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Panama is a country in Central America, bordered by the Caribbean Sea to the north and the Pacific Ocean to the south. Panama borders Colombia to the east and Costa Rica to the west. It is known as the land bridge connecting North and South America.
The Panama Canal, an artificial waterway, connects the Atlantic Ocean with the Pacific Ocean and is a prominent geographical as well as engineering feature of the country. Panama’s strategic location made it an important hub for trade and transportation, especially with the opening of the Panama Canal in 1914, a critical link for international shipping.
You can read more about the climate, health care system and school system HERE.
In 2022, the estimated GDP of Panama was approximately US$71.97 billion. This is expected to increase to approximately $77.26 billion in 2023. This data presents Panama’s economic development from 1981 to 2021, with projections into 2028.
From 2023 to 2028, Panama’s GDP is expected to grow steadily by $26.8 billion, or 34.69 percent. It is estimated that the GDP will be around $104.02 billion in 2028.
Gross domestic product, or GDP, is the total value of all goods and services produced within the country’s borders in a year and intended for final consumption. This value is a decisive measure of a state’s economic potency. Nominal GDP incorporates the development of prices and its variation is often interpreted as economic expansion.
Territorial tax principle
Panama follows a territorial tax system, which means that only income earned within Panama is taxed. Income from sources outside Panama is tax-exempt. And already this title of the article Panama – The paradise for tax optimizers explains itself.
Offshore companies: Foreign entrepreneurs have the option of establishing offshore companies that do not have to pay taxes on income earned outside Panama.
Free Zones: There are special free trade zones, such as the Colon Free Zone, where companies can enjoy tax benefits.
Taxation of dividends
As a rule, dividends are taxed with a withholding tax of 10%. However, this rate may be lower for companies in free trade zones.
Double taxation agreement
Panama has double taxation treaties with some countries to avoid double taxation of income and to fight tax evasion.
Reporting and compliance
Companies are required to file financial reports and tax returns on a regular basis. Compliance with local tax regulations is critical to avoid penalties.
Foreign entrepreneurs find a favorable tax environment in Panama, especially when doing business outside the country. However, compliance with legal requirements and careful planning are essential.
An offshore company in Panama, often referred to as a “Sociedad Anónima” (Anonymous Company), is a type of company that is registered in Panama but conducts its business mainly or exclusively outside the country. These companies benefit from a number of tax and regulatory advantages that Panama offers. Here are some characteristic features and aspects of an offshore company in Panama:
Foundation and registration
Operation and management
The Panama Papers refer to a massive data leak that was made public in April 2016, with confidential documents leaked by Panamanian law firm Mossack Fonseca. This leak revealed extensive information about offshore companies and the people associated with them, including many prominent figures. Here are some key facts about this event:
The Panama Papers represented one of the largest revelations regarding offshore finance and tax havens, and had a far-reaching impact on the global discussion about transparency and fairness in the financial system.