10 reasons why Panama is an ideal place for doing business

Safety and Stability

Panama is widely regarded as a “Safe Haven” due to its political and socio-economic stability. It benefits from special treaties with the United States, ensuring protection in times of conflict. As the safest country in Central America, it attracts a diverse expat community from around the globe.

Ease of Business Setup

Setting up a business in Panama is a straightforward process. Forming a Panama corporation takes just a few business days, and a business operations permit can be obtained online with a small setup fee or tax. It is also possible to establish a sole proprietorship, with the business operations permit costing only $15. Municipal taxes are generally low, varying based on the nature of the business and the municipality.

Currency Stability

Since its inception as a nation in 1903, Panama has adopted the U.S. Dollar alongside its currency, the Balboa. The Balboa is pegged to the US Dollar, and both currencies circulate within the country. Local banking transactions are usually quoted in Balboas, while international transactions are quoted in US Dollars.

Favorable Tax Structure

Panama offers a relatively simple tax structure for businesses. The country imposes a low value-added tax (VAT) or sales tax of just 7%, compared to the 17-21% rates in neighboring countries. Corporate income tax stands at a modest 25% on net income after expenses, and dividend taxes range from 5-10%. Panama follows a territorial tax system, meaning only income generated within Panama’s territory is taxed by the government. Non-Panamanian income remains tax-free for Panamanian companies, residents, and citizens. However, it’s important to note that US persons residing in Panama are subject to worldwide income taxation by the US.

Political and Economic Stability

Panama has maintained a stable democratic government since 1989, without significant political unrest. Additionally, Panama has experienced consistent annual GDP growth since 2005, coupled with low inflation rates.

Robust Banking System

Panama’s banks are known for their strength and conservative lending practices, contributing to their overall stability. The country’s banking regulatory body ensures strict oversight of Panama’s financial institutions.

Advanced Infrastructure and Communication

Panama boasts high-speed internet connections across the country and modern telephone equipment for international communication. It has well-maintained roads, including 4-lane highways connecting the capital with major provincial capitals and Costa Rica. The Panama Canal enables efficient transport of goods, while domestic airports facilitate fast domestic air travel.

Natural Disaster-Free

Unlike many other regions, Panama is relatively free from natural disasters such as hurricanes, tornadoes, or tidal waves. While minor earthquakes occur occasionally, they are infrequent and generally pose little threat.

Bilingual Environment

While Spanish is the primary language, English is widely spoken in Panama due to the substantial English-speaking expat community. The involvement of the United States in the construction and maintenance of the Panama Canal until 1999, when it was handed over to the Panamanian government, further contributed to the prevalence of English in the country.

Proximity and Connectivity

Panama City’s Tocumen International Airport offers direct flight connections to over 100 cities worldwide. Several international airlines serve Panama, ensuring convenient travel options for citizens of Canada, the United States, Latin America, and Europe.

These factors make Panama an appealing destination for living and conducting business, offering a secure environment, favorable tax policies, stable infrastructure, and a thriving international community.






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