The Republic of Panama is a presidential independent, sovereign state. It is well known as one of the most developed international business center. Panama has the fastest growing economy and the largest per capita income in Central America. Today Panama is popularly known for being one of the most outstanding tax havens in the Central America region. The offshore jurisdiction of Panama has a large client base with investors from all over the world. Panama has a booming financial services sector which provides superior services such as the incorporation of International Business Companies, offshore banking, the formation of Panama Foundations and Trusts, Panama insurance the registration of boats and vessels among other services.
Tax haven Panama is a pure tax haven which offers a tax free environment to clients. Panama developed as an offshore tax haven by putting very strict legislation in place to regulate its offshore and financial sectors. The passing of modern and progressive legislature has made the Republic of Panama a very secure and stable offshore tax haven. Panama as a tax haven imposes no taxes on offshore business companies who engage in no business operations in the jurisdiction. One of the characteristics of Panama offshore legislation which puts the jurisdiction way above the competition is that offshore business companies are allowed to carry out is business operations both within and out of the offshore jurisdiction.
Most offshore jurisdictions available in the world today prohibit International Business Companies (IBCs) from doing business in the country of incorporation. Panama offshore corporations who do no business in the jurisdiction will pay no corporate and income taxes or local taxes. Panama offshore companies pay no withholding tax, capital gains tax, inheritance tax, estate tax, gift tax, etc. All offshore companies incorporated in the Republic of Panama are entitled to pay an annual licensed fee to the government. Offshore companies undertaking business operations in the tax haven of Panama will be subjected to Panama local taxes. One of the characteristics of tax havens is its ability to provide privacy and confidentiality to its clients.
The tax haven of Panama is able to provide authentic privacy and confidentiality to its offshore clients, in fact this is guaranteed by legislation. The trustees and the agents responsible for setting up a Panama offshore trust must keep all information pertaining to the trust confidential. Violation of such a law will result in imprisonment for up to half a year and monetary fines reaching up to US$50,000. There are also confidentiality clauses in place for Panama Foundations. All persons involved in formation a Panama Foundation which includes lawyers, foundations members, agents and bankers are to keep Foundation information very private. The failure to keep foundation information private will result in criminal penalties.
As an offshore jurisdiction providing offshore banking services tax haven Panama has banking secrecy laws in place to protect the offshore bank account holders. Panamanian banks are prohibited from disclosing information regarding offshore bank accounts which are classifies as confidential. This carries serious fines and penalties. Information concerning offshore bank account may be given out in cases of criminal investigations if the proper court order has been given out. Failure to comply with these laws can result in fines up to US$100,000. Panama International Business companies are also allowed privacy in tax haven Panama. As a tax haven Panama does not require that the names of the shareholders be registered as public information. To provide added layers of privacy for International Business Company in Panama registration with nominee directors and shareholder is permitted in that way the names of the beneficial owners does not appear in the registers.

People from any nationality can incorporate in panama. An offshore corporation needs only three directors, one shareholder and the appointment of a company secretary for incorporation. Tax haven Panama does not require offshore companies to file annual financial report to the relevant tax authorities in Panama. However offshore corporations are advised to prepare these records for the benefits of the shareholders and directors of the companies. The fact that offshore companies in tax haven Panama have no need to present its records means that this information is kept private to the company. The Republic of Panama is yet to sign any tax treaties with foreign countries. This is to the advantage of offshore clients. Another advantage that tax haven Panama presents is the government has passed no exchange controls laws. This makes it easy for offshore companies to move funds since no questions have to be answered or forms filed. Panama Offshore companies therefore are free to engage in international trade. The offshore tax haven of Panama gives clients a medium to reduce tax liabilities and still provide them with excellent asset protection. The tax haven of Panama exhibits characteristics which makes it the perfect jurisdiction for investments.