Why Panama? The answer is simple: Panama has it all and 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.

This accomplishment has brought more investments to the country than ever before.

Panama is no stranger to foreign investment. For centuries, the Spaniards used Panama as a trade and distribution center. On more modern times, Panama is not only used for trade and distribution, but also as a Financial Center and a suitable jurisdiction to establish regional offices for multinationals as well as other types of businesses and of course, tourism.

Presently Panama has engaged several mega projects; most notable is the 4th bridge over the Panama Canal, the second and third lines of the metro rail system and the construction of a new, state of the art airport terminal. These projects provide an array of opportunities for companies that wish to offer their goods and services to the companies that are currently working on these projects. Everything from the supply of technology, to training and security, to simpler, but yet important things, like the provision of food.

Tourism is another area of opportunity. Panama has great incentives for the investor in the Tourism Industry as set forth in Law 8 of 1994, ranging from exemptions in income tax, to exemptions in import duties for constructions materials, cars, boats and any other means of transportation to be used in the tourism facility.  The stability of the country, along with the incentives offered by Law 8 has attracted many hotel chains, which presently are either in the middle of construction of or at least on the initial stages of their respective projects. Many, if not most of these projects, are located on the Pacific Coast of Panama City and the "Dry Arch" area of the Pacific Coast of Panama with investments totaling Hundreds of Millions of US Dollars.

Panama has many other opportunities for business, such as those offered at the Colon Free Zone or the Panama Pacific Economic Area. Both have their incentives, but most notable, of course are the exemptions of taxes (except the 5% tax on dividends generated from foreign sourced income) and the multitude of businesses than can be done.

The Free Zone exists since 1948 and is located in the city of Colon at the Atlantic entrance to the canal, and has been extremely successful - more than 500 companies are established there, shipping more than $4 Billion of goods annually. It is the second largest Free Zone in the world, next to Hong Kong. All kinds of processing and manufacturing are permitted within the Free Zone, while administration can be conducted from inside or outside the zone.

As for the Panama Pacific Economic Area, it is less known as the Colon Free Zone, but rapidly gaining recognition. Since its creation, it has attracted major players because of the favorable business environment and of course, the tax incentives, facilities and location. The most notable companies that have established themselves in this area are DELL, Caterpillar and 3M, but there are more than 100 companies already established.

The more salient features of this particular economic area are:

  • A functioning airport on site
  • Stability and flexibility for business growth and expansion
  • Tax breaks, labor and legal incentives, through Law 41 of 2004
  • Immediate access to infrastructure and if needed, the project has plans to accommodate future growth
  • Immediate availability of all utilities
  • Access to state of the art communications

In general Panama offers opportunities in all areas of business, whether it's in trade, manufacturing, services and tourism and above all, political stability, tax incentives, protection of investments through special Laws to name a few.

Permanent Residence in Panama

Acquiring permanent residence status has never been so easy in Panama. With the enactment of the "Friendly Nations Visa", nationals of the following 50 countries can apply for permanent residence in Panama for a minimum investment:

  1. Andorra
  2. Argentina
  3. Australia
  4. Austria
  5. Belgium
  6. Brazil
  7. Canada
  8. Chile
  9. Costa Rica
  10. Croatia
  11. Cyprus
  12. Czech Republic
  13. Denmark
  14. Estonia
  15. Finland
  16. France
  17. Germany
  18. Great Britain
  19. Greece
  20. Hong Kong
  21. Hungary
  22. Ireland
  23. Israel
  24. Japan
  25. Latvia
  26. Liechtenstein
  27. Lithuania
  28. Luxembourg
  29. Malta
  30. Mexico
  31. Monaco
  32. Montenegro
  33. Netherlands
  34. New Zealand
  35. Norway
  36. Paraguay
  37. Poland
  38. Portugal
  39. Republic of Korea
  40. San Marino
  41. Serbia
  42. Singapore
  43. Slovakia
  44. South Africa
  45. Spain
  46. Sweden
  47. Switzerland
  48. Taiwan
  49. Uruguay
  50. USA

The immigrant must prove economic solvency to the immigration service and professional and economic ties with the Republic of Panama. An "Economic Activity" means the applicant owns either a Panama corporation or a Panama company (new or bought an existing business) which is doing business in Panama.  Foreigners are prohibited from owning a Panama retail business.

Another option is to prove "Professional Activity" by means of being employed by a professional Panama company, obtain a work permit and registered with Panama's Social Security system.

To prove the economic solvency the foreigner would need to open a bank account in Panama to his name and deposit a minimum of $5,000 USD (plus $2,000 for each dependent).  Whether an applicant is solvent enough is not clearly defined leaving the matter up to the discretion of the immigration officials, but the trend since the program started has been to accept this as sufficient economic solvency proof.

We invite you to come by and see for yourself this beautiful country and everything it has to offer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.