Relocating to Panama

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Information
Tax Planning
The purpose of business or personal tax planning is to minimize or defer income taxes payable. This requires a deep understanding of Panama's Code of income tax, in addition to the ancillary laws and regulations adopted by the Ministry of Economy and Finances (MEF), along with the courts or administrative decisions.

As in other countries, the Code of Income Tax is a comprehensive document, which deals with general issues such as income from employment, business or property, at the same time, outlines the specific rules in many areas. Although Panama has no tax on capital gains, many capital gains are treated as general revenue. There is also a withholding taxes payable in foreign payments, in some cases.

Personal or corporate tax planning includes a concerted effort to reduce or defer taxes payable, a practice that is generally accepted. The Income Tax Code includes a general anti-avoidance rule, like the laws of many other countries, thus allowing the MEF to evaluate any transaction that is not considered an arm's length transaction. Unless a compromise is deemed to have taken place mainly bona-fide purposes other than obtaining a tax benefit, which may be subject to adjustment.
Usually work closely with accountants to ensure that appropriate advice is given in relation to specific operations and the basis consequences.

Panama is not a "tax haven" to the extent that they actually have no taxation. However, taxation is one of territorial nature, which is particularly attractive for foreign investors. For example, with respect to income tax, the territorial principle applies to the revenues generated outside the country is tax exempt, despite the fact that the person or entity generating revenue is domiciled in Panama. There are certain income that is exempt from income tax, as they are considered foreign source and others which, although originating from a source of income for Panama, are exempt from income tax in Panama. This territorial method of taxation is only one of the many advantages of incorporating and living in Panama.

Before requesting the establishment of an offshore company or structure of any kind, we recommend that customers seek tax advice in their country of origin rather than simply rely on information found on the Internet. Although they are completely comfortable with the use of offshore entities for asset protection and privacy purposes, we are aware that many customers try to use offshore entities for tax planning purposes as well. As lawyers licensed to practice in Panama, which are only qualified to advise on the laws of Panama and not those of other jurisdictions, and therefore recommend that a lawyer look at your country of residence and / or citizenship.
 

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