Setting up shop in Panama

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1 Setting up shop in Panama University of Charleston International Practicum June 5, 2014 Tryp Albrook Template 1

2 Just South of the Border 20 countries in North America (Mexico), Central America (from Guatemala to Panama), certain islands of the Caribbean and South America, Latin America now has a collective population of over 490 million. The GDP of many countries in Latin America grew. Brazil experienced 5.1 percent growth, Mexico 4 percent, Chile 5.9 percent and Argentina 8.5 percent. These four countries account for 83 percent of the gross domestic product of Latin America The strong growth was accompanied by declining inequality, poverty, and public debt levels. The net commodity exporters that is, the South American countries, which exhibited increasing commodity dependence and an export base highly concentrated in primary goods have grown, on average, 4.5 percent a year since But the rest of the region Mexico, Central America, and the Caribbean was much less buoyant, growing only about 2.5 percent a year.. 2

3 Where to do business? Population? Purchasing Power? Offer/Demand? Trained Workforce? Safety? Corruption? Friend or foe? Diversity? 3

4 Where to do business? Air? Sea? Land? Time vs Convenience 4

5 Jaguar of the decade Panama s economy has seen rapid growth in recent years, with the last five years averaging 8.75% yearly increases in GDP (IMF, 2011). The current labor force boasts million with an unemployment rate of 4.4% The majority of labor is concentrated in the service sector with 64.4% of the population working in services. Bilateral investment protection treaties with U.S., Germany, U.K., Switzerland Real estate and construction surge (US$1.2 billion) Panama Canal Expansion (US$4 billion) Fueling growth is the development of Panama s infrastructure as an emerging country, specifically a project aimed at widening the Panama Canal which is expected to be completed in

6 Panamá as financial center Income earned from international activities is exempt of income tax Interest earned from Panama bank accounts is exempt from 100 years using the U.S. Dollar No foreign currency restriction Economic and political independence preserve tax and corporate advantages Financial center with 100 banks, multiple trustees and insurers subject to quarterly government supervision Intersection of fiber optic cables routes between the Americas Double taxation agreements with Luxembourg, Cyprus (under negotiation), Italy, France and 12 countries Direct flights to capitals of the Americas, Amsterdam and Madrid 6

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10 The Essentials Which form to take? Sole propietorship Unlimited liability company Limited liability entities (corporation, LLC) Branch of foreign entity Tax registration National tax registration ( online) Local tax (Municipality online only in Panama City) Business registration Business license ( online) Social Security Employer ( online) 10

11 More requirements Registration of Employment Agreements Opening of Severance Fund ( show up for work prize) Construction Permits (0.01% of construction value) Acquiring Title to property (or) Registering Rental Agreement (1 month deposit) Opening Bank Account and passing KYC test Getting Electricity and Water (1 month deposit) P.O. Box ($40 yearly) Car Registrations ($27/car yearly) Payment of Taxes (up to 25% of net local income yearly) Special permits (Restaurants, Hotels, Industries, Professionals, FTZ) 11

12 Case studies A Colorado couple performs 360 marketing campaigns for second home developments. With the slump in US real estate, they heard that Panama has real estate projects catering to foreigners so they plan to do the same from an apartment in Panama. 3 California thirty-somethings have raised capital to buy/rent a property in Casco Viejo to set up a bar and boutique hotel. A New York businessman sets up an office in Panama to buy wine from US, Chile and Argentina. New brands keep coming up all the time and he plans to resell them in emerging markets like China and Nigeria. 12

13 For more information Contact Alvaro Aguilar Aquilino de la Guardia St. Ocean Business Plaza, Piso 12, Ciudad de Panamá, Panamá Tel: Fax: P.O.Box laglex.com com Jun 5 UCVW Setting up shop in Panama.odp 13

The Growth of Panama as Business hub: Banking sector in Panama Alvaro Aguilar-Alfu Lombardi Aguilar Group

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