OFFSHORE CORPORATIONS OR COMPANIES IN PANAMA
FISCAL BENEFITS OF OFFSHORE CORPORATIONS IN
PANAMA
Panamanian Corporations are subject to Panamanian territorial fiscal
regime, which only requires the payment of taxes for operations
taking place within the territory of the Republic of Panama.
For any other operation, which is consummated or is effectuated
abroad, that is, operations of an Offshore character, Panamanian
Companies or Corporations do not have to pay any taxes, except for
the Annual Company Tax, even if the operation is managed from an
office located in Panama.
Companies must pay an annual fee of US $300.00 for registration tax
or duration, known as the Annual Company Tax.
DOMICILE, VIRTUAL OFFICE, AND RE-INVOICING
Domicile is a fundamental concept in the FISCAL PLANNING
area of International Fiscal Planning. This connecting point allows
the implementation of measures that permit the maximum fiscal
savings, in a global and lasting manner.
In other words, establishing the Domicile of Companies or
Corporations implies submitting to the fiscal regulations of the
country where said domicile has been established, which in turn
makes it possible to apply to an universal or territorial fiscal
regime, depending if in the country one system or the other is
applicable.
Panama has a fiscal system based in territoriality, which makes it
obligatory to declare and pay taxes on the commercial activities
that generate taxable income only within the Panamanian fiscal
territory, thereby excluding the applicability of the universal
income principle prevailing in many other countries.
Among the activities that the territorial system allows are the
carrying out of import/export operations for prices equal or higher,
via the utilization of an Intermediary Company which allows not only
to make the commercial operation more efficient, facilitating
payments and collections for example, but also the generation of
savings.
This intermediation operation is commonly referred to as
TRIANGULATION, due to the fact that in the operation there
are three parties carrying out specific duties, one of them being
the re-invoicing of merchandise, which is effectuated in accordance
to the legislation presently enforced.
In effect, in accordance with article 694 of the Panamanian Fiscal
Code, income generated by the following operations will not be
considered generated within the territory of the Republic of Panama:
A- The invoicing
from an office established in Panama of the sale of merchandise or
products for an
amount higher than the merchandise or products had
been invoiced against the office established in Panama, if and when
said merchandise or products are only transported abroad.
B- Direct, from
an office established in Panama, transactions that are perfected,
consummated, or
are effective abroad.
C- Distribute
dividends or participations of juridical persons, when said
dividends or participations
arise from income not generated within the territory
of the Republic of Panama, including income generated by the
activities mentioned in literals a and b of this paragraph.
As highlighted, the triangulation activity, also known as
re-invoicing, can and must be carried out from an office located in
the Republic of Panama, which implies the domicile of the
corporation to be in Panama, without this generating any tax
obligations.
In some cases, it is important that the international fiscal
planning process involves the establishment, not only of a virtual
office, but also the generation of a special accounting for the type
of operation carried out, as well as the issuance of all type of
documentation which evidences the existence of an operation based in
Panama.
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