopoly operator, INTEL,
the subsequent concession to Bell South in 1995 to operate one of the two
(2) cellular mobile telephone licenses and the sale of 49% of the shares
of INTEL to Cable & Wireless (a UK company) in 1997.
- Cable & Wireless
enjoys complete management responsibility, exclusivity in certain
telephone services (including international long distance services) for a
period of five years (which will expire in 2003) and has a license to
operate in the mobile cellular communications sector. Bell South has the
second largest share in the mobile cellular communications sector.
- Panama has the best
access to multiple high-bandwidth continental fiber optic networks in
telecommunications infrastructure. The extremely low risk of natural
disasters (hurricanes etc.), gives the Panama telecom sector security and
reliability of service as well as a competitive advantage over other
- Panama is extremely
easy to access from almost anywhere, due to its central location in the
middle of the Americas. Its proximity to large cities in the US and Europe
makes it relatively cost effective to bring in specialist know-how for
installation and maintenance.
- Panama's long
history as an international banking and services jurisdiction, has
resulted in the availability of technical know-how in internet technology
and information technology as well as sufficient human resources to
install and maintain ecommerce operations. The MAYA-1 and ARCOS-1 ring
systems link the continental Americas and the Caribbean Basin, which was
completed in December of 2000.
- All the preceding
advantages, incentives and infrastructure place Panama as an ideal
location for: Internet Service Providers, E-Commerce Providers,
Applications Outsourcing ASP, Broadband Content Providers, New Media
Content Providers, and Exchange Traffic.
official language is Spanish, however, English is the second most widely
spoken language. 8 out of 10 Panamanians living within the banking sector of
Panama City are bi-lingual in English and Spanish.
- English is a widely
spoken language in Panama.
- 9 out of 10
educated Panamanians have traveled to the USA.
- Panama has a very
high literacy rate in comparison with other Central and South American
10. The Republic of
Panama is located at the narrowest point of the Central American Isthmus,
which connects the continents of North and South America. It is just 2.5
hours by air from Miami, FL, USA and located in the same time zone as the
U.S. East Coast (five hours behind Greenwich Mean Time).
- Panama is located
between Costa Rica & Colombia.
- Panama is on
Eastern Standard Time (same as New York, USA).
- Panama is just 2.5
hours away by air from Miami, Florida, USA.
Panama is the ideal
jurisdiction for international investors and businessmen to operate their
offshore corporations, banking, investing, finances, and all other areas of