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Why Big Companies Do Business In Panama

By Edited May 9, 2016 0 0

Like people, corporations are always searching for great opportunities. For decades, Panama has all the criteria for good opportunity. Many Fortune 500 companies including  Sony, Nestle, HSBC, Roche and many others recognize this. Regardless of the size of your company, it is wise for the small business owner to follow suite if it fits their needs. Foreign investment capital inflow continues as potential becomes reality, and reality becomes profit.


The country that stands apart from other Latin America countries is the Republic of Panama. The Economic Liberty Index for 2007 ranks Panama 47th of 157 countries. The quality of life in Panama is a major consideration to do business in Panama. Panama City is cosmopolitan and offers excellent living conditions. Along with skilled, multilingual employees you will find office, commercial, industrial and housing spaces available.


Ket features in Panama include:


- A stable government

- A dollar-based economy without currency exchange restrictions

- The Panama Canal and the Colon Free Trade Zone

- An international financial center with a well-developed infrastructure including a top notch telecommunications system

- An excellent legal framework that allows 100% foreign owned investments

- A strategic location with access to the entire western hemisphere


Awaiting approval is the U.S. - Panama Free Trade Agreement (2007), which has passed the Panamanian legislature and is awaiting U.S. approval. The purpose of the agreement is to provide legal security for trade, business and investments between the two countries, It will increase opportunites available to investors from the United States. Based on successful models in Switzerland and Singapore is Law 41 (2007), which was passed with the intent to ensure that Panama baecomes an attractive center for multi-national firms. 


Benefits given to multinational companies establishing their headquarters in Panama include:


- Tax exemptions

- Special labor and migration status

- Simplified and streamlined visa

- Residence and work permit requirements


There are already special considerations for industrial parks, call centers, and e-commerce to facilitate trade and investment.


Panama’s income tax laws permit taxation only on income generated from trade entirely within Panama. Foreign source income, generated outside Panama is 100% exempted. Income from the following activities is not considered domestic activity within the territory of the Republic of Panama, and is specifically exempted from taxation:

- Invoicing, from an office established in Panama


- The resale of merchandise or products for an amount greater than had previously been invoiced against the office in Panama, provided the goods transit solely outside Panama. 


- Directing transactions that are executed, completed, or effected outside Panama. 


- Distributing dividends or participations from the tax exempt activities. 


- A corporate regional headquarters with offices and employees based in Panama does not pay any income tax, if the office merely directs operations from Panama; that is, it performs only international operations from Panamanian territory.


-For manufacturing or assembly operations, the existing law for Export Processing Zones designates them as 100% tax-free areas. Both the developer and the export item will be 100% exempted from national direct and indirect taxes, duties, levies, right and charges.


The tremendous benefits of doing business in Panama are obvious. 



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