Would you like to establish an offshore company in Panama in 2020? We will be happy to assist you in the matter! Going offshore does not mean resorting to a tax haven any longer. All it means is opening a company in a foreign country. There were times when having an offshore corporation was morally wrong but not any longer as the word ‘offshore’ has lost its negative connotations. An offshore company in Panama is a perfectly legal corporation that meets all the international business standards.
Panama: A secure jurisdiction for international businesses
Panama is famous all around the world for the high quality of corporate and financial services that international businesspersons can find there. The Government of the country offers inviting tax incentives to foreign entrepreneurs and the local economy demonstrates stable growth over the recent years.
More and more business people from different parts of the world are opening companies in Panama. This country has the lowest VAT in the whole of Central America, which attracts many entrepreneurs from Europe, North America, and China.
Double standards applied in international politics
The success that Panama has been making is a pain in the neck for larger states that would like to see the country less attractive for foreign investors.
The ‘Panama Papers’ scandal that broke out in 2016 is only one indication of this. The scandal was the beginning of a mud-slinging campaign against Panama that was aimed at making its financial sector more ‘transparent’.
Panama was falsely accused by the ‘investigative reporters’ of many vices that it did not have. As a matter of fact, such ‘investigations’ revealed the use of double standards by the authorities of some OECD countries. They showed how hypocritical and unjust they can be at times.
Under the tremendous pressure on the part of the European Union and OECD, the Panamanian authorities had to reform the country legislation so that it would conform to the imposed ‘transparency’ requirements.
Thus, since 2017, all foreign companies in Panama have to keep financial records, which they did not have to do before. In February that year, Panama signed the international agreement on automatic exchange of its residents’ financial information with the fiscal bodies of their home countries. In April 2017, the Parliament passed a new Law on Trusts. Since 2018, all Panamanian companies have to have a tax identification number that reflects the type of business activities that they are engaged in and several other factors. In January 2019, the National Assembly criminalized tax offences while they had been considered administrative offenses before. Finally, following the FATF recommendations, Panama established a closed Register of Ultimate Beneficiary Company Owners that went into operation in January 2020.
These measures have led to exclusion of Panama from the black lists, as it is not considered a tax haven by any international organization any longer.
It should be noted that today Panama is in better conformity with various FATF and OECD regulations than many other ‘reputable’ jurisdictions. According to the global rating of ‘The level of financial secrecy’, Panama ranks 15th in the world while the following countries make up the top-ten in the list:
- Cayman Islands
- The United States of America
- Hong Kong
- The Netherlands
- British Virgin Islands
- The United Arab Emirates
While FATF and OECD are discussing how efficient Panama is in imposing regulation and control in the financial sector, a number of large states do not live up to the standards that have been set by themselves! You should also know that far from all EU states have Registers of Ultimate Beneficiary Company Owners while Panama has been forced to establish one. This shows that double moral standards are applied when the ‘big and powerful’ nations are talking about ‘transparency’ of financial operations.
It looks as if making the rules of the game does not mean following these rules for some national governments. At the same time, the world financial authorities are pushing small countries such as Panama, for example, to obey the strictest requirements and make their corporations totally transparent.
Panama: the advantages of establishing an offshore company in the country
Buying an offshore company in Panama would not mean that you want to evade taxes. The matter is that the Panamanian tax legislation simplifies doing business greatly. No one can deny to you the right to plan your taxes in accordance with all the legal requirements.
Territorial taxation system in Panama
Probably the main reason to register an offshore company in Panama is to use the advantages that its territorial taxation system brings. In accordance with this taxation policy, Panamanian-registered companies pay taxes only on the income that they make on the territory of Panama.
The income that residents of Panama (both private individuals and legal entities) derive from business operations abroad are not taxable in Panama.
The owners of Panamanian companies do not have to pay taxes on dividends nor interests earned outside Panama. Neither do they pay the capital gains tax, nor the gift tax, nor the inheritance tax.
If you bring capital to Panama from abroad to finance a business located in Panama, however, you will have to pay the local taxes.
The main tax that your offshore company will have to pay in Panama is the annual company registration extension fee of US$ 300. This is the sum that you will have to pay in a timely manner and without fail.
Tax incentives and asset diversification opportunities in Panama
When you buy an offshore company in Panama, you can make use of the advantages that the Free Economic Zones in the country offer. For instance, The City of Knowledge Zone will be interesting for hi-tech companies that can sell their produce both at the domestic and at the international markets.
Companies registered in this Free Economic Zone receive the following tax incentives:
- VAT exemption as well as exemption from import duties on equipment, transportation vehicles, furniture, expendable materials, mechanisms, and instruments.
- Exemptions from all duties on financial transactions aimed at the Technological Park development as well as income tax and transfer tax exemption.
Colon Free Trade Zone is the largest such zone in Panama. The resident companies are engaged in international trade and re-export. They are not taxable on import of goods nor services.
The Panama Pacifico Free trade zone offers tax incentives to companies working in wholesales, logistics, and other suchlike spheres.
There is also a specially designated area in Panama City where international corporations set up their headquarters. There are a number of foreign resident companies in this zone as they are attracted to Panama by the territorial taxation system that is applied in the country.
An offshore company in Panama is the best way to protect your assets
The legislation of Panama allows registering a corporation, a limited liability company, a private foundation or a trust in the country. All these business entities will protect the foreign owner’s assets in an efficient manner.
If you are planning to engage in international business, the best type of company to register in Panama is a corporation. Panamanian corporation shareholders have limited liability, which means that their financial responsibilities to the Government are limited by the shares of their company ownership.
A corporation registered in Panama will protect the confidentiality of its owners. The Public Register shall have the names of the company top officers (the president, the secretary, the treasure, and the directors) and the company legal address.
The UBO’s Register mentioned above does not make the names of the company beneficiaries public. In case the company owner is not among its managers, his or her name will not be associated with the company in any public corporate documents.
The laws in Panama effectively protect property rights as well as personal privacy and they equally apply to both native people of the country and its foreign residents.
Unauthorized disclosure of confidential information, including banking and corporate information leads to high fines and even custody in severe cases.
Other advantages of registering a corporation in Panama:
- It takes five to seven business days to establish a corporation in Panama while the company owner does not have to be present in the country during the registration process.
- If you contact Offshore Pro Group by electronic mail firstname.lastname@example.org, we will gladly register a company in Panama for you. The corporate documents can be kept in the country of your choice.
- The corporate laws in Panama do not set neither the lowest nor the highest limits for the charter capital that you would like to register when setting up a company on the country. The common practice is registering US$ 10,000 in the form of shares. The nominal value of one share can be one US dollar. Please bear in mind that you do not have to actually put the charter capital in the bank. Declaring the amount of the company charter capital is enough.
- General Meetings of the shareholders can be held anywhere in the world. Moreover, online conferencing and other means of virtual communication are acceptable for this purpose.
- The company that plans to do international business does not have to acquire any licenses nor special permits. There are no requirements in Panama as to the company seal nor other corporate accessories.
- An offshore company registered in Panama does not have to file tax returns, balance sheets, nor have audits. At the same time, the company must keep financial records and store them at the registered address.
- There are no limits as to the capital that can be brought to Panama from abroad. Similarly, you can disinvest the profits that you obtain in Panama in the amount that you desire.
- The Panamanian-registered company can use the advantageous service conditions that the local banks offer. There are over eighty banks in the country and many of them pay high interests on the deposits (while providing high banking security at the same time) and have a wide choice of credit types. The US dollar is used in Panama as the official currency. There is a national currency called balboa but only balboa coins are used as change (there are no balboa banknotes in Panama). The balboa is pegged to the US dollar at 1 to 1.
One more benefit that registering a company in Panama will bring is the possibility to acquire legal residency in the country. Not only will the company owner be eligible for Panamanian residency but the members of his / her family as well.
Unlike most other countries, Panama offers a wide choice of immigration programs that allow acquiring legal residency in the country in exchange for a modest investment into the local economy.
For example, if you invest US$ 160,000 on the Business Investor visa and create at least five new jobs, you will be eligible for a two-year temporary residence permit and if your company keeps on running after that, you can apply for a permanent residence permit.
There are more immigration programs in Panama and we will be happy to make more suggestions to you if you write to us at the e-mail address specified here.
Our company has already helped many people from different countries to buy offshore companies in Panama and put their business plans into reality. If you would like to join this group, please write to email@example.com , contact us via Whatsapp or the live chat and we will reply to you without delay.
How can I buy an offshore company in Panama and what company ownership type should I opt for?
If you would like to have an offshore company in Panama, please seek our specialists’ advice. With our assistance, you can purchase an existing (already registered) company with a zero balance or establish a new one in Panama. If you are looking to engage into international business, we recommend that you register a corporation. If you are after protecting your assets rather than earning a profit, it is advisable to establish a Private Foundation or a Trust in Panama. Shortly speaking, the ultimate solution will depend on your primary goals. Whatever option you choose, registering a company in Panama is going to work out much less expensive than setting up an offshore company in most other countries of the world.
What are the main advantages of an offshore company in Panama?
Probably, the weightiest advantage that Panama offers is its legislation that allows the corporations (aka International Business Companies, IBC) registered in the country to do tax-free business abroad. The territorial taxation system is applied in very few countries and it is appreciated by international entrepreneurs from all over the world. A Panamanian-based company will let you plan your taxes and lessen your fiscal burden significantly. An offshore company in Panama is going to be an efficient instrument that you can use for entering foreign markets or effectively protecting your assets.
What if Panama does not suit me as a country where I would like to set up an offshore company?
Panama used to be considered a classical offshore jurisdiction before. However, with the toughened international requirements, the country has now turned into an onshore jurisdiction that offers lucrative business conditions and serious tax incentives. At the same time, you had better use the advice of our specialists if you would like to set up a business company offshore. Much will depend on your ultimate goals and your business plans.