Tax Haven Panama

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The vision of a canal that would ease and stimulate trade within the Americas and with the rest of the world was the beginning of Panama tax haven journey to prosperity. With free trade agreements in force with the Caribbean region and the US, such as the Caribbean Basin Initiative and Tratado de Promoción Comercial (TPC), and strengthened ties with the EU, Panama tax haven has evolved into one of the world’s most prominent trading and manufacturing giants. In 2006, the EU became tax haven Panama principal investor, accounting for USD 4,585 million in investments.

Brief Country Overview

Panama tax haven is situated in Central America and shares frontiers with Costa Rica and Colombia, which lie northwest and southeast respectively. Officially, Panama is called the Republic of Panama. In 2009, Panama tax haven population was calculated at 3,360,474. This is made up of Mestizo, African, European, Asian and Mulatto ethnic groups including about 7 Amerindian tribes belonging to the Guaymí, Naso, Bribri, Wounan, Ngöbe, Naso and Emberá. Although Spanish is the official language, English and other native dialects are widely used. Culture in Panama tax haven is expressed through song, religion, dance, art, cuisine and musical forms include Spanish reggae, salsa, reggaetón, jazz, Cuban music and blues. Panama City is one of the most densely populated areas in Panama tax haven, with over half the population residing there.

Due to the Panama’s strategic location, large investments were made in the areas of commerce, private industry, banking, trade and tourism. The service sector is the economic base of Panama tax haven and is responsible for the majority of the revenue generated in the country. In 2008, Panama was identified as the country with the quickest expanding economy in Latin America and with the Colón Free Trade Zone accounting for about 90% of all trading activity in Panama tax haven, is known to possess the biggest free trade zone in the western hemisphere. During the period January-September 2008, tourist arrivals totaled 1,110,000, furthering increasing the record large numbers of tourists that had entered Panama tax haven on 2007.

Panama Fiscal Advantages and Incentives

Panama tax haven has a dollarized economy which encourages foreign investment because of the absence of foreign exchange risks and low rates of inflation which have been kept at just below 2% for about 40 years. The work force speaks both English and Spanish (the official language) and as a result does not limit investors in the types of business ventures that they may undertake in Panama tax haven. Other Panama tax haven benefits are:

  • Zero tax on the offshore income and profits of a Panama company
  • Tax incentives for investments of 50,000 and above (eg, 20 year tax break from import duties on furniture, raw material and vehicles; 20 year tax break on real estate tax; annual rate of 10 percent for accelerated depreciation).
  • International Credibility
  • Use of the United States dollar (called Balboa) as legal tender
  • After Chile and Brazil, known as one of the best countries in the work for accessing capital
  • The Panama Canal trade opportunities and success
  • Flexible corporate laws
  • Open and market oriented economy
  • Equality of opportunities for foreign and local entrepreneurs
  • The biggest free trade zone in Latin America and the Caribbean (Colon Free Trade Zone)
  • Sophisticated banking center
  • Development infrastructure transportation
  • No exchange controls

Panama Offshore and Financial Services

Panama tax haven is a leading offshore jurisdiction for companies and foundations. Other offshore services are available to investors who are interested in operating or investing in Panama in one way or the other. Panama is a true tax haven and levies zero tax on all offshore operations. Panama tax haven offshore services can be summarized as follows:

  • Panama Corporation formation
  • Panama Foundation formation
  • Offshore banking
  • Vessel registration
  • Real estate brokerage
  • Capital/financing procurement
  • Trademark registration
  • Investment brokerage

Panama Offshore Legislative Framework

Panama tax haven offshore legislative framework is sound and has been supported by strict privacy laws for many years. Panama offshore laws enable fast company incorporation, modernized company services via an online registry system and competitive corporate structures. Some of these legislations also regulate financial activities and seek to implement measures to clamp down and combat financial terrorism. The following are some of those Panama tax haven offshore laws:

  • General Corporation Law (Law 32, February 26, 1927)
  • Private Foundation Law 1995
  • Trust Law No. 1 of 1984
  • The Banking Act
  • Capital Laundering Law No. 41 of 2000
  • Financial Intelligence Unit Decree No. 136 of 2000
  • Law No. 32 of 1927
  • Law No. 24 of 1996
  • Securities Act (Decreto Ley 1 de 1999)
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