Why do Companies save in taxes by incorporating in Panama?
More and more companies are deciding to enjoy the benefits provided by the laws of various countries in order to reduce the fiscal impact on profits and thus expand their investment opportunities. Panama is renowned worldwide for the broad tax benefits offered to companies carrying out commercial and economical activities in their country, allowing legal and quick solutions against the fiscal pressures of Latin American countries.
On the one hand, in Panama, offshore companies don't have to pay Value Added Tax (VAT) or submit annual business reports so they have no accounting or auditing costs. On the other hand, they have a key advantage over traditional companies: they don't pay taxes from the sale of products or services abroad and their properties abroad won't be subject to Personal Income Tax. Their earnings, or income made outside Panama territory, are completely tax free. The only income that will be taxed is that obtained inside Panama territory through the sale of products or services, since they will be considered a source of income for Panama
Following this territoriality-based income system which forces companies to pay taxes only on income-generating transactions in Panamanian territory, company shares won't be subject to fiscal policy, no matter whether they are bearer shares or registered shares.
Only when it comes to commissions and earned interests on loans which finance businesses in Panama, can they be taxed.
From a financial standpoint, offshore companies should not pay taxes on earned interest on bank savings accounts, time deposits or on share capital. The shareholders of offshore companies will pay taxes neither on dividends acquired abroad nor on capital gains.
Inheritances are completely tax free and stamp duty exempt on all transactions related to them. State taxes are not a tax burden for offshore companies either. The only tax offshore companies pay is an annual "Flat Rate" as tax registration or validity.
Offshore companies not only enjoy a country with full legal, politic and economic stability, but also take advantage of Panama's fiscal and economic policy to make a profit. Incorporating in Panama is an opportunity no company should pass up. We suggest that you seek legal advice from experienced Panama Lawyers that will review your case in detail and ensure that your company fully complies with the laws of your country of residence. Delvalle & Delvalle offers comprehensive legal services to incorporate your offshore company in Panama.
To analyze your case, schedule an appointment with our lawyers. We will get back to you within 24 hours.