Panama, a country that has an area of 74,177.3 square kilo meters, and a population of around 3,929,141 shot into the news headlines following the release of tonnes and tonnes of secret documents which revealed that the country has been for years the destination of choice for some of the top politicians and celebrities for evading tax in their country. In fact, according to the International Consortium of Investigative Journalists, which released the Panama Papers, the country is second only to British Virgin Islands when it comes to being a storehouse for untaxed money.
A number of reasons have been cited for the country becoming an off-shore tax haven.
*Panama's offshore jurisdiction offers a wide array of excellent financial services, including offshore banking, the incorporation of offshore companies, registration of ships and the formation of Panama trusts and foundations.
*The enactment of very strict financial laws and regulations has made Panama one of the most solidly established tax havens in the world.
*There are no taxes imposed on offshore companies that only engage in business outside of the jurisdiction.
*Offshore companies incorporated in Panama, and the owners of the companies, are exempt from any corporate taxes, withholding taxes, income tax, capital gains tax, local taxes, and estate or inheritance taxes, including gift taxes.
*Panama offers an additional benefit not available in many offshore tax havens: being able to conduct business within the offshore jurisdiction. However, any business conducted within the jurisdiction is subject to local taxes.
*There are extensive laws in Panama to protect corporate and individual financial privacy.
*The names of corporate shareholders are not required to be publicly registered. Panama also has very strict banking secrecy laws.
*Panamanian banks are prohibited from sharing any information about offshore bank accounts or account holders. The only exception is a specific Panamanian court order in conjunction with a criminal investigation.
*Panama has no tax treaties with other countries, further protecting the financial privacy of offshore banking clients who are citizens of other nations. Panama also offers the benefit of having no exchange controls.