Doing Business in Panama: A Smart Option for US Companies
Doing business in Panama can be a smart option for US companies due to strong international relations between these two countries, benefits for foreign investment, and the US-Panama free trade agreement.
Panama has the lead in economic growth in Central America, with an estimated GDP growth of 3.7% in 2019 and a GDP per capita of US$15,642. Furthermore, the country is expected to grow by 3.8% in 2020, promising stability and growth for investors.
Attractiveness for US Investors
With attractive benefits for US investors such as currency pegged to the US dollar, easier immigration access, regulations favoring the protection of the company’s information and low fiscal duties, foreign direct investment (FDI) has increased.
The Panama Canal strongly supports import and export activities to Latin America, the Caribbean, and Europe. Financial services, construction, tourism, real estate, amongst other ventures are profitable in the country.
Free Trade Agreement with the US
The United States – Panama trade promotion agreement (TPA) removes duties for 87% of US consumer and industrial products in Panama, with remaining tariffs to be phased out over the period of 10 years. The list of consumer and industrial products with duty-free access includes information technology equipment, agricultural and construction equipment, aircraft and parts, medical and scientific equipment, environmental products, fertilizers, agro-chemicals, amongst others.
Quick Company Incorporation
It takes 2 weeks to set up a legal entity and the company owners do not need to be physically present. Panama secrecy laws protect the name of corporate shareholders, which are not required to be publicly registered. Also, anonymous corporations do not have to declare income earned outside Panama.
No Income Tax for Overseas Profits
Under the Panamanian tax principle based on territory, income generated outside the country isn’t taxed. Investors generating profits in Panama and conducting international operations can benefit from maximized profitability. The country has 17 tax treaties to avoid double taxation (TDT) with countries such as Mexico, Spain, United Kingdom, amongst others.
Free Trade Zones
Panama has free trade zones that offer tax breaks based on the purpose of activities. The Colon Free Trade Zone and The Panama Pacifico Special Economic Zone offer various tax exemptions to businesses.
Since Panama national currency, the Panamanian Balboa (B), is pegged to the US dollar, the exchange rate between these currencies is the same.
Member of Panama Friendly Nations Visa
Panama offers residency and the right to work to US citizens who are included in their Friendly Nations list. After 5 years, residency visa holders can apply for Panamanian citizenship and passport.
If you are a US investor looking to do business in Panama, you can begin by incorporating a company with the help of Biz Latin Hub. Contact us at contact@bizlatinhub.com and get your venture started.
