Panama Offshore Company formation
Panama is one of the most popular and established tax havens around. Its popularity is thanks to the offshore companies and foundations on offer. Panama’s tax advantages stem from the fact that it has a territorial tax system. This means there is no tax on income earned outside Panama. This rule applies to both personal and corporate income. Panama is also known for its strong maritime business and good privacy laws. Political stability is also recognized as good. As banking and shipping are Panama’s two main ‘offshore’ industries there is a good selection of banks to choose from (more than 140). Panamanian bank accounts are becoming more popular because interest is tax free and, for EU nationals, they are excluded from the Savings Tax Directive.
While Panama provides a fully-fledged and regulated market, at its inception over 20 years ago trading took place only in government bonds. This has since expanded to include services to domestic and international companies. Traditionally, the Exchange mainly serves the Panamanian market: local companies tap the market for equity, and investors tend to be domestic institutions or the general public. Many of Panama’s largest corporations are third or fourth-generation family businesses, and they have come to appreciate the possibilities that a listing offers them, such as providing an exit route for dormant family shareholders. However, the Exchange has recognized that future growth has to be driven by international expansion. Although government bonds remain the PSE’s most active segments, Panama’s drive to maintain low operating costs has led international investment funds to choose the PSE as their venue for listings. This new international business is a result of the strong regulatory structure, professionalism, cost-effectiveness and reputation that the PSE enjoys overseas.
Panama registered funds can be formed in a number of possible vehicles, including open-ended and closed-ended corporate entities, contractual funds and limited partnerships. Asset management companies in Panama have already launched fund platforms exclusively open to family offices and third-party managers to provide them with an efficient and cost-effective solution to enter the market. The platforms are usually registered while clients can choose their own service provider for the management of their segregated sub-funds.
With its skyscrapers glittering in the intensely bright sun, the center of modern Panama City resembles a miniature Manhattan. Panama has the most modern and successful international banking center in Latin America. The International Banking Center (IBC) offers investors over 67 Banks from more than 32 countries around the world, especially from Asia, Europe and the Americas. Some of these banks carry out their operations to and from Panama, as a consequence of the favorable banking environment.
Lured by the ease of doing business, international and regional players have established operations in the country. Today, Panama’s banks are the envy of many of its US and European peers as they are ranked among the safest and best-run financial institutions. The sector suffered no systemic shocks or banking failures. There is a clear divide between the local retail banks (44), and the more internationally-focused, specialized foreign banks (21) that have set up in Panama and which have almost no interaction with the domestic economy.
Panama has maintained leadership in the production of insurance and reinsurance in Central America by taking advantage of its market. In seeking to win investment from abroad and globally focused insurance companies, the country championed the introduction of innovative structures. The international insurance market now plays a key role in the evolution of Panama’s International Financial Center (IFC).
Panama’s reputation as a paragon of financial stability has prompted renowned family offices to relocate to the country and has also led legal and corporate law firms to offer family office type services. Family offices are on the rise around the globe as they can offer high-net-worth clients a more convenient way of protecting and growing their fortunes. As the financial crisis has brought down the level of trust and confidence in large banks, a gap in the market has appeared which Panama’s financial services sector intends to take full advantage of. Offering the entire spectrum of services, the country’s firms have built up a reputation of personalized assistance and tailored solutions over the years that now allows them to cater for every aspect of a client’s wealth management needs.
Panama’s drive to become a leading centre for private asset management is gaining momentum as high-net-worth individuals express a demand for robust alternatives in the wake of the financial crisis. Orchestrating a symphony of innovative products, experienced professionals, as well as personal and cost-effective services, Panama believes it can fulfil the demands of today’s affluent clients and their advisers. It offers all the favourite investment vehicles of high-net-worth individuals, while the also allowing investors to protect their wealth through the establishment of companies, trusts or foundations. Panama is also a competitive location for luxury asset management. It offers significant advantages for yacht registration, featuring the world’s largest shipping register. In addition, the country boasts a collection of prestigious residential homes that can be purchased for future occupancy or as an investment.