Panama Real Estate & Immigration Advisory Agency

Question 1

Why is Panama ranked #1 in the world as a place to live?

a democratic republic
the fastest growing economy in South America
the "hub" of the Americas
Panama canal is the key waterway for globalization
safe geographical positioning far from "Hurricane Alley"
over 10,000 islands, mountain ranges, landscapes featuring one of the greatest bio-diversity locations on Earth
ranked #2 in the world as a place for seniors to retire & have an amazing quality of life
one of the most community diverse countries in the world
a country with one of the best ranked private health care systems in the Americas
a leading private & public school system and higher education center
a stable dollar-based economy
center of commerce for banks and Fortune 500 companies
a beneficial tax system for international investments

Answer

For the past ten years, Forbes International Living has ranked Panama as #1 on the list of best places to live & retire. Panama is:

Question 2

What is the Qualified Investor Permanent Residency Status?

Real Estate - USD$300,000 minimum - no minimum holding period
1. New build - immediate occupancy
2. Pre-Construction - your non-refundable deposit equal to the entire purchase price must be paid into the Seller's escrow for the construction period. Seller will provide security in the form of a Letter of Credit and will pay interest during the term of construction.
Panama Registered Company on the Stock Market - USD$500,000 minimum - must be kept for at least 5 years.
Government Social Fund - USD $500,000, non-refundable, to be invested in a program, such as the social security & poverty alleviation programs.

*For a full description, please review the Qualified Investor Permanent Residency FAQ included on the main page.

Answer

Qualified Investor Permanent Residency Panama Status means: Immediate Permanent Residency for you, your spouse (if applicable), your dependents, and dependent parents who look to you for total support.

Question 3

How does Panama rank on an economic basis?

Answer

Panama has transformed into an economic leader in Latin America in a stable & sustained manner over the past 10 years. Panama ranks as the 42nd most competitive economy in the World (out of 138), 2nd in Latin America, only after Chile (33) and ahead of "developed" economies such as Italy and Portugal. Over 75% of Panama's Gross Domestic Product (GDP) is derived from services (including roughly 10% from the Panama Canal), while agriculture and industry account for the balance.

Question 4

What is the public & private education system like in Panama?

International School of Panama (ISP)
Balboa Academy
The Metropolitan School of Panama
Oxford International School

Answer

Panama offers both private & public education options. Private schools are rated amongst the top in Central America. Panama's school year runs from March to December. International Schools adhere to the North American calender, from September to June. Panama has schools that offer Advanced Placement (AP) or International Baccalaureate (IB) programs:

Question 5

Are there advanced learning centers and universities in Panama?

Law
Medicine
Dentistry
Psychology
Certain fields of Engineering

Panama has US accredited schools in Florida, such as Florida State University and Quality Leadership University.

Answer

Panama has both private & public universities regulated by the Ministry of Education. There are over 33 higher education centers in Panama. Some professions require re-validations in Panama to be able to practice in the country. These include (you must verify):

Question 6

Are there US schools and universities in Panama?

Florida State University
Quality Leadership University (affiliated with the University of Louisville and the University of South Florida)

Some other universities have agreements with the Minister of Education:

University of Arkansas
Georgia Insitute For Technology

Most schools require proof of English proficiency if the high school degree is received from a non-English speaking country. Schools that offer programs such as AP or IB will enable students to receive college credits during high school and ensure a top-level education.

Answer

Panama has campuses for two US accredited universities:

Question 7

What is the healthcare system like in Panama?

Answer

Panama has 3 healthcare systems, 2 of these are government-operated and 1 is private. Public Hospitals and Health Clinics - These are run by the Ministry of Health (MNSA). Basically free or low-cost healthcare. These clinics serve primarily in low-income communities and in remote locations. Social Security Hospitals - This is run by Caja del Seguro Social (CSS). Most working people have access to this, and everyone who works in Panama is required by law to pay into the social security system. 70% of Panama use this healthcare system. Private Hospitals and Clinics - Even though the private healthcare system runs at a higher cost than the public one, it is still affordable relative to the US (USD$147 monthly for a married couple). It will also be easier to find an English speaking doctor in the private system. Often these doctors, like in the United Kingdom, work in both private and public systems.

Question 8

How many Private Hospitals are there in Panama?

Answer

Centrol Medico Paitilla - located near Balboa Avenue, the Centrol Medico Paitalla is affiliated with the Cleveland Clinic and hosts adjoint conferences in Panama yearly. It has one of Panama's best-known Oncology units. Clinical Hospital San Fernando - affiliated with 3 renowned US hospitals: Miami Children's Hospital, Baptist Health International of Miami, and Tulane University Health Services Center. They also feature an "international office" to help ex-pats unfamiliar with Spanish, and they have a health clinic in Coronada that services the beach areas. Hospital Nacional - This hospital is run by the American Hospital Management Company, which is affiliated with the Kendall Medical Center in Florida and the University of Nebraska Medical Center. Hospital Punta Pacifica - with a state of the art diagnostics, this hospital is considered the most technically advanced in Latin America. They offer advanced video conferencing allowing authorized doctors around the world to watch surgeries, view, and analyze patient data. It is the only hospital and medical center in Latin America and the Caribbean affiliated with John Hopkins Medicine International.

Question 9

What about Medical Tourism?

Neurosurgery & other services related to neurology
Minimally invasive surgery
Orthopedics

A great majority of foreigners that come to Panama in search of health services come from countries such as the United States, Canada, and some Caribbean islands. There are no official numbers that indicate the quantitative volume of people that enters the country for this purpose since it is considered medical data, but the health authorities in Panama indicate that the country is one of the leaders for this type of tourism. Natural health tourism is also offered, with different thermal water spots in various regions of the country. These are especially helpful for chronic respiratory, locomotive, and digestive disorders; thermal waters are known for their multiple healing qualities.

Answer

Given its excellent connectivity and quality of life, the country is becoming an interesting medical platform for foreign visitors. Specialties with the highest demands are:

Question 10

What are the tax advantages of establishing permanent residency in Panama?

income generated through operations managed in Panama but held outside of Panama
income from rebilling for goods and external services
dividend distribution derived from outside of Panama income

Panama banking has a well-renowned reputation worldwide as of the safest places, fulfilling all the required norms that international organizations have set and adhere to. Panama Permanent Residency documentation allows for exemptions in practically all personal income. The main exception is the United States; however, the first USD$160,000 will not be taxed. This facilitates that a person can constitute a business under Panamanian fiscal residence and can manage it outside of the country so that they can generate income outside of the territory and this capital would be exempt from paying taxes.

Answer

By establishing fiscal residence (Permanent Residency) in Panama, you immediately become a Panama taxpayer. This means that at the start of the "Principle of Territoriality" that the state of Panama operates under, you will only pay taxes on income earned and obtained within Panama only. Tax exemptions can be grouped in the following manner:

Question 11

What are the tax benefits and rates for Panama residents?

City of Knowledge
Panama Pacifico
Processing Areas for Exportation
Colon Free Trade Zones

As a Panamanian Resident, you are to pay tax on income earned in Panama only, and it means that residents' offshore earnings, foreign investments, and salaries are essentially tax-free:

the first $10,000 net taxable revenue in Panama of a person is tax-free. From $11,001 to $50,000 net taxable revenue, income tax is set at 15%, while net taxable income above $50,000 is taxed at 25%
income tax for corporations is 25%, although there are some other benefits to micro and small businesses. Bank net income is taxed at 30%
VAT (ITBMS or Sales Tax) is based on 7% (although there are some accommodations at 10% (Alcohol) and 15% (Cigar and tobacco products) are exempted from VAT
interest, royalties, commission and professional fees paid to non-Panama resident person or company have a withholding tax rate of 12.5% plus VAT of 6.45%
dividend tax is set at 10% for domestic income distribution, while a 5% dividend tax is applied to international income distribution
capital gain tax is set a 5% applicable to share transfer
real estate property tax is set at 1% on properties valued above $30,000. New real estate properties (construction improvements) are exempted from property tax according to property value. The exemption could vary from 5 to 20 years. Besides the high-yield real estate market, owning real estate in Panama is one of the ways to qualify for a Permanent Residency
Panama does not hold CFC (controlled foreign companies) rules.
If a person decides to move to Panama and live in his or her property, the person is not required to pay import taxes on the interior items they send to Panama when moving.
real estate taxes are not always due immediately, and capital gains taxes could be 3% based on the sales price or 10% based on earnings
Income tax exemption for overseas profits "Territorial Taxation Principle": under the Panama Fiscal Code based on territory, income generated outside the country is considered non-taxable. Income from international sources, such as transfers or acquisition of securities, investments, transfer or sales of real estate property, retirement, and dividends are not subject to tax at all. There are some other activities that were recently added to the non-taxable income categories.
Doing business in Panama offers great advantages to companies generating income abroad as tax exceptions pave the way to higher profits.
Investors generating profits in Panama and conducting international operations can benefit from maximized profitability. The country has approximately 17 tax treaties to avoid double taxation (TDT) with countries such as Mexico, Spain, United Kingdom, amongst others. Businesses handling operations with these countries can enjoy lower taxes and maximize profitability.

Answer

From a legal point of view, Panama holds a total of 21 tax benefits and you should seek advice from a Panama certified accountant. There is a wide variety of social, political, public needs, special economic zones, and attracting foreign investment that forms the basis of Panama's tax benefits. Special Economic Zones have been set up for business development:

Question 12

What kind of business corporations can be set up in Panama?

Must Have a minimum of three directors: president, secretary and treasurer (also to be named dignitaries)
Must Have (2) Subscribers (can be a person from the board of directors or one of the appointed dignitaries – established in the Public Deed. Each subscriber must agree to subscribe to at least one share, at the time of registration)
Must appoint a Legal Representative (this can be one of the directors of dignitaries)
Must appoint a resident agent (it is mandatory by law to have a Panamanian lawyer)
Must Register the company fiscal address
Must file monthly and annual tax declarations, if the corporation is operating commercially
Have a minimum of one shareholder
Annual payment of Corporate tax (Tasa Unica)

Limited Liability Company (Sociedad de Responsabilidad Limitada – S.R.L.)

Must have a minimum of one administrator
Must have a president, secretary and treasurer (also to be named dignitaries)
Must have (2) Subscribers (can be a person from the board of directors or one of the appointment dignitaries. Each subscriber must agree to subscribe to at least one share, at the time of registration)
Appoint a legal representative (this can be the president, an associate or one of the administrators – established in the Public Deed (El Pacto Social)
Appoint a resident agent (it is obligatory by law to have a Panamanian lawyer)
Register a company fiscal address
Prepare and submit annual tax declarations
Must have a minimum of two shareholders or associates
Annual payment of Corporate tax (Tasa Unica)

Answer

Incorporating a company in the Republic of Panama is a fast and smooth process as compared to other Latin American nations. It takes 2 weeks to set up a legal entity and the company owners do not need to be physically present. In addition to this, a company doing business in Panama benefit from confidentiality. Panama secrecy laws protect the name of corporate shareholders, which are not required to be publicly registered. Also, anonymous corporations do not have to declare income earned outside Panama. An investor may choose between an Ltd (S.A. Corporation) or an LLC (S.RL. Corporation). Must comply with the following fundamental requirements: Corporation (Sociedad Anónima – S.A.)

Question 13

Is the US dollar legal tender in Panama?

Answer

The US dollar has been legal tender in the Panama territory since 1904. In this sense, it is comfortable for US companies and individuals doing business in Panama, as currency conversion is not an issue and there is no currency volatility as the dollar responds to the US economy.