REPUBLIC OF PANAMA
1.- GEOGRAPHIC LOCATION:
The Republic of Panama is located in the western hemisphere, connecting Central and South America. Panama City is its capital. At North it borders on the Caribbean Sea, at East on Colombia, at South on the Pacific Ocean and at West on Costa Rica. It is divided into 13 departmental divisions: Bocas del Toro, Chiriquí, Coclé, Colón, Comarca Embera Nº 1, Comarca Embera Nº 2, Comarca Kuna Yala, Comarca Ngobe Bugle, Darién, Herrera, Los Santos, Panamá y Veraguas. The total population of the country is of 3.300.000 inhabitants and Panama City has 1.600.000.
This privileged geographic location between two oceans constitutes the main natural resource; and has turned Panama into an important aerial center with daily connections to the main destinations in the world.
It is the only country in Central America 100% free of hurricanes and does not suffer from devastating earthquakes.
The country has paradisiacal and virgin locations such as: beaches with white sand, forests, flora, fauna, dense jungles, mountains, islands, rivers and lakes. Historic sites such as: The Metropolitan Cathedral, The National Theatre, The Presidential Palace, El Casco Antiguo of Panama, Panamá Viejo, Religious Art Museum, Reyna Torres de Arauz Museum, Natural Sciences Museum and The Panama Canal Museum. Eco-tourist places such as: La Amistad International Park, Baru Volcano National Park, etc…
The official language is Spanish and the English language is widely used.
El español es el idioma oficial y el inglés es ampliamente utilizado.
2.- BRIEF HISTORIC REVIEW:
Cristobal Colon was attracted by the charm of the Atlantic Ocean's breeze on his trip to The Indies, Vasco Nunez de Balboa discovered the Pacific Ocean in 1502 and the first customs trade of the New World was created in Portobelo (Colón).
Since the colonial period, Panama was the center of important international trade fairs. In the 16th and 17th centuries, most of the commerce between the colonies and Castilla, was transported through the Camino de Cruces and on Nombre de Dios route.
In 1850, the first inter-oceanic railroad in the world was opened, built by the New York owned Panama Rail Road Company that connected both oceans by land.
In 1914, the dream of joining the waters of these two oceans became reality, with the completion of the construction of The Panama Canal.
Panama and The Panama Canal have attracted the world's interest, transforming the country into a financial and investment center for the entire world. There is stability in its democratic policy.
Since 1930 there is no central issuing bank and although the official currency in the Republic of Panama is the Balboa, the United States Dollar is the legal currency, for which there are no devaluations, having the lowest inflation rate in the hemisphere over the last 50 years, even lower than the United States.
The Canal, its widely known international banking center, with approximately a hundred entities with more than 35 billions in assets and a wide monetary and credit base supported by the free use of the dollar, its service structures, businesses and commerce, the modern port facilities in the Atlantic and Pacific Oceans, the Colon Free Zone, the second largest free zone in the world, international law firms, the most important incorporation center in the world.
In Panama the are no duties for the transfer and circulation of money, except for the obligation of every person that enters the country to declare the money or values that exceed the sum of 10,000 $, as well as informing the origin of the amounts exceeding said sum in the banking entities. The mostly used credit cards are accepted in Panama.
The accrued interests by the deposits in local or foreign banks are exonerated from every type of tax.
Panamanian laws promote and facilitate the registration of vessels, the creation of banks, insurance and reinsurance companies, as well as free zones that offer attractive fiscal tax systems.
The corporations set up in accordance with Panamanian Laws, are an attractive and beneficial vehicle to carry out real estate investments and of any other nature, due to the good reputation that Panama has as an economic, financial and accounting center.
Panama allows the issuance of special visas that offer migratory benefits and tax exemptions for foreigners that invest or live in the country.
4.- THE PANAMA CANAL:
Since the 31st of December of 1999, The Panama Canal is under Panamanian control. More than 5% of the world's commerce transits through the canal. It is 80 kilometers long and it connects the Atlantic and Pacific Oceans. It takes between 8 to 12 hours to travel across it and each day it is used by ships from all over the world: in the last two years, a total of 32,000 ships have traveled through it, breaking historic records and under excellent safety standards. Today, The Panama Canal has revenues of 1,250 millions of $ per year and profits of 500 millions of $. In this moments it
operates at 93% of its capacity and with the approved expansion, a third set of locks will be built, that will allow Post-Panamax ships to transit through it.
This project has an estimated cost of 5.2 billions of $ and an approximate construction time frame of 96 months.
5.- PROPERTY ACQUISITION:
Foreigners can purchase properties in Panama with the same rights and protection that Panamanians have. The costs paid by the buyer will be the ones related to the closing of the transaction (Notary, recording, lawyers and banking expenses).
The buyer acquires the property when the public deed is recorded in the Property Section of the Public Registry.
It is possible for a Panamanian corporation, another offshore entity or foundation to acquire title of a property. The costs to set up a corporation are approximately of 1,000 $ including legal fees.
When buying a piece of property, a foreigner can first file the petition for residency, after some time, the permanent residency and finally the Panamanian nationality, as long as a several requirements are met:
The Property Transfer Tax shall be paid by the seller and it is the 2% of the selling price or of the cadastral value of the property (whichever is higher).
- Purchase of an estate of between 40.000 $ to 150.000 $: Permanent residency after 4 years of purchasing and filing the petition for residency, and after 5 years of having the permanent residency, the petition for the Panamanian nationality can be filed.
- Purchase of an estate over 200.000 $: Permanent residency after a year of purchasing and filing the petition for residency, and after 5 years of having the permanent residency, the petition for the Panamanian nationality can be filed.
- Purchase of an estate with a minimum value of 80,000 $ and a deposit of 120,000 $ in a local bank for a minimum of 2 years: Permanent residency after a year of purchasing and filing the petition for residency, and after 5 years of having the permanent residency, the petition for the Panamanian nationality can be filed.
The seller is obligated to pay the Capital Gains Tax for the sale of a real property; this is approximately a 10%, although the opinion of a tax advisor is recommended.
The properties have a property tax exemption period, depending on its value, after this period, the property tax is the only tax applied to the estate and it is a table that goes between 1,05% and 2,1% of the registered value. The current exemption is:
There is no Asset Tax in Panama.
- Up to 100,000 $: 15 years
- From 100,000 $ up to 250,000 $: 10 years
- More than 250,000 $: 5 years
6.- OTHER FISCAL INFORMATION
The taxes in Panama are based in the principle of territoriality, that is why the income that a natural person or legal entity receives, as a result of the activities accomplished, formalized or that have effects outside the Republic of Panama, are not subject to any type of tax. Neither do these revenues cause dividend tax.
In Panama it is not mandatory for the presentation of tax declaration forms or of any type of report or annual declaration for revenues derived from foreign sources.
The most common tax that a resident foreigner would pay in Panama is the ITBMS (IVA in Spain and VAT in the U.S.). This tax is generally applied to the transfer of personal property and services provided, a tariff of 5%. There are exemptions such as: food, medication, transportation, land line telephone service, books and medical services, the sale of estates is also exempted. Besides this tax, there is also a Selective Consumption Tax, also with a general tariff of 5% that is only applied to the sale and consumption of certain goods and services considered sanctuaries such as: private TV, vehicles with a value exceeding the sum of 15,000 $ and mobile telephone service under contract.
There are important exemptions and special discounts for retired people and old age people. The grade bulletin of the AARP (American Association of Retired People) has considered Panama as one of the four best places in the world to live out of the United States; International Living states the same.
The taxation system respects the total independence between the legal person and the shareholders of corporations; this is why it is perfectly possible to buy a real property through a Panamanian corporation or from any other jurisdiction.
7.- WHY CHOOSE PANAMA TO INVEST
Because Panama is near; for its privileged location in Central America, it is within one flight distance of the main capitals of the world and has the first HUB in Latin America: Copa Airlines.
Because Panama is safe; is one of the safest countries for tourists and residents according to Pikerton International Intelligence Agency. There is judicial, political, economical and financial certainty.
Because Panama uses the U.S. dollar; currency used for all the transactions.
Because Panama has the infrastructure of any developed country; it has first world infrastructure, a North American style capital without losing its Latin-American identity, with high speed internet, the second largest Commercial Free Zone in the world, a banking area with more than 100 banks, world-class hotels and restaurants and shopping centers on the same level as the ones in any European country. The road infrastructure, medical services and commercial services are excellent.
Because Panama is fiscally attractive; for companies, persons and retirees.
Because Panama is a friendly country; completely bilingual (Spanish - English), it is internationally known as one of the most friendly countries in the world since its discovery.
Because Panama is linked with nature; which provides its blessings. It is the only country in Central America free of hurricanes and devastating earthquakes.
Because Panama is an exotic economical destination; the prices are the best in the market because it has started to promote itself as a tourist attraction destination.
Because Panama has important tourist attraction places within a short distance; it is very easy to be in the city and in less than 15 minutes find yourself in exotic tropical places. Panama has mountain refuges; Caribbean style beaches, two oceans within an hour distance, active Indian cultures and a cosmopolitan life. You can visit historic places of the discovery of America.
Because Panama has the eighth wonder of the world; the Panama Canal, a visitors facility, the possibility of navigating through it moving between its locks and enjoying the marvelous landscapes of lakes and jungles.
Because Panama is the best place for eco-tourism; has the most accessible tropical rainforests in the world, being the land bridge that connects both portions of the same Continent. It has one the forests with more biodiversity in the world, national parks that cover millions of hectares and as a biodiversity indicator, there are more than 954 distinct registered bird species.
Because Panama has a great variety of beaches and islands; with two coasts and more than a thousand islands.
Because Panama has fishing, scuba diving and world class sailing; there is a place called Bahía Piñas, which has 250 world fishing records. You can scuba dive in seven excellent sites: Coiba National Park, the Pearl Islands, Iguana Island, Bocas del Toro Archipelago, Portobelo and historic diving in the Panama Canal. Panama is also famous as a yacht destination.
Because Panama is worldly known among the adventure seekers; Canopy tours, hiking, rappelling, kayak, surf, regular or extreme best quality experiences. International experiences praise the kayak and raft rapids; there are rivers where you can cross 20 groups of rapids in one afternoon.
BECAUSE PANAMA IS THE INTELLIGENT CHOICE; between the sophistication of Panama City, safe, with an incomparable variety of activities that include golf, sport fishing, shopping, the best hotels, casinos, and business centers of its financial district; the adventure of tropical rainforests, indigenous people, historic relevant sites. The Panama Canal, the city's skyline and the biodiversity of its natural landscape all merge in one country.
Panama deserves to be known
Notice: This present document is for information purposes only and can be changed without previous notice, for this reason the opinion of your legal advisors in the Republic of Panama is suggested.
This document is not a legal opinion and the issuing company is not responsible for its content.
Price: on request