PANAMA

Panama is a sea state in the southern part of Central America, between Costa Rica and Colombia. It is known particularly thanks to the Panama Canal that is of strategic importance and that connects the Pacific Ocean with the Atlantic Ocean. The territory of Panama was colonized by the Spanish as early as 1508. Between 1524 - 1565 it was part of the General Capitanate of Guatemala, and in 1708 it became the viceroyalty of Peru, then between 1718- 1821 it was part of New Granada. Panama declared independence in 1821. Subsequently, it joined the Federation of Great Colombia, but in 1903 it declared its independence once more. In the same year it signed an agreement with the USA, providing for the construction of the canal on the territory of Panama and, at the same time, guaranteeing its administration to the USA. In 1999 the canal fell under administration of Panama. The economic dependency of Panama on the United States is understandable due to historical reasons, which is mirrored not only by the currency (free trade of USD in Panama), but also by the impact of British-American jurisdiction. Panama is a country with a continental legal system, on a Spanish basis.

Panama is a well established jurisdiction, which in the course of its existence has built up a very good reputation. The Companies Act has been in effect here for 70 years. The companies registered in Panama only pay taxes on income accrued from Panama based sources. The IBC companies that operate abroad do not have to pay any direct or indirect taxes. Instead a small fee (150 USD) has to be paid to the Panama government. No reports need to be submitted to the authorities for companies not doing business on the territory of Panama. Bookkeeping can be maintained in any country.

One attractive possibility lies the usage of the free zone in Colona, which is the second largest duty-free territory on the world, behind Hong Kong. All the goods transactions, including raw materials and semi products, are subject to a special tax regulation - export to third world countries is totally exempt from Panama duties, and the fees and income from these trades are subject to taxes with extremely low rates. The Panama's Ship Registry is also the largest in the world and keeps records of as many as 60 % of newly built vessels.