Tax Residence In Panama

Author:Mr Ricardo Cambra La Duke
Profession:Cambra La Duke & Co
 
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As a Law Firm in Panama, we are seeing an increasing number of entrepreneurs in online or internet businesses, such as developers of software and applications for mobile platforms or simply individuals that work out of their laptops and keep moving around the world doing business and retirees that are looking for a solution in order to keep their financial privacy and/or simply gain protection of the assets they accumulate and flexibility to do business.

However, individuals looking for solutions may be misled by those marketing, quite aggressively, Permanent Residence and Second Citizenships as a way to escape the Automatic Exchange of Information. Dubai, Dominica, Grenada, St. Lucia, among others, offer great programs, but gaining residence, from an Immigration point of view, will not be sufficient in light of the OECD's closing loopholes and forcing countries and subsequently Banks, to do more due diligence on their clients to determine where is a client tax resident. Faking a relocation will not work, it will not be enough as you will need to prove you actually live in that new country you say you are resident of, you will effectively have to choose between playing by the new rules or leave your country and relocate to countries that are friendly to you.

In this sense, showing a bank that you have a utility bill with an address from X country may not be enough in the future. Therefore, you should start planning how to become tax resident in a country that offers you stability, good communications, good infrastructure and flexibility tax wise.

Why Panama? The answer is simple: Panama has it all, warm climate year-round, beaches, mountains, great food, great internet and air connectivity, but above all, has stability as it is a proud member of a select group of Latin American countries (Chile, México, Brazil and Peru) that have Investment Grade. On March 23, 2010, Fitch Ratings granted Panama the rating of BBB- with a positive perspective. Since 2010 the Investment Grade has been sustained every year, the latest ratings are: Standard & Poor's credit rating for Panama stands at BBB with stable outlook. Moody's credit rating for Panama was last set at Baa2 with stable outlook. Fitch's credit rating for Panama was last reported at BBB with stable outlook.

In addition to the above, by doing business from Panama your income is not taxable in Panama, so long as such income derives from foreign sources. It's not even reportable to the Panamanian...

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