Thread: Is Panama really the most business-friendly country?

Is it really the most business friendly country in Latin America? I suppose I can't think of another Latin American country that is more business friendly than Panama off the top of my head.

I think the fact that it uses the US dollar helps a lot, especially for businesses from the United States.

Originally Posted by lee

Yes I do think so.... because:

1. It has the US Dollar as national currency!
2. A good infrastructure.
3. About 200 different banks to choose from (maybe more).
4. High standard of living at relative low cost.
5. Most hotels and apartments have high speed internet.
6. It's friendly towards foreigners and not overly corrupt towards them.
7. A large EXPAT Community.
8. Many speak/understand English. Banks and shops have English speaking employees.
9. English book shops!
10. Low crime.

Erk. Thanks lee for that list. I need to think again if i need to bring my son here. Good or not its also depend on our money. I think i need to think again our budget.

200 different banks? That's a lot! How many banks are there in other countries?

Yeah the use of the USD is one of the most attractive aspects followed by the low cost of living.

Countries that don't use the USD tend to be seem less business friendly. Also the low crime rate is another good factor since what good is it to have a lot of money if your at risk of being robbed/killed? Which is why various other countries that offer a low cost of living are unattractive since their crime rates are much higher.

Originally Posted by lee

Yes I do think so.... because:

1. It has the US Dollar as national currency!
2. A good infrastructure.
3. About 200 different banks to choose from (maybe more).
4. High standard of living at relative low cost.
5. Most hotels and apartments have high speed internet.
6. It's friendly towards foreigners and not overly corrupt towards them.
7. A large EXPAT Community.
8. Many speak/understand English. Banks and shops have English speaking employees.
9. English book shops!
10. Low crime.

Thanks for posting some of what Panama is like, I'm going to go to Panama sometime in the future for business related issues and i can't speak Spanish although now that you've mentioned that the majority of them can speak English it makes me abit happier ;P.

What kind of business is more suitable and well known over there? How's the buying power over there and also piracy and stuff.

Originally Posted by lee

Yes I do think so.... because:

1. It has the US Dollar as national currency!
2. A good infrastructure.
3. About 200 different banks to choose from (maybe more).
4. High standard of living at relative low cost.
5. Most hotels and apartments have high speed internet.
6. It's friendly towards foreigners and not overly corrupt towards them.
7. A large EXPAT Community.
8. Many speak/understand English. Banks and shops have English speaking employees.
9. English book shops!
10. Low crime.

Are you sure there are 200 different banks in Panama ??
Not overly corrupt but corrupted to a huge extent such that we can bribe the cops??

Actually I think allot of banks merged so it actually maybe only 100 now. As far as bribing police outright, it is pretty common practice in many countries and pretty standard throughout Latin America. Once again the police here are pretty friendly towards the tourists, no problem.

I guess some business which deal with illegal things like pirated software or such can take this opportunity to bribe but I find that's not gonna be good for other businesses which are doing the legal way.

Well, I'm not sure if Panama is THE MOST business friendly country in LatAm, but certainly it offers a lot of incentives to doing business compared to other countries in the region, such as the Colon Free Trade zone, corp tax advantages (0% from income originated off-shore), oil free trade zone, call centers incentives, city of knowledge, etc.
Depending on the focus of the business you will develop in Panama, you can maximize the use of these incentives. On the other hand, there's scarcity for well-educated resources if you want to setup a high-tech or sofisticated services company. For that purpose Chile, Argentina, and Uruguay are more competitive than Panama.
In terms of qualified cheap labor, I think Panama ranks fairly poor compared to Mexico, El Salvador or Nicaragua to setup a "maquiladora" business.

In summary, if you want to setup a business for the solely purpose of lowering your current off-shore corporate income tax expenses or to do export/import from Colon, then Panama is a good choice. But if your business will need high-level skills and qualified human resources at competitive costs I suggest to look elsewhere.

On regards to the banks, in reality there's a list of about 75 banks active now (listed in this forum), but only some of them are foreign-friendly, oriented to corporations, and with acceptable service levels, which reduces your options to a bunch of 5 or 7.

Originally Posted by lee

Yes I do think so.... because:

1. It has the US Dollar as national currency!
2. A good infrastructure.
3. About 200 different banks to choose from (maybe more).
4. High standard of living at relative low cost.
5. Most hotels and apartments have high speed internet.
6. It's friendly towards foreigners and not overly corrupt towards them.
7. A large EXPAT Community.
8. Many speak/understand English. Banks and shops have English speaking employees.
9. English book shops!
10. Low crime.

I doubt it has low crime maybe compared to other countries.

I saw on the U.S embassy they show some heavy crime. Their was one report of guys with Mercedes they chop off someones head and was walking with it around town.

So I am not sure if the crime is low or not.

Just sharing what I found.

For some real data on this question, go to Home - Doing Business - The World Bank Group and download the (free) 4.7MB PDF report, "Doing Business 2009." Although Panama has made some reforms, it is very far from the easiest place in the world to do business. (The report ranks it #81, which is somewhere in the middle of all countries studied.)

What are the basis to be the most friendly country?

Panama - 10th *worst* country in the world for paying business taxes

Paying Taxes - The Global Picture - Doing Business - The World Bank Group▼
▲▼
▲

Originally Posted by exilio

Panama - 10th *worst* country in the world for paying business taxes

Paying Taxes - The Global Picture - Doing Business - The World Bank Group▼
▲▼
▲

Oww...That's too bad to hear

For people with LOTS of money and an on-retainer crew of lawyers and accountants, I'm sure that Panama has advantages. E.g., if it's good enough for the scoundrels at AIG and HSBC, it must have something going for it. There are also some business incentives for large companies that are willing to create HQs in Panama; e.g., Caterpillar. It also can be a good location for companies that do a lot of import/export. But for us ordinary, law-abiding plebes, the tax advantages are slim to none. E.g., all this talk about setting up a corporation to protect your personal assets: You can do exactly the same thing in the US. Or, another example: You can put all your money in Panama real estate, and the IRS won't tax the capital gains when you sell -- *IF* you make a profit -- but Panama will. And as far as getting what you pay for: I've subsidized Medicaire, via my US taxes, for a few decades now, but that coverage is useless in Panama. If I want to claim those benefits I've already paid for, I have to move back to the US.
▼
▲▼
▲▼
▲

you even have to pay capital gains on a house or property when you sell it in Panama, which is tax free in my home country of Canada

True also in the US, if it is your home. There's a limit; it was $500K gain when I left, don't know what it is now. In Panama, anything above $30K is taxed.

Now, there are many people in Panama who evade this, by recording one price and selling at another -- but it is illegal to do so. It's just another example of the fact that if you're willing to lie and cheat, there are lots of way to avoid taxes -- not my MO. And if you do get caught, it's much better to be in a US jail than one in Panama. :-)

"And if you do get caught, it's much better to be in a US jail than one in Panama. :-)"

heheheh That was funny, I once seen a jail in the Philippines, and believe me, that was a nasty little
place...

---------- Post added at 03:53 AM ---------- Previous post was at 03:32 AM ----------

"Now, there are many people in Panama who evade this, by recording one price and selling at another -- but it is illegal to do so."

How is this done in Panama, is your selling and buying price not recorded on the title or deed? Or maybe they get the house appraised each time it sell, or how does this work?

If a person built a house themselves wholesale for like $200,000 but was $250,000 retail when it was done, and you sell it 3 years latter for $300,000, what is the real gain I wonder?

Speaking of taxes, I have heard on forums of several foreigners being audited for taxes for both property sales and also income taxes in Panama... Even on this forum....

So people moving just for a tax haven reason, will be in for a shock when the Panama tax guys instead of the IRS guys, Comes knocking on their door.

Darryl

Originally Posted by hockey97

I doubt it has low crime maybe compared to other countries.

I saw on the U.S embassy they show some heavy crime. Their was one report of guys with Mercedes they chop off someones head and was walking with it around town.

So I am not sure if the crime is low or not.

Just sharing what I found.

I personally think Panama has a high crime rate. Just pick up a newspaper... actually right now I think its even worse because of the elections. There are alot of kidnappings and alot people are getting robbed/killed in taxi cabs. Im not saying this to scare anybody, but its a sad reality because the law isnt as strict on crime like the states. so I suggest keeping your eyes open and if you have to use a ATM please us it inside a super market or outside a bank where there is security.

I am in the process of preparing for a move to Panama to make it my new home. I am too young and poor to retire, so I will have to be engaged in business for a living. Panama sends so many conflicting signals. I am attracted by the country and the people. Yes, I am already making friends and have not even set foot into Panama. I am attracted by somewhat less regulation, or clearer regulation. Its written down, you can read it and understand it.

But there is the flip side of the coin.....

- Law appears to be written by lawyers for lawyers, making it the most dangerous thing if you happen to pick the wrong one. And it adds a lot of complexity to even simple things. Being still in the US, I really got used to the fact that you can just take a piece of paper and, as long as, two parties agree, you can have a valid contract that doesn't have to be traveled around town, with few exceptions.

- Everybody seems to get stuck on taxes. Taxes are everywhere in the world and are part of every country. What makes a difference in my eyes is what you get for the taxes you pay. It just looks like this subject is the all defining driver for so many. for anybody that has ever had a social security number and lived in the US, that fact will haunt you for ever. But there is the option to give the SSN back (very formal process I hear) and relinquish alien status or citizenship. Lot's of pros and cons and surely bejoned the subject of this post.

- The countries main purpose seams to be to be the execution arm of the US leading to the craziest things. Every lawyer tells me to open a bank account in Belize, Andora, just anywhere but in Panama. This just makes no sense to me, but I see how the requirements to open an account have become so evolved and people have become so, should I say, paranoid, that nobody seems to have a clear thought on that anymore. Since there is hardly any holding that would not be subject to fees or taxes or other basic needs to use money, any foundation or corporation needs a bank account. And for legit cases where onebody would ever come to Panama, Panama is probably one of the worst places to do business. Hong Kong, Singnapore, ...., can do it in 1-2 days without much fuzz and still be compliant with the riot act. That of course serves primarily US interest.

- Legislation has now reiterated twice to make it much harder to come to Panama. Immigration regulations are tightening, financial requirements are tightening, almost to the point where you get the feeling that stopping influx is the goal. Of course, I am realistic enough to understand that Panama doesn't have much of a budget and probably most of these changes are likely not more than a desperate attempt to better the countries financial situation.

- There is so much more effort extended to figure out how to use the corporate structures possible in Panama for borderline, questionable and even flat out criminal activities, than there is to explain and promote how you can actually arrange and managed complex family matters and succession. i can only imagine what you can do with these tools to manage family or group affairs. I always ask myself how my business ventures would continue without me, and how my wife would ever figure out what's going on. a foundation would be a wonderful tool for a solution that can provide business continuation beyond my expiration data, and for that I could never be the protector and signor.

As I said, Panama is a lovely place. I consciously picked it after looking at 40 different countries. But, it sure is confusing.

Originally Posted by speedy

I am in the process of preparing for a move to Panama to make it my new home. I am too young and poor to retire, so I will have to be engaged in business for a living. Panama sends so many conflicting signals. I am attracted by the country and the people. Yes, I am already making friends and have not even set foot into Panama. I am attracted by somewhat less regulation, or clearer regulation. Its written down, you can read it and understand it.

But there is the flip side of the coin.....

- Law appears to be written by lawyers for lawyers, making it the most dangerous thing if you happen to pick the wrong one. And it adds a lot of complexity to even simple things. Being still in the US, I really got used to the fact that you can just take a piece of paper and, as long as, two parties agree, you can have a valid contract that doesn't have to be traveled around town, with few exceptions.

- Everybody seems to get stuck on taxes. Taxes are everywhere in the world and are part of every country. What makes a difference in my eyes is what you get for the taxes you pay. It just looks like this subject is the all defining driver for so many. for anybody that has ever had a social security number and lived in the US, that fact will haunt you for ever. But there is the option to give the SSN back (very formal process I hear) and relinquish alien status or citizenship. Lot's of pros and cons and surely bejoned the subject of this post.

- The countries main purpose seams to be to be the execution arm of the US leading to the craziest things. Every lawyer tells me to open a bank account in Belize, Andora, just anywhere but in Panama. This just makes no sense to me, but I see how the requirements to open an account have become so evolved and people have become so, should I say, paranoid, that nobody seems to have a clear thought on that anymore. Since there is hardly any holding that would not be subject to fees or taxes or other basic needs to use money, any foundation or corporation needs a bank account. And for legit cases where onebody would ever come to Panama, Panama is probably one of the worst places to do business. Hong Kong, Singnapore, ...., can do it in 1-2 days without much fuzz and still be compliant with the riot act. That of course serves primarily US interest.

- Legislation has now reiterated twice to make it much harder to come to Panama. Immigration regulations are tightening, financial requirements are tightening, almost to the point where you get the feeling that stopping influx is the goal. Of course, I am realistic enough to understand that Panama doesn't have much of a budget and probably most of these changes are likely not more than a desperate attempt to better the countries financial situation.

- There is so much more effort extended to figure out how to use the corporate structures possible in Panama for borderline, questionable and even flat out criminal activities, than there is to explain and promote how you can actually arrange and managed complex family matters and succession. i can only imagine what you can do with these tools to manage family or group affairs. I always ask myself how my business ventures would continue without me, and how my wife would ever figure out what's going on. a foundation would be a wonderful tool for a solution that can provide business continuation beyond my expiration data, and for that I could never be the protector and signor.

As I said, Panama is a lovely place. I consciously picked it after looking at 40 different countries. But, it sure is confusing.

I sincerely say it's good to read a well thought-out impression from somebody that is new but has done a lot of research. Just wait until you actually move down here and begin to slowly realize how things work in Panama. Not to mention how much different this place is than anywhere you may have been before. Keep up the learning and research, it will save you.

Some advice Speedy... Doing business in Panama is very frustrating especially if you are on a tight budget. You will not be able to afford large reputable firms for contract work. When you hire independents, it's rolling the dice. They all claim to be able to do the job when in fact most cannot. That can put you into a costly situation because there is a domino effect. Their failures carry forward to your outstanding contracts that you may end up defaulting on. Panamanians do not like to admit fault. That means it's always your fault for their mistakes and you will end up paying twice or more times to get the job done right. You must budget that in.

The labor laws are heavily skewed toward the workers. You might think that's fair because they make around $2/hr. anyway, but there are many other costs to keep employees and your lawyer must know all the current laws so you do not get sued and fined. Every small business owner I know has been sued one way or another by a disgruntled employee. It's best to be an investor more than a business owner in Panama so that you only need to hire one or two key people to make money, or none at all.

If you are a U.S. citizen it will be nearly impossible to open a bank account now. That makes doing business hard, but there are work arounds.

I think Panama is a great place for certain types of people. I know it is a great place to make money if you tune into the right market. Once you dial it in, you can make a fortune. The big mistake is to jump into a dead market thinking that you may revive it. An example is land developers selling to foreigners. That market is dead right now. Foreigners are not buying, but instead renting right now.

Regarding crime, it's like most C.A. countries. Most of the victims are gang bangers and drug dealers. So if you don't roll in that crowd then you will be ok. However, you have a good chance of being a victim of theft and robbery. Panama crime is getting worse. You may have read many recent stories of ex-pats being murdered. But the odds of it happening to you are very slim. This applies to other C.A. countries as well.

My main criticisms of Panama are subjective so you may not notice the same things. I like living in a place that has charm and character with a rich history and heritage. I just don't feel it here in Panama. Panama seems too commerce driven and contrived... almost like the USA with everyone chasing money and status. That vibe just doesn't work for me other than to make money here in Panama and then retire somewhere else.