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Panama Virtual Office Solution for your Panama Corporation

Panama Virtual Office Solutions For International Business Corporations

• Panama new homes don't pay property taxes for 20 years.  The annual percentage of assessment is 2.10% of the property's value.  Any land worth less than $20,000 is exempt.
• 76 banks in operation, 38 of which are licensed as full-service banking institutions.  Two of them are owned by the government of Panama: Caja de Ahorros and Banco Nacional de Panama.
• Panama bank interest, interest from savings accounts, Panamanian securities, loan income, and time deposits are tax free.
• Foreign income doesn't create any tax liability.
• All retired foreigners living in Panama pay no taxes on income made abroad.
• All income made within Panama by domestic corporations is subject to income tax.  The first $3,000 is exempt.  Thereafter, the income tax is progressive from 20% to 40%.  The tax is based on the territorial nature of the corporation.  If a foreign resident of Panama conducts business from Panama, and generates income in Panama, some of the income is taxable.
• See a tax advisor or attorney in Panama.
• If you're a U.S. person, you must report all income generated worldwide, from whatever source derived.  See your tax advisor.
• The Fraser Institute in Canada has rated Panama high on the list of the most free economic environments due to it's domestic and international tax policies.
• The Organization for Economic and Community Development (OECD) pressures low-tax or no-tax countries to stop competing with the high-tax jurisdictions.  They do this by imposing labels, such as "money laundering" and political intimidation.  The Panama position to this privacy threat is that demands for transparency, and disclosure, must be consistent across all countries.  And since it's not equally demanded, Panama doesn't participate in the race to the bottom by forfeiting privacy and it's tax regime.  Furthermore, Panama's independence from the U.S., the British and the EU places it secure from the usual political spine of the jelly variety.
• Decree 238 was passed in 1970 removing controls of currency and apply a very liberal banking law.  There's an exemption from offshore income and interest on savings accounts.  Business transacted offshore isn't taxed.
• What activities are exempt?  Let's look at a few:
  • When operations are abroad and the management office is in Panama.
  • Invoicing from Panama for products and services sold and distributed abroad.  The product doesn't travel through Panama. 
  • Interest from time deposits are tax free.
  • No inheritance tax.
  • No gift tax on assets owned outside Panama.
  • Vessels traveling through the Panama Canal, embarking/disembarking, air transportation and travel through international waters.
  • Dividend distributions from Panamanian entities when income was produced outside Panama.
  • Sales commissions, interest income, royalties and outside income are not taxable.
  • Dividends from Panama corporations are free from income tax.

What is taxed in Panama?  The key is WITHIN PANAMA.

• Salaries/wages
• Bonuses
• Profits
• Trademarks
• Securities
• Capital Gains
• Royalties
• Copyrights

What's tax-deductible in Panama?

• Medical expenses
• Education expenses
• Donation to charities
• Interest paid on home mortgages

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