Panama is a great place for foreign investment, and many people are deciding to either move their business there, or start a new one. If you’re still on the fence about whether or not Panama is the right fit for you, check out these reasons. Here are 10 of the greatest benefits you’ll see if you decide to start a business in Panama.
- Tax Benefits: If you run an offshore business out of Panama, the tax breaks are immense. There is no offshore income tax, capital gains tax (except on sales of real estate located in Panama), tax on issuance of corporate shares, no federal, or state tax, and many more incentives. If you open a business that operates in Panama, you are liable to pay local business taxes, however rates are significantly lower than the US, Canada, or Europe.
- Favorable Incorporation Laws: Panama corporation laws enable you to hold “Bearer Shares”, provided you have an authorized custodian, have directors from any country, are inexpensive to form, and afford you the right to incorporate Private Interest Foundations.
- Low Labor Costs: Due to the low cost of living, Panamanian wages are significantly lower than North America. Basic unskilled labor costs around $3 an hour. Skilled positions, like executive and management level jobs, are typically 60-70% cheaper in Panama. There is a growing skilled labor force, and many well-trained people with a higher education.
- The US Dollar: Unlike most of its neighbors in the region, Panama has low inflation, and a stable currency. Panama uses the US Dollar as legal currency, which makes transactions from banking, to payroll, to contracting much easier on businesses. It’s also a big reason why so many international banks are located there.
- World-Class Banking System: Panama, as a country, is a worldwide leader in global banking. They are favorable to business, giving out more credit than any other country in Central America, and do to the sheer volume of banking institutions ,have very competitive interest rates.
- Language: The international language of business is English, and while Panama’s native tongue is Spanish, there is a high level of English proficiency at the local business community. There is also a very high literacy rate, and decent higher education institutions. There is a huge international market in Panama, and as a result, having a multilingual staff is common, which makes it an ideal environment for international business.
- Growing International Market: Panama’s consumer market is hot these days, and it’s growing by the day. The tourism industry nearly doubled in the past two years, and with an influx of people relocating for work or retirement, the international market is booming. The local consumer market has the most spending power in the region, and Panamanians have some of the lowest unemployment rates in all of Latin America.
- Location: Panama is a strategic destination for many businesses due to its location and time zone. Panama is a temperate country with warm weather year-round, and is considered a hub for the Americas as far as air and sea travel are concerned. Panama is a 5-hour flight from New York, 2.5-hour flight from Miami, 1-hour flight from Colombia, and a 7-hour flight to Brazil. There are also around 100 international non-stop flights to Latin America, N. America, the Caribbean, and Europe.
- The Panama Canal: Panama is a global shipping and logistics hub, and has one of the biggest ports in the world. The Canal accounts for approximately 1/3 of the country’s total economy, and makes Panama one of the easiest, and cheapest places to receive or send international shipments. Imports are accessible and low-cost, and exporting products is easier than almost any other country in the hemisphere. The port of Colon on its own generates exports and re-exports valued at more than US$11 billion annually. Also, the Canal is currently undergoing massive expansions that will double its size, and more than likely do the same for the Panamanian economy.
- Panama Has a Booming, and Growing Economy: In just about 10 years, Panama has doubled the size of its economy. The World Economic Forum ranked Panama as the 2nd most competitive country in Latin America and the Caribbean, trailing only Chile. It has averaged between 7-10% growth annually over the past ten years, and predictions are that it will hover around 8% for the next fiscal year. Due to the Canal expansion, many economists predict up to double-digit average growth over the next 5 years. By most estimates, despite already being in a current boom, the best days are yet to come when it comes to the Panamanian economy.
