The Sovereign Society Offshore A-Letter Says:
Here’s Why Panama is Still The One!
The Best Place to Invest in Real Estate!
This week, Erika Nolan, Founding Publisher and Executive Director for The Sovereign Society shared a story about a
Canadian member of the society who visited Panama for a Symposium and fell in love with the country. He returned home, packed up his family and business and moved to Panama (Sound familiar?). She goes on to ask
“Why Would a Canadian want to move his business to Panama?”
Here are some key reasons Why Panama is The Sovereign Society’s Top Tax Haven and quite possibly the Best Place to invest and set up an International Business:
- Some businesses can be restructured in Panama with local employees, and if business is done outside Panama, it pays no corporate taxes in Panama. –The best part for this Canadian’s business is that it no longer has to pay the high Canadian corporate taxes. Note only that but, unlike the U.S., Canadian citizens can opt for non-residency meaning they do not have to pay income tax in Canada or even file a return there.
- The expansion of the Panama Canal is now well underway and scheduled to be complete by 2014 which also happens to be the 100 anniversary of the opening of the canal. – Can anyone smell a big party and an even bigger boost of prosperity coming soon to Panama?
- You’ve been reading a lot about the booming real estate market in Panama. – See my recent letters about articles in the both the Wall Street Journal and the Washington Post.
- Even Donald Trump loves Panama and has invested more than $220 Million into a his 65 story – 2.4 Million square foot hotel/condo monolith called the Trump Ocean Club International Hotel & Tower.
- In addition to the hot real estate market, The Sovereign Society still loves Panama for an entirely different reason – It’s a “foreign source income tax haven.” That means if you move to Panama you only get taxed on income you earn in Panama. If your business is based in another country and you live in Panama, you can live virtually tax-free. And like our Canadian friend, even if your foreign business is technically located in Panama, you can avoid most corporate taxes. (Americans still must pay U.S. taxes no matter where they live. However, Canadians can declare Non-Resident status and are not required to file income tax documents in Canada.)
- Panama has statutory guarantees of financial privacy and confidentiality. Violators can suffer civil and criminal penalties for unauthorized disclosure.
- Panama also has no double taxation agreements and no tax information exchange agreements with other countries. Still wodnering if Panama is the Best Place to invest and set up your business?
In contrast Bob Bauman, The Sovereign Society’s Legal Counsel makes these key comments about the Cayman Islands –
“A few years ago the Cayman Islands could claim that its financial institutions stood fifth in the entire world. For decades, the Caymans was the premier jurisdiction for tax-free international banks and businesses which wanted (and got) iron-clad privacy guaranteed by law.
But a series of highly publicized cases involving drug and other criminal money laundering, plus a major case in which a local bank was used for wholesale U.S. tax evasion, contributed to ending this haven’s secrecy. It’s still a very rich place, but the total amount of assets held in the Caymans has slipped.
In recent years this U.K. colony, under extreme pressure from both London and Washington, has shredded its financial and banking secrecy laws. The result: an outflow of billions to other, more privacy oriented, tax and asset havens. (read Panama)
One of my personal contacts on Grand Cayman (a foreigner who was a resident) wrote recently: “Having lived in the Cayman Islands for over five years, and having visited for more than 12 years, I can attest to the major undesirable changes in financial policies. I first visited Grand Cayman in 1994 when privacy was assured, and secrecy was still available if one desired it. Due to the OECD and numerous ‘black listings,’ followed by the total capitulation of the Cayman government then in power, Cayman these days has neither secrecy nor privacy.” – It’s important to note that other than a relatively small tourism sector Banking is the only industry the Grand Caymans has. This equates to little or no sovereign negotiating leverage when it comes to fighting the OECD or Uncle Sam. Contrast that with Panama and one huge asset called, The Panama Canal. Sure pressure can be applied to this small nation but at risk of return pressure in terms of increased passage fees which would have a major affect on the cost of goods being shipped to the U.S. via the canal.
My friend went on to say: “As far as an ‘ideal’ tax haven, how about this: $2,500 plus to establish a Cayman corporation, (in Panama $1,250 or less) followed by annual costs of $1,500 or more (in Panama $800 or less) to maintain the corporation. Attorney fees of $400 or more (in Panama $100 or less) per hour, even for the most mundane tasks; total declarations of partners, beneficial owners, and officers of the corporation, copies of passports, government identity documents, and sworn statements, photos and fingerprints demanded.” – In Panama: statutory guarantees of financial privacy and confidentiality.
“They even demanded reference letters of good character from ‘honorable professional acquaintances.’ It has been near impossible for non-residents to open a financial account with a Cayman bank for years, without the help of an over-priced attorney, and normally only by establishing a local company to do so. Land on a cruise ship and open an account? It has not happened, and will never happen.” In Panama it’s a relatively simple process. You do need a letter of reference, from anyone with residency in Panama, and two letters of reference from your home bank – again easily obtained.
And the Caymans, under British pressure, signed a tax information exchange agreement with the United States — something that would have been unthinkable only a few years ago. This allows the IRS to inquire about any financial activity of U.S. persons in the islands.
Washington tried to get Panamanian authorities to sign a TIEA with the United States, but Panama has politely ignored their demands. So basically, Panamanian authorities have what it takes to stand up to anyone (even the U.S.) who would threaten their tax haven status.”
Back to Erika who says, “Panama has it all when it comes to offshore structures -Trusts, foundations, offshore corporations. Its corporation law dates to 1929, and Panama has long offered refuge for entrepreneurs seeking to escape hyperinflation and foreign exchange controls in Central and South American countries. More recently, Panama enacted a law authorizing private foundations and patterned it after the best model available: Liechtenstein.
Not only that but Panama wants you to set up shop! Small business investor visas are readily available and there are many incentives.
There is also no requirement to reveal a beneficial trust or corporate ownership to Panamanian authorities and no required audit reports or financial statements. That’s financial privacy in spades. On top of all that, Panama has good offshore professional services, with dozens of banks, trust companies and attorneys to choose from to help you set up your offshore trust, foundation or offshore corporation.
Learn more about Panama as the best place to invest in Real Estate and to establish your business – read Erika’s Comments in the A-Letter.
The information expressed here is solely the opinion of the author. Nothing on this web site or in subsequent communications is to be considered personalized investment advice. Although we may answer your general questions, we are not licensed under securities laws to address your particular investment situation. No communication by any associate or representative of Learn About Panama is to be deemed as personalized investment advice.