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Forming Offshore Corporations in Panama

May 7, 2008
There are a myriad of offshore jurisdictions clamoring for investment by offering favorable tax laws and easy offshore corporation formations. Making the correct choice for your personal situation can be a daunting task considering the wealth of information available on incorporating offshore available on the internet today. Every jurisdiction has it's fans who publish information about how perfect their offshore jurisdiction is for investor's and businessmen but they aren't all telling the truth. Not all offshore jurisdictions were created equal.

One caveat to watch out for in particular when incorporating an offshore corporation is whether the offshore corporation is subject to any restrictions that limit it's ability to transact business. Unlike many offshore destinations Panama allows IBC's incorporated in Panama to conduct business with both local companies and offshore companies alike. It is this distinction that makes a Panama corporation stand out from many other popular IBC's available in competing jurisdictions. In addition, Panama corporations can be formed in named or bearer share format which is another advantage not available in each jurisdiction. A bearer share company formed in Panama by a law firm using nominee directors is virtually anonymous. When transacting business using a Panama corporation, unlike old Swiss numbered accounts, the transactions appear completely normal and credible reducing the risk of it being flagged and investigated.

It is also important to consider the banking situation in the offshore country prior to actually incorporating your company there. It doesn't make a lot of sense to form a company and then find out the banking situation does not suit you or your companies' needs. A nice feature of banking in Panama is it is possible to set up a bank account for a bearer share corporation. The bank account transactions will go out in the corporation's name with only the bank itself knowing who is the account signatory. Panama has rock solid banking privacy laws and will not give up this signatory information without a court order from a Panama court and these are only issued in the case of serious crime.

Panama is also favored by many because its has stable weather patterns. There is no risk of a hurricane or earthquake delaying your financial needs and or putting your financial information at risk. Many other popular offshore jurisdictions have weather issues that can delay you transactions and leave your information up in the air. Many offshore professionals prefer Panama over other offshore jurisdictions for other reasons as well. Panama has some of the best banking secrecy laws in the world, which is an essential element to look for in a company where you are starting an offshore corporation. Many other offshore havens lack consistency of enforcing their laws of banking secrecy evenly between the locals and foreign business people.

It is also worth noting that the strict bank secrecy laws of Panama are enforced equally for both citizens and foreigners alike. No one is above the law and violators are punished with fines and potentially jail time. Panama's government and banks realize that presenting a united front and consistently enforced set of rules helps the country to attract more investment and keeps the money they have already accrued safely in their bank vaults.

Many of the banking secrecy laws written in other offshore tax havens were created to attract money and investment. But, as with offshore IBC's, you need to look closely to see if there are any caveats to conducting your banking there. There are several popular stories circulating on the internet where countries with seemingly bullet proof asset protection laws have done nothing to offenders who have broken these rules. When this happens foreigners lose confidence in the jurisdiction and capital flight soon follows.

In general, when considering the formation of an offshore corporation it is intended to help in asset protection strategies and tax minimization. In this respect Panama's ability to offer anonymous corporations and then also provide these corporations with bank accounts covered by strict and enforced banking secrecy laws gives it an advantage over other similar tax havens. The country prides itself on the protection of privacy people have there. It is also one of the easiest places to set up a corporation. Many law firms can have a corporation established on your behalf in as little as three days.
About the Author
To get a Panama company or reading about other offshore topics is encouraged to visit the author's website.
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