There are plenty of great reasons to take your business offshore, but how do you select the right location for your business? This could be one of the most important decisions you make for the future of your company, so it’s critical to weigh up all the potential benefits and drawbacks of your potential offshore location.

Many countries have certain rules and regulations in place to attract overseas companies to their shores because there are a lot of benefits to reap for everyone involved.

Of course, there’s a fine line to walk in these situations. Countries have to make their laws and regulations attractive to these companies without crossing any legal and ethical boundaries. They have to provide incentives around setting up an offshore corporation, but they also have to get some benefits of their own.

Panama has been a hotspot for offshore companies for decades, and it has the economic, political, and geographical elements that make it one of the best choices for corporations looking to expand like this. 

But is it the right choice for your company?

Here are some of the most common reasons why people choose Panama as the home for their offshore corporations.

  1. Attractive Tax Laws

Many people often associate “offshore companies” with “tax havens,” but that’s not how Panama works. Panama has become an international financial hub that offers relative tax freedom, which means is that Panama does not assess any income tax on the income produced from sources outside the country. 

As long as the corporate activities are performed outside Panama’s territory, the only tax the country requires is the annual franchise tax.

Even profits gained through transfers or acquisitions of securities, management of investments and bank accounts, the reception of dividends from companies operating abroad, and the transfer or sale of real property are all exempt from Panamanian taxes – as long as these transactions and gains occurred outside the geographic territory of Panama.

  1. No Currency Restrictions

The U.S. dollar is standard in Panama, which makes it a good location for many companies, but there are no currency restrictions, which makes it a good choice for any corporation with international intentions.

The wide variety of currency in Panama has attracted a lot of foreign investors, but a lot of the current situation around the currency grew out of the canal and growing financial sectors. 

  1. Run Your Business Your Way, from Your Location

It is possible to form a corporation in Panama without actually being physically present in the country. Instead, nominee incorporators in Panama can act on behalf of the interested parties and take care of the Articles of Incorporation.

There are also no nationality restrictions on directors and shareholders here, so the corporation can be set up with people from various countries. There is also a certain amount of accounting flexibility, meaning that the books of the company can be managed from inside Panama or handled abroad.

  1. The Costs Remain Reasonable

Compared to other potential locations around the world, the incorporation costs in Panama remain very competitive. The process of incorporation will require a number of documents (Articles of Incorporation, etc.) and certification, and there will be some fees to cover various activities. 

The only ongoing costs is the annual franchise tax payment of US$300, though there may be some additional fees, depending on the services you require. This could include fees for acting as Resident Agents on your behalf, services related to nominee directors, and other activities.

  1. Panama Believes in Privacy

The financial infrastructure established in this country puts a very high value on safeguarding the personal and financial information of the people and companies who bring their business here.

On top of that, share certificates are issued in private documents, and the officers and directors of the corporation are not required to be shareholders. Even those who are the shareholders in the corporation don’t have to be registered at the Panama Public Registry, so their identities can be kept confidential.

Is Panama the Right Place for Your Offshore Corporation?

There are several important advantages of establishing an offshore corporation in Panama, and this is a critical decision and will impact your ability to grow your company and begin reaching an international market. 

At Mata & Pitti Attorneys at Law, we can help you determine if this is the right choice for your company. Contact us today to learn more.