Presentation on theme: "Escobar, Della Togna, Icaza & Jurado Attorneys at Law"— Presentation transcript:
1 Escobar, Della Togna, Icaza & Jurado Attorneys at Law RELOCATION TO PANAMAEscobar, Della Togna, Icaza & JuradoAttorneys at LawSeptember , 2011 – Panama City, Panama
2 BackgroundJacqueline Escobar – Graduated from Duke University – Masters in Law (Real Estate Expert)Marisel Della Togna – Former Deputy Director of Panamanian Internal Revenue Service (Tax Consultant)Marisel Jurado – MBA and Masters in Accounting (Corporate Law Expert)Maruquel Icaza – Graduated from American University, – Former Vice Consul Panamanian Embassy at Washington, D.C. (Immigration Consultant)
4 Comparative advantages Panama´s Economy: - Dollarized economy. Reasonable life here on about $1,200 a month.Comparative advantagesPanama´s Economy:- Dollarized economy.- Services based economy (banking, commerce, transportation, ports and tourism).- The country's industry includes, manufacturing of aircraft spare parts, cements, drinks, adhesives, textiles and more.
5 HEALTH CARE AND INSURANCE Infrastructure (e.g. Punta Pacífica Hospital which is affiliated to the John Hopkins Hospital in the US)Low cost medical services and health insurance premiumsRecognized local and international insurance companies (Blue Cross Blue Shield)Your health insurance policy can cover you for hospitalization and/or medical expenses. You can obtain Local or International Coverage.By Law, all vehicles have to be insured.
7 The most common legal instruments for Incorporations in Panama: The most common legal instruments for Incorporations in Panama:1- Panamanian Corporations (Used to do business in Panama or to protect assets such as properties, any legal activity)2- Private Interest Foundation (Asset Protection)
8 PANAMANIAN CORPORATIONS Law 32 of 1927IDENTITY OF DIRECTORSNationals or foreigners may establish a corporation• SHARE STRUCTUREBearer and nominative shares are also permitted.A single person or a corporation may own all shares.• CORPORATE DIGNITARIES & RESIDENT AGENTPanamanian law requires a President, a Secretary and a Treasurer, and a local resident agent.DURATION AND DOMICILE OF CORPORATIONLaw 2 of 2011KNOW YOUR CLIENT – DUE DILIGENCE
9 Steps to Set Up a Corporation Check name availability in the Public Registry.Preparation of legal documentation (i.e. corporate by-laws).Upon registry, the Resident Agent prepares share certificates and legal books for the corporation.The annual corporate tax is of US$300Length of time for organizing a company: 3-5 days
10 Doing Business in Panama Set up a companyObtention of tax payer I.D. number (R.U.C.)Obtain a Commercial License to operate in Panamá (Aviso de Operación – Retail activities restriction by Law)Register the company in the Municipality Office (Municipal Taxes)Hire personnel / Labor contracts sealed in the Ministry of LaborRegister personnel in the Social Security of Panama (The rate paid is of 12% employers – 8% employees)
12 Private Interest Foundation Law 25 of 1995These private interest foundations shall not be profit oriented.• They may engage in commercial activities in a non-habitual manner.• The founders must select a name to identify the foundation.• The objectives, duration, domicile, and board of the foundation must also be indicated, along with the beneficiary or beneficiaries.
13 Private Interest Foundation Foundation charter must be notarized and registered as trust deed does.The private interest foundation is very similar to a trust in its operation, but unlike the trust, there is no need to transfer the assets to a third party.When the assets are from outside the territory of Panama, no taxes are levied when these assets (whether movable or immovable, shares, bonds, and others) are transferred.
14 Private Interest Foundation It may be established for the benefit of a person or persons, a family, or a specific social purpose.PIFs are a viable solution for estate planning, providing privacy, and protection of assets.
15 Private Interest Foundation Your Foundation books are mantained 100% private and confidential by law.The Beneficiaries are not registered in the Public Registry.Beneficiaries can be appointed through a Private letter of wishes written and signed by the Protector.The PIF does not require Paid In Capital
17 PENSIONADO PROGRAM Law No. 9 /June 24, 1987 Pension income of at least US$ 1, per month and an additional US$ for each dependent.Private and public pensions apply (retired by the government, social security or private pension programs) Your application must be processed by a Panamanian attorney through a Power of attorney.Indefinite legal residence statusDoes not grant you a Passport nor a Panamanian I.D. Card
18 Private Income Retiree Visa This visa has an income requirement of US$ monthly.Approximately US$350K (Time deposit) with current interest rates.The time deposit has to be free of any liens.This visa has to be renewed every five (5) years.Grants Special Panamanian Passport but not Panamanian I.D. Card
19 IMMIGRANT VISA AND RESIDENCE PERMIT TO FOREIGNERS WITH ECONOMIC SOLVENCY The Self-Economic Solvency Visa offers three (3) different investment options to qualify for residency status in the Republic of Panama:Investment Option A: Requires a minimum of US$300,000 in a three (3) year time deposit (or "certificate of deposit" or "CD") without liens at any licensed bank in Panama.Investment Option B: Requires a minimum of US$300,000 in a titled property (real estate) in Panama without any liens.Investment Option C: Requires a time deposit and property, for the amount of US$ 300,000 for both investments.
20 General Documentation Required Registration Process is the first step. To register at the Immigration Office, the applicant must go in person with his original passport and 2 pictures.Power of attorney (we provide it)Health certificate issued by a Panamanian Doctor.Police report.Complete passport copies (all pages including cover), notarized in Panama (we take care of that).Six (6) photographsSworn statement about personal background. (We provide the form)All document coming from a foreign country needs to be authenticated by a Panamanian Consulate in the U.S or by Apostille. If it is a private document, it has to be notarized before sending it to the Consulate.All documentations requires to be translated into Spanish by a Panamanian authorized translator.
22 BANKING REGULATIONS A foreigner can have a Panama Bank Account. The bank account minimum is $1000, for both checking and savings accounts, in USD or Euros.Article 194 of this law specifically enshrines the client’s right to privacy and confidentiality in its relationship with the bank with respect to third parties, and Article 110 makes explicit the bank’s obligation to maintain this confidentiality.More than 75 banks are stationed in Panama, 36 of them with international (offshore) licenses. The financial sector represents a full 8% of the GDP, and employs 17% of the labour force.
23 BANK ACCOUNT REQUIREMENTS- PERSONAL ACCOUNT AND CORPORATE ACCOUNT- Please note that requirements can vary from Bank to Bank.Requirements to apply for a personal account (deposit) – Basic requirements.Personal interview with Branch Manager – Main BranchRequired documents:- Passport – original- Bank reference letters (preferable two)- Personal reference letters (from a known friend /customer with residence in Panama )- Business reference letters (job, accountant, lawyer or broker). (Two in total).Internal bank papers will need to be signed and completed by applicant.Application documents will be evaluated by our Compliance OfficeBank reserves the right to request additional information if considered necessaryBrief description of background and current activities.
24 Requirements to apply for a deposit account in the name of a corporation (local) with foreign directors and/or signers – Basic requirementsPersonal interview / bank formsCopy of articles of incorporation and its amendments (if applicable)Legal I.D. for all directors of corporation are requiredReference /Presentation letter from lawyers in Panama.Bank reference lettersBusiness/commercial letters of reference of corporation and or directors and signers to accountValidation Certificate of Corporation issued by the Registry Public in Panama (recent)Brief description of background and current activities of the authorizing signatures.
26 M A J O R T A X E S 1. INCOME TAX Individuals Companies 2. ALTERNATIVE METHOD FOR CALCULATIONCompanies with taxable income of more than 1.5 millions pay income tax on the greater of applying the traditional method (25%) or 4.67% of total net revenues2.1 ADVANCE INCOME TAX - Companies that earn taxable income1% of the monthly taxable incomeUp to 11,000O%11,000 – 50,00015%+ 50,000USD5,850 for the first 50,000 and 25% of the surplusPERIODTAX201127.5%201225%
27 3. TRANSFER OF MOVABLE GOODS & SERVICES TAX / VAT (7%) Exceptions – (10% & 15%) 4. SELECTIVE CONSUMPTION TAX (varies depending on the goods such as cars, cigarettes, liqueurs, etc.)5. COMMERCIAL OR INDUSTRIAL LICENSE TAX2% of the company’s total capital , with a minimum payment of 100 and a maximum of 60.000 INCOME TAX RELATED TO REAL ESTATEHabitual BusinessBrand new - Progressive TableUsed – general income tax tariffs as individuals or companiesNon-habitual Businessa. Income tax at a rate of ten percent (10%) on taxable income. The taxpayer is obliged to pay a sum equal to 3% of the total value of the transfer or the cadastral value, whichever is greaterTRANSFER OF REAL ESTATE TAXa. Property vs. Panamanian Corporation (2%)
28 PROPERTY TAXa. Progressive tableb. 1% of land value for condos (if improvements are exempt)CAPITAL GAINS TAX (10% - 5% witholding)10. IMPORT DUTIES (varies depending on the good – in many cases ISC supplanted import tax)11. BANKING & FINANCIAL INSTITUTION TAX / Insurance Tax (FECI)12. OTHERS: Oil Tax, Municipal Tax, Vessel Flag Tax
29 TERRITORIALITY PRINCIPLE INCOME TAXIndividuals earning income in Panama, who stay more than 183 consecutive or alternate days, must pay income taxSums derived from income generated in Panama that are remitted abroad pay withholding tax of 27.5 % (for companies) or 15% (highest rate for indivIduals) on 50% of the total incomeForeign Income non-taxableInvoicing from a company in PanamaTo conduct transactions in Panama that have its effects abroad (offshore)To distribute dividends generated from foreign income or from companies that do not require commercial licenseTERRITORIALITY PRINCIPLE
30 T R A N S F E R S A B R O A DInterest, commissions and others credited or remitted abroad, pay income tax at regular rates over 50% of remitted sum, withheld from the total amount paid to the foreign creditor.The beneficiary of the service may deduct the paymentremitted from its taxable income.
31 G E N E R A L P R I N C I P L E S O N D I V I D E N D T A X E S TAXABLEDistribution of such earnings derived fromits internal sales in Panama.Dividends: Nominative 10%Bearer 20%NON-TAXABLEForeign source income is not subject to tax.Example: company has administration and accounting in Panama; operations are abroad.Co. established in CFZ or special regimes (export & re-export) sales – distribution of such earnings.
32 R E A L E S T A T E R E L A T E D T A X E S Real Estate TaxProgressive Table / 1% condosTransfer Real Estate Property Tax2%Capital GainsTax3%
34 PANAMA AS TAX HAVENPanama has triumphed in the process of not being considered a tax haven. Finally, after a successful negotiation and subscription of 12 double taxation agreements and the implementation of deep changes within the internal revenue and tax administration, the OCDE introduced our country into the so called “white lists”.
35 PENSIONADO PROGRAM BENEFITS Selective Consumption Tax (ISC) of 5% plus 7% Service Tax on cars (*)Import tax exemption for households up to US$10,000Import tax exemption for household goods25% discounts on utility bills25% discount on airline tickets and 30% on other transportation15% discount on loans made in your name1% reduction on home mortgages for homes used for personal residence (The house has to be purchased at your name not a company or SA)20% discount on doctor's bills 15% on hospital services if no insurance applies15% off dental and eye exams10% discount on medicines20% discount on bills for professional and technical services50% discount on entrance to movie theaters, cultural and sporting events50% discount at hotels during Monday to Thursday, 30% on weekends, among others.(*) Law 33 of 2010
36 SPECIAL TAX REGIMES COLON FREE ZONE (ANNUAL GROWTH 15%) EXPORT PROCESSING ZONESPANAMA-PACIFIC SPECIAL ECONOMIC AREA ($400M)PETROLEUM OIL FREE ZONESCALL CENTERS (14,000 JOBS)CITY OF KNOWLEDGE AND THE INTERNATIONAL TECHNOLOGICAL PARKTOURISMPENSIONADO PROGRAM
37 TIEA PANAMA - US In effect since April 2011 1. Includes the following taxes imposed by the United States:(a) Federal income taxes;(b) Federal taxes related to employment;(c) Federal estate and gift taxes; and(d) Federal excise taxes.2. Includes the following taxes imposed by the Republic of Panama:(a) Income Tax(b) Real Estate Tax(c) Vessels Tax(d) Stamp Tax(e) Notice of Operations Tax(f) Tax on Banks, Financial and Currency Exchange Companies.(g) Insurance Tax(h) Tax on the Consumption of Fuel and Oil Derivates(i) Tax on the Transfer of Movable Goods and the Provision of Services(j) Tax on the Consumption of certain Goods and Services(k) Tax on the Transfer of Immovable Goods3. Under section 274(h) of the U.S. Internal Revenue Code, an individual may deduct from income expenses
38 Escobar, Della Togna, Icaza & Jurado 47th Street and Aquilino de la Guardia Ave., The Ocean Business Plaza, Suite 1003Panama City, Panama–Tel.(507)Fax. (507)