Panama is an independent country in Central America. Panama is a prosperous country with the highest GDP per capita and highest HDI (Human Development Index) in the region. The country achieved this status mainly due to its reputation as a tax haven and offshore jurisdiction. Panama is in fact one of the oldest and best known tax havens in the whole Central America and Caribbean region. Since the start of 20th Century, Panama is known for adopting policies that provide facilities of tax avoidance to offshore companies. The country has maintained its reputation till now by adopting business friendly policies. Tax avoidance is just one of many reasons that attract individuals and corporations to select Panama as their favorite place for an offshore company. Currently there are more than 500,000 offshore corporations in Panama which is one of the highest in the world.
Recently disclosed Panama Papers revealed that people and companies from around the world use Panama offshore for their fiscal benefits. Despite allegations, several such companies were doing everything under a legal framework. Following are few important factors that make Panama as one of the world’s best offshore jurisdiction in the world.
- Panama is primarily famous for being a tax haven where offshore companies are free from all types of taxes after payment of certain annual fee. In Panama, the income is not taxed in case it comes from a source outside the country which means offshore companies are completely free from taxes
- There is no minimum capital required for formation of an offshore company
- Complete secrecy is adopted for owners and directors of offshore companies. Names of directors are registered in the company’s books of shares and they are not made public
- Companies are given complete freedom to transfer their funds anywhere in the world
- A free trade zone provides facilities of storage, repackaging and reshipment of goods without duty
- Annual meetings are usually not considered necessary. If they are in specific cases, then it is not mandatory to be held in Panama
- Every Panama Offshore company needs 3 directors (president, secretary and treasurer). They can be of any nationality. There is no minimum number of shareholders required and they also can be of any nationality
- Any language can be used to name a corporation. The name should end with “Inc., Incorporated, Corp., S.A”