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Panama is a country on the cusp of greater things. With the economy peaking and infrastructure improving, thumb the Republic of Panama is an even more enticing place to visit, invest in, and live. Yet, this appeal to foreigners is not a totally unique situation in the isthmus. Panama has long been the focus of a number of powerful business’s affairs, whether corporate, public, or individual.
Historically, Panama has maintained a strong international banking center built on privacy and its simplicity to invest. At the core of Panama’s international financial allure is the Panama Corporation, which, for foreigners is customarily used as an offshore corporation. At the last official count, doctor there were over 120,000 corporate bodies in Panama. Most of these are offshore.
Beyond the limelight of the Panama Canal’s expansion project, in recent years it is important to note a host of positive laws have been introduced which positively effect everyday Panamanian life. These laws have ensured the protection of businesses, corporations, and individuals, with Panama’s privacy and anonymity offering Panamanians and foreigners a chance to make more prudent investments, as well as fully protect their assets.
Even during the tumultuous years of the 70s and 80s, Panama recognized a golden goose when it saw one. Determined to keep the financial eggs coming, there was little financial over-regulation or mismanagement related to offshore investments during the dictatorships of Torrijos and Noriega. After the U.S. invasion, “Just Cause”, which helped oust Noriega, Panama seamlessly switched back to business as usual. It was immediately after this event that Panama’s golden age for offshore investment began.
Since then, Panama has maintained a respectable average inflation rate under 2%, as well as posting a few double-digit annual economic growth rates in recent years. This, combined with the lack of government bureaucracy in financial matters helped Panama stay on the radar of savvy investors for years.
The ongoing economic and social factors which helped make Panama such a stable country for most of the 20th century have, alongside the shipping trade-funnel of the Panama Canal, helped make it the epicenter for offshore banking south of Miami. Today, Panama is one of the world’s most secure locations for offshore asset protection, with excellent corporate and financial laws for businesses seeking offshore services. It currently provides the most flexible and favorable offshore incorporation legislation in the world, with great programs for tax minimization, diversity of investments, and individual privacy.
Panama has the strictest banking and corporate secrecy laws of any nation worldwide, with the Republic still offering the formation of Bearer Shares Corporations to provide anonymity. As Panama is a 100% sovereign nation, all assets kept offshore and registered in Panama are totally confidential and private.
Yet, what does the future hold for Panama? Recent legislation such as Law 41 (encouraging the relocation of regional and worldwide corporate headquarters to Panama) has seen multinationals flock to the country – utilizing its historic friendliness to those seeking offshore investment, as well as those seeking to invest in a country seemingly unharmed by the economic collapse of 2008/2009. The country has had to broaden the number of tax transparency treaties it must sign, in line with the Organisation for Economic Cooperation and Development’s information exchange program. Many of the treaties undertaken are with governments in Ireland, Israel, the Netherlands, and Italy – leaving the majority of international investors secure.
Another recent development is the introduction of Law 47 in Panama, which will take effect on August 6th 2015. This law states that all current holders of bearer shares have 3 years to submit their shares to an “authorized custodian”, providing their basic information to determine ownership. All corporations issuing these offshore bearer shares have 20 days to pass their certificates to the custodian. This custodian must then provide documentation on request to any legal or civil authorities who request it, with a list being drawn up to identify and potentially levy sanctions for non-compliance.
The majority of Panamanian offshore companies and corporations will still be required to comply with an older law, Law 32. This was introduced in 1927 and has been used as the basic template for ensuring businesses are compliant with foreign and domestic legislation. A simple law, it requires companies to incorporate with 2 people of any nationality – allowing foreigners or those living away from Panama to qualify. There must be 3 directors of the company and shares may be kept classified. The unchanged format of this law speaks to its success in Panama, with few amendments to its original format. Alongside the fact that foreigners can own property in Panama with all the same rights as Panamanians, this is a powerful argument for those seeking to take part in the republic’s ongoing success.
It is also important to note that Panama has recently taken measures to increase immigration in effort to further stimulate the economy and foster growth. As of May of 2012, President Ricardo Martinelli issued a Presidential Decree 343 declaring that citizens of 22 friendly nations could apply to become permanent residents in a fast track manner. Since then, other Decrees have increased the number of friendly nations to 48. The formal wording of this permanent residency visa is for “citizens of friendly nations with professional and economic ties with the Republic of Panama”. Regardless of the requirements, which are in fact lenient, it is clear that Panama immigration and the influx of foreigners, and they money the bring with them, is seen by the government of Panama as a source of future growth and prosperity. With that said, it is not likely that Panama will enact future laws decreasing immigration, and in effect decreasing growth.
Panama has little appetite to harm its burgeoning reputation as Latin America’s success story; expect to see strengthening of privacy laws for individuals and corporations, as well as the maintenance of Panama’s bearer stocks situation. With such a rich and historic culture of business developing even further, it is reasonable to assume that Panama will be welcoming many new arrivals for years to come.
For more information on Panama immigration, relocation, and offshore corporations, visit: http://www.panama-offshore-services.com/
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