Tax Haven Panama — General Information
Panama is situated between Costa Rica and Columbia, with the Caribbean Sea forming its north coast and the North Pacific Ocean, its south coast. This relatively narrow strip of land connects Central America to South America.
The Panama Canal provides easy shipping access between its East and West Coast, while providing employment for residents and major income for Panama. Major shipping lines utilize the Panama Canal, which links the Pacific with the Atlantic, through the Caribbean Sea. This has placed Panama as an important country for international transshipment and Free Trade Zones.
Today Panama, with a land mass of approximately 76,000 square kilometers, has a population of some three million persons, with ethnic diversity including Mestizo, West Indian, European and Amerindian.
The climate is tropical maritime, which means it is basically hot, humid and cloudy. The official language of Panama is Spanish. The capital is the metropolitan city called Panama City.
Panama is a constitutional democracy with the Chief of State and Head of Government being the President. The President and two Vice Presidents are elected on the same ticket every five years, through national elections.
The infrastructure of the Republic is fairly well developed, with railroads being expanded to connect the major sectors of the country and the numerous ports. Between the railroad links and the major highways, containerized inland cargo will compete with canal cargo as a transshipment alternative.
Air service is also available through the international airports, providing direct access for passengers and cargo to the major destinations in North, Central and South America.
While the telecommunications infrastructure requires further expansion, land based telephones, cellular service and internet services are available to the major commercial centers via a digital fiber optic link.
Panama’s economy is based primarily on a well developed services sector, which accounts for 80% of GDP. The operation of the Panama Canal, the Colon Free Zone, banking, insurance and transshipment ports are the major activities in this sector and include tourism.
Other sectors of the economy which have a positive impact include agriculture and fisheries and provide employment for 20% of the economically active population. Forestry and mining also play lesser but yet important roles in the nation’s economy.
Financial services, particularly the banking sector, play a pivotal role in making Panama a financial centre for Latin America. As a safe Tax Haven for international non-resident corporations, Panama has incorporated in excess of 400,000 offshore companies. With the General Corporations Law providing many advantages for offshore company incorporation, Panama expects to remain in the forefront in attracting these companies.
Panama Company Formation
The legislation for non-resident company formation which is among the oldest in existence provides the laws which facilitate global trade and commerce, using an offshore corporation incorporated in this stable tax haven.
While Panama has suffered from political instability over its history, its offshore legislation has survived in excess of 75 years. With the democracy created from 1989 Panama now offers a future of economic and political stability.
Panama law and regulations prohibit its Republic from being used for drug trafficking and money laundering. The integrity of the financial services sector is maintained so as to enjoy the economic benefits derived from its success.
Legislation has the flexibility which provides for the privacy of the ownership of its non-resident corporations:
- Documents filed with the Mercantile Registry include the Articles of Incorporation and By-laws containing the names of the directors and initial subscribers. These documents are part of the public record. However, the customary practice, and acceptable under the law, is to use local Nominee Services for the subscribers and directors of the corporation.
- Panama Registered Non-resident Corporations are not required to file or to keep books and records (accounts). If books and other records are kept for the convenience of the shareholders or directors, they may be kept anywhere in the world.
- Local Nominee Services for shareholders and directors is acceptable. The law requires a minimum of three directors and it is common for us to provide Nominee Services on your behalf at no extra cost. A Power of Attorney will be given to the Beneficial Owner.
- Bearer Shares may be issued.
- While a Stock Register has to be kept and up to date, the names of the holders of Bearer Certificates do not appear in the register. The Stock Register may be held anywhere in the world at the discretion of the directors.
- Panama corporations enjoy 100% tax exemption on all its offshore activities.
- Shares may be issued as Par-value or No-par value. Voting or non-voting, and in many other categories and classes.
- Bearer Shares are available.
- Panama corporations do not require paid in capital.
- Authorized capital can be in any amount. (The standard is US$10,000.00 Authorized Share Capital).
- There is no time limit in which Authorized Share Capital has to be fully paid.
- There are no reporting requirements.
- No annual accounts or records are required to be filed.
- Panama corporations are not required to appoint auditors.
Panama Corporation Requirements:
- Panama Companies require a local registered agent, who must be a practicing lawyer or law firm, a trust company or a professional management services firm.
- Three Directors and three officers are required. The following officers shall be appointed: President, Secretary and Treasurer. The Director can hold an officer’s position. Any officer can hold more than one position with the exception that the President and the Secretary must be two separate persons.
- A Stock Register with the names of Nominal Shareholders and the certificate numbers of Bearer Shares must be maintained by directors anywhere in the world.
- The name of the corporation (in any language), must end with a word, phrase, or abbreviation of a word or phrase which indicates a Corporation as distinct from a person or Association. E.g. “S.A.”, Sociedad Anonima“, “Corp.”, “Corporation”. A Panama corporation cannot use “Ltd.” Or “Limited”.
Panama Company — Permitted Activities:
- Panamanian Corporations can bank anywhere in the world including Panama with no restrictions.
- Panamanian companies can be involved in any legitimate activity with the exception of deriving income inside Panama.