5 reasons to choose Panama for offshore investments

Situated at the crossroads of the Americas, Panama enjoys a strategic location that positions it as a hub for international trade, commerce and offshore investment. The famous Panama Canal, which connects the Atlantic and Pacific Oceans, facilitates the seamless transit of goods, making Panama a vital link in global logistics. This strategic advantage allows investors to tap into a wide variety of markets in both North and South America.

When it comes to offshore investments, Panama is a top choice for investors seeking to diversify their portfolios and capitalize on global opportunities. With its unique blend of advantages, Panama offers an attractive environment for offshore investments. In this article, we will explore five compelling reasons why Panama stands out among the crowd: favorable tax policies, strategic location, a strong banking and financial sector, an easy residency process for foreign investors, and a wide range of investment opportunities.

Panama City skyline. Panama City is a popular tourist destination, known for its beautiful beaches, towering skyscrapers, and vibrant culture.

Panama City

1. Favorable tax policies

One of the most significant advantages of investing in Panama is the country’s favorable tax policies. For instance, Panama does not impose taxes on foreign-sourced income. This means that foreign investors can enjoy a tax-free environment for their offshore investments.

Panama works under a territorial tax system, where only income earned within the country is subject to income taxation. This does not necessarily mean that investors will benefit from a low tax rate. The tax rate in Panama is progressive, so the more income you earn, the higher your tax rate will be. However, there are various tax incentives and exemptions available to investors, which can reduce their tax liability.

Panama also has signed various double taxation treaties with other countries, which can help investors avoid double taxation on their offshore income. Some of this countries are:

  1. United States: signed in 2011.
  2. United Kingdom: signed in 2013.
  3. Spain: signed in 2010.
  4. France: signed in 2010.

2. Strategic location

Panama is located between North and South America. This location has made it a hub for international trade and commerce, particularly for shipping and logistics. The Panama Canal, which connects the Atlantic and Pacific Oceans, is a crucial shipping route and has made the country a gateway to the Americas.

The Panama Canal is a man-made waterway that connects the Atlantic and Pacific Oceans. It is one of the most important shipping routes in the world.

Panama Canal

3. Strong banking and financial sector

Panama is home to a strong and stable banking and financial sector. The country’s banking system is well-regulated and has a long history of stability, dating back to the establishment of the first international banks in the early 20th century. Today, Panama is home to many international banks, including some of the world’s largest financial institutions, such as:

  • Scotiabank:

    This bank has a strong presence in Panama and is one of the largest banks in the country. It offers a wide range of financial services, including personal and commercial banking, investment management, and insurance.
  • Global Bank:

    This bank offers a wide range of banking and financial services to individuals and corporations. With over 20 branches across the country, Global Bank provides convenient access to its clients.
  • BAC Credomatic:

    It offers a wide range of banking and financial services to its clients, including commercial banking, investment banking, and wealth management. The bank has a solid reputation for its customer service and innovative products.

The country’s banking sector is known for its financial system being able to report to foreign jurisdictions, but outside of that there is an important veil of banking secrecy. There are many options for offshore banking and investment services. Additionally, Panama offers a range of tax incentives and exemptions for foreign investors, making it an attractive destination for those looking to minimize their tax liabilities.

4. Easy residency process for foreign investors

Panama offers a straightforward and easy residency process for foreign investors looking to establish a base in the country. Here are some of the options available:

  • Self-Solvency Visa:

    Which is available to foreign investors who have a minimum investment of $300,000 in a local bank account or real estate.
  • Qualified Investor Visa:

    which allows to foreign investors to obtain permanent residency in Panama by making a qualified investment in the country. The investment can be made in a variety of assets, including:
    • Real estate: Invest US$300,000 or US$500,000 afterwards, free of liens.
    • Real estate projects in pre-sale: Sign a purchase and sale contract for the sum of US$500,000 or more, free of lien.
    • Stock market: Invest US$500,000 or more.
    • Fixed term deposit in a qualified Panamanian bank: Open a time deposit of US$750,000 or more).
  • Reforestation Visa:

    Which allows to foreign investors to obtain permanent residency in Panama. This program is designed to encourage foreign investment in reforestation projects in Panama. The minimum investment amount starts at USD $100,000.

Overall, Panama offers a range of flexible and easy residency options for foreign investors, making it an attractive destination for those seeking to establish a base in the country.

5. A Wide Range of Investment Opportunities

Panama offers a wide range of investment opportunities for foreign investors looking to diversify their portfolio. Real estate is one of the most popular investment options The country has experienced significant growth in the construction industry, particularly in the capital city of Panama City, where many new developments and luxury projects have been built in recent years. The demand for housing and commercial spaces is also increasing, fueled by the country’s strong economic growth and growing population. Additionally, Panama offers a range of incentives for real estate investors, including tax exemptions and residency options.

The country also has a thriving tourism industry, with many attractions and activities for visitors, ranging from its beautiful beaches and islands to its rich cultural heritage and historical sites. As a result, there are many opportunities for investment in hotels, resorts, and related infrastructure projects.

Panama is also an attractive destination for finance and banking, with a stable economy and a favorable regulatory environment. The country is home to many international banks, and there are opportunities for investment in fintech and other financial services.

Finally, Panama is becoming a hub for technology and innovation, with a growing startup scene and opportunities for investment in areas such as e-commerce, software development, and cybersecurity.

Panama City skyline at sunset. Panama City is a popular destination for real estate investment, with a growing economy and a beautiful location.

Panama Real Estate

Get expert legal assistance for Your Panama Offshore Investment

If you’re considering offshore investments in Panama, it’s important to have the right legal guidance to navigate the process and answer your questions effectively. Kraemer & Kraemer is a leading law firm in Panama with a team of experienced attorneys who specialize in offshore investments, corporate law, and immigration law.

We can help you make informed decisions about your investments and guide you through the residency application process, ensuring that you meet all legal requirements. Don’t hesitate to contact Kraemer & Kraemer today to discuss how they can assist you with your investment and residency goals in Panama.

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Published June 15th, 2023, as Commentary on Business by Johana Sum