The Republic of Panama is a Spanish speaking country located in Central America, between Costa Rica and Columbia.
It is a long established tax haven with excellent communications. The return of democracy to Panama in 1990 has created a stable political environment in the country, making the Panamanian jurisdiction one of the most attractive offshore financial centres.
A Financial Services License can be issued to a Panama offshore company. This is a very important feature for clients seeking to conduct financial affairs with their offshore company. Such a license is not available in most jurisdictions except at very high fees, large capital requirements and extensive/expensive documentation. The financial sector of Panama’s economy provides the best facilities in Latin America with the principal banks of the world being represented. There is complete freedom in the movement of funds. All business is conducted in United States dollars and there are no exchange controls. English is widely used.
Although Panama has fairly high rates of tax internally, its status as a tax haven depends upon the principle that income received by a Panamanian corporation from sources outside Panama is exempt from tax.
Panama has full confidentiality and privacy embedded in the law, with civil and criminal penalties for disclosure. There is no requirement for the disclosure of beneficial ownership to the Panama authorities and no requirement for audited reports or financial statements.
There are no double taxation agreements and no tax exchange agreements with other countries. The incorporation documents are in Spanish but are accompanied by certified English translations.
This is not usually a problem if your corporate vehicle is mainly for your personal use and/or you deal extensively in Latin America. It could be a problem if you sign many contracts worldwide, as attorneys may wish to have an independent translation of important clauses.
The legal system is based on Spanish Civil Law with many Common Law influences; particularly regarding Company Law which is based on the Delaware model. Generally, corporations are incorporated under the Corporation Statute Law 32 of the 1927 Commercial Code.