Doing Business In Panama - Part II

Panama’s current and planned public investment in productive infrastructure is one of the highest in the Region and is on a par with East Asian economies, including the ongoing construction of a subway in Panama City. Another major project is the still expanding Tocumen International Airport, presently undergoing a remodeling process in order to offer a comfortable and safe atmosphere to all travelers who visit Panama. From the airport, Copa Airlines operates its hub of the Americas, which offer more than 4 destinations to 25 countries, with excellent connections; having three daily flights to the most important cities of Latin America. The Tocumen Airport is a sea level airport that is near the sea ports of the Panama Canal, and has two runways; something very rare in the region.  COPA is not the only airline that is using the airport as a hub; some European airlines are starting to use the Tocumen Airport as important destinations for their flights, including KLM and Air France. These factors contributed to further lowering of unemployment rates from 4.6% in 2012 to 4.1% in 2013 respectively.   

Its banking sector currently comprises of more than 80 foreign banks, providing full banking services through ATM cards, Visa credit cards, check books, Internet banking and Visa debit cards. The first two banks opened their doors in 1904. One was called the International Bank Corporation and is today’s Citibank, (part of Citigroup, the biggest financial conglomerate in the world.)The second one was the Banco Nacional de Panama. The banks of Panama are strictly supervised and licensed by the Superintendency of Banks (Superintendencia de Bancos de Panamá), Panama’s regulatory authority. At present, Panama is reported to have the most upgraded banking system in the world.

Panama City, by Juliette Passer

Panama has one of the most modern and flexible corporate law frameworks in Latin America. Panama’s taxation is based on the territorial principle, hence the only taxable income is the one produced within the Panama territory. Individual income tax rates in panama are progressive to 25%; top corporate income taxes are around 25%. Panama has no compulsory legal currency. De facto, the US dollar is the legal tender for most transactions. However, any currency including gold and silver is allowable for the purposes of financial transactions.

Panama is an interesting and potentially profitable jurisdiction for licensing agreements and joint ventures as well as routine commercial operations for international companies.

The Public Register of Panama provides much transparency to the company registrations, recordings of mortgages and liens and for transfer of title to properties. 

Panama has a court and judicial system built around a civil code, rather than the Anglo-American system of reliance upon case law and judicial precedent. Fundamental procedural rights in civil cases are broadly similar to those available in U.S. civil courts. However, the system can be inefficient, although it is improving and undergoing regulatory revisions. Arbitration is always a good choice at the Center for Mediation and Arbitration established by the Panamanian Chamber of Commerce. 

Panama offers a higher quality of living at a lower cost and with less crime than typical Central American destinations, although Panama City is rapidly catching up with world price levels. Panama has a wealth of variety to offer, whether it is beaches, lakes, mountains or the countryside with prices for real estate purchases to suit practically any budget.

Cinta Costera, Panama City by Juliette Passer

Due to recent economic and legal developments, Panama has become a very attractive country to set-up administrative offices as well as company operations as a gateway to Latin America.  Law No. 41, enacted in August of 2007, created a framework for setting-up administrative offices of multinational companies by providing a centralized governmental office, which handles company licensing, employee visa processing and provides foreign employee benefits, all under one roof. 

For this reason, Panama has been chosen by many multinational companies, such as Samsung Electronics Inc, DHL, DELL, Procter & Gamble and Caterpillar, Hutchinson Port Holding Group, BICSA, SCOTIABANK, Assicurazioni Generali, American Life Insurance Comprany and many more, as main office for their regional operations. In addition, some of the most recognized International Organizations, such as the United Nations Children0s Fund (UNICEF), United Nationes Development Programme (UNDP), Organization of American States (OAS), the Spanish Agency for International Cooperation (AECI, being its acronym in Spanish) BLADEX (Latin American Export Bank), among others, have chosen Panama for establishing their regional operations.