Comparing Panama with all the jurisdictions

CORPORATE FEATURES

GENERAL INFORMATION:

The Republic of Panama is located between North and South America, and is the narrowest portion of the isthmus that links North and South America.

POPULATION

The population of Panama is approximately  3.191.319 (July 2006 )

INFRASTRUCTURE AND ECONOMY

The Colon Free Zone is located on the Caribbean side of the Isthmus of Panama near the Atlantic entrance to the Panama Canal. This Free Trade Zone is the second largest in the world after Hong Kong.

Operations and transactions taking place in the Free Trade Zone are subject to a special tax treatment whereby imports from other parts of the world and re-exports to other countries are exempted from any import or export taxes imposed by Panama. Income earned from re-exports is taxed at specially reduced rates.

LANGUAGE

Spanish is the official and spoken language. English is also spoken widely in urban areas and is used daily in commerce and international trade.

CURRENCY

United States Dollar.

EXCHANGE CONTROL

None.

TYPE OF LAW

Based on Spanish Civil Law with many Common Law influences, particularly regarding Company Law, which is based on the Delaware Model.

PRINCIPAL CORPORATE LEGISLATION

• Corporation Law No. 32 of the 1927 Commercial Code

• Decree Law 5 of 1997

• Executive Decree 296 of 1997

COMPANY INFORMATION:

TYPE OF COMPANY FOR INTERNATIONAL TRADE AND INVESTMENT

Generally, corporations are incorporated under the Corporation Statute Law 32 of the 1927 Commercial Code. Limited Liability Companies and Limited Partnerships are used also.

PROCEDURE TO INCORPORATE

By presentation of the proposed corporation’s signed Articles of Incorporation before a Notary Public who creates a Public Deed for registration at the Public Registry.

RESTRICTIONS ON TRADING

Cannot undertake the business of banking, trusteeship and trust administration, insurance, assurance, reinsurance, fund management, investment funds, collective investment schemes or any other activity that would suggest an association with the banking, finance, fiduciary or insurance businesses.

LANGUAGE OF LEGISLATION AND CORPORATE DOCUMENTS

Spanish and certified English translations.

REGISTERED OFFICE REQUIRED

Yes, must be maintained in Panama at the address of the Registered Agent.

NAME APPROVAL REQUIRED

Yes.

SHELF COMPANIES AVAILABLE

Yes.

TIME TO INCORPORATE

One day, subject to name approval.

NAME RESTRICTIONS

A name that is similar to or identical to an existing company. Names of well known companies incorporated elsewhere or a name that implies government patronage.

LANGUAGE OF NAME

Names may be expressed in any language using the Latin alphabet. A Spanish or English translation may be requested by the Registrar.

NAMES REQUIRING CONSENT OR A LICENCE

Bank, building society, savings, insurance, assurance, reinsurance, fund management, investment fund, trust or their foreign language equivalents.

SUFFIXES TO DENOTE LIMITED LIABILITY

All Panamanian corporations must end with the suffix Corporation, Incorporated, Sociedad Anonima or the abbreviations Corp., Inc. or SA. They may not utilise the suffix Limited or Ltd.

DISCLOSURE OF BENEFICIAL OWNERSHIP TO AUTHORITIES

No requirement.

COMPLIANCE:

AUTHORISED AND ISSUED SHARE CAPITAL

The standard authorised share capital is US$10,000 divided in to 100 common voting shares of US$100 each or 500 common voting shares of no par value, the capital may be expressed in any convertible currency. The minimum issued capital is either one share of no par value or one share of par value.

CLASSES OF SHARES PERMITTED

Non-voting shares, preferred shares, bearer shares and registered shares.

BEARER SHARES PERMITTED

Permitted,

TAXATION

No corporation tax is levied on non-Panamanian sourced income.

DOUBLE TAXATION AGREEMENTS

None.

LICENCE FEES

Annual Franchise Tax of US$150 is payable.

FINANCIAL STATEMENT REQUIREMENTS

No requirement if income is of non-Panamanian sources.

DIRECTORS

Both corporations and natural persons may act as directors and the minimum number of directors is three. They may be of any nationality and need not be residents of Panama. Panamanian companies are also required to appoint a minimum of three officers (president, secretary and treasurer) who may also be the directors.

COMPANY SECRETARY

A company secretary must be appointed, who may be a natural or corporate person. The company secretary may be of any nationality and need not be a resident of Panama.

SHAREHOLDERS

The minimum number of shareholders is one.

Our Qualification

Panama Vs Aruba

Aruba abolishes its offshore regime as such and implemented a new regimen in 2003. Since that, this jurisdiction lost attractive and it's considered as a low tax jurisdiction instead an offshore jurisdiction and it's pretty good to conduct business within Aruba, but no as a global offshore company. If you are not planning to conduct business here this is not an attractive offshore jurisdiction anymore.

Aruba Exempt Company is known as the "zero tax corporation" since no tax is payable so long as all business income arises outside of Aruba and so long as the company is not controlled directly or indirectly by Aruban residents

Payments made by residents of Aruba to non-residents in foreign currency (other than Netherlands Antilles guilders) are subject to a tax at 1.3%. According some experts Aruba will sign Tax Treaties with OECD countries and have signed Mutual Assistance Treaties with USA for example including tax matters, beside that, they have signed with the Netherlands a Tax Treaty.

The E-commerce in Aruba is lack of impact, so this is not an offshore solutions jurisdiction for E-commerce. However, according some expert it is matter of time.

The main criticism to the Aruba framework is that there is not bank secrecy in their laws. Aruba is pretty good jurisdiction to conduct business to be used as holding company and maybe in future as E-commerce. The best usage will be in order to conduct business right there. As well they have good tax rates for the following activities: 

• Investment and Holding companies Income is taxed at 2.4% on the first Af 100,000 of net income and 3% on the balance. Capital gains are not taxed; but capital losses are not deductible.
• Mutual Funds These are exempt from profits tax if they have either minimum net assets of $50m, at least fifty shareholders, and four local employees, or if they have minimum net assets of $300m and two local employees; otherwise the fund will be taxed on its net assets, giving a minimum charge to tax of $1,000 rising to a maximum charge of $10,000.
• Trading companies The normal applicable rates of tax are 24% on the first Af 100,000 of net income and 30% thereafter; however it is usually possible to obtain a ruling from the Inspector of Taxes exempting 90% of income, which has the effect of reducing the rates to the usual offshore levels of 2.4% and 3%.
• Banks Investment and interest income is taxed on the usual offshore basis at 2.4% and 3%; commission and fee income will suffer 24% and 30% unless a tax ruling can be obtained (normally possible).
• Intellectual Property Holding companies If a tax ruling can be obtained, the effective tax rate for income from royalties, licenses, patents, copyrights, trademarks etc will be from 2.4% to 3%.
• Insurance companies Foreign-owned captive and reinsurance companies not in receipt of treaty-related income benefit from a concession that deems their income to be Af 100,000, giving them a fixed tax rate of Af 2,400 annually.
• Real Estate Holding companies These companies are not taxed on income derived from real estate (or subsidiaries wholly or predominantly engaged in owning real estate) outside Aruba.
• Ocean Shipping and Aviation companies Substantial tax concessions are available depending on circumstances. ·

Other complaint against Aruba is that they apply the withholding taxes to interest received by individuals who are residents of a European Union member country and have savings accounts or other savings instruments in Aruba.

Our Qualification 

Aruba Executive Summary

Aruba is a small (75 sq m) island off Venezuela with a population of 87,000. It separated from the Netherlands Antilles in 1987. Their political and legal system is based on Dutch legal system with offshore regime influence. Aruba is an associated territory of the EU.  Its citizens carry EU passports, and have free rights of entry, residence, work etc in the EU. The Aruban economy is very open and is highly dependent on tourism and offshore financial services. Constant warm weather and some of the most beautiful beaches in the world attract 1m visitors a year, 57% being American. Due to its proximity to oil-rich Venezuela the island has a petroleum refining industry.

OFICIAL LANGUAGE

Dutch but English is very well spoken.

CURRENCY

Florin 1$US = 1.79 Af.

TAXES

Local taxes are quite high for residents. (Is not quite good for retirement). Aruba has a series of fiscal incentives in place to attract offshore banks, insurance companies and business in general. Aruba split with the Dutch Antilles in 1986

SECURITY

Unemployment is about 1%. Delinquency low.

FREE ZONE

Yes

TAX TREATY

Yes,Netherlands

BANK SECRECY LAWS

No.

POLITICAL STABILITY

Yes

MIGRATION

Tourist entry visas are not required by Canadian, USA or EU nationals who can stay for up to 90 days upon production of a passport, a return or onward ticket and (if requested) proof of sufficient funds to support their stay. The corresponding visa free-entry period for citizens of the Netherlands or Dutch Antilles is 180 days.

General