about panama

Since the Spanish conquerors through the California Gold Rush of 1849 and then the Panama Canal, banking and services have always played an important role in Panama.

Other factors have also played a part in this service-oriented economy, the absence of currency restrictions, free circulation of the US dollar as legal currency, free international movement of capital, convenient taxation law focused on bringing in foreign investment and capital, and the lack of a central bank in charge of currency insurance.

Despite this unique monetary system, foreign investors in Panama enjoy the convenience of using a variety of currencies for business; this is mainly due to the international use of the canal and financial sectors and a rapidly expanding tourism industry.

Long recognized as a commercial hub of the Americas since it was a converging point of world steam-ship lines, Panama has similarly developed into a banking and foreign exchange center.

The Panama Banking superintendence supervises the banking activities closely to maintain a highly rated, reputable financial center.

More than 30 countries have been represented with commercial banks in Panama due to the 1970 banking law guaranteeing free movement of funds and lower taxes.

More than 6,000 Panamanian are employed by the banks, with multiple foreign banks operating in Panama. Of all the banks officially registered, approximately 70% provide full domestic and foreign services, about 30% are licensed strictly to conduct international operations or are representative offices.

It is essential to point out that offshore banking operations are exempt from Panamanian income tax. In a world moving toward greater globalization, Panama’s flexibility in dealing and experiencing a multitude of financial factors, including banking, low costs, and trade, establish it as a prime location in which to conduct local as well as global businesses..

Contrary to popular belief, Panama is not a tax haven but an international financial hub, and as a result, it is especially attractive to foreign investors.

The government of Panama welcomes foreign investment and holding companies. Since the last decade, Panama has passed a series of significant law reforms designed to strengthen its democratic system.

The economy of Panama has remained stronger in the last decade, and inflation is one of the lowest in all of Latin America.

Tourism earnings have also been increasing. The government has outlined a robust development plan to attract foreign investors in tourism to improve resort facilities and infrastructure on the Atlantic and Pacific coasts.

Total annual trade passing through the Colon Free Zone exceeds 10.2 billion. The Colon Free Zone accounts for 5% of the gross domestic product, while Panama Canal traffic represents 10% GDP.

A positive attitude toward free enterprise, together with the fact that the US dollar is legal tender in Panama, has increased foreign investments.

Moreover, the development of institutions and instruments to regulate business activities in Panama has been consistent with its trade and service-oriented economy, which is closely connected to the international market and geared to using Panama’s geographic position.

There are very few limitations on foreign investments as well, especially for international business operations based in Panama. The government has developed the necessary institutional and infrastructure facilities, efficient public administrative machinery, favorable and flexible policy guidelines, and attractive fiscal and non-fiscal incentives to attract foreign investment into Panama.

Historically, the policies of the Panamanian government toward foreign investment have been so open that there has never been any need for a formal statement of policy on this subject. Legislation hardly establishes any differences in treatment between nationals and foreigners. Similarly, all foreign investors, regardless of their country origin, are treated equally.