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Top 7 Reasons For Setting Up A Business In Panama

Read the article to understand the reasons for setting up a business in Panama and how the benefits can aid your company's growth and expansion in Central America.

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    Are you thinking about starting a business in the Central American region? Do you wish to support the expansion of your company in Panama’s booming economy? As a prospective business owner in Panama, it’s important to be well-informed about the various reasons for setting up a business in Panama.

    reasons for setting up a business in panama

    Panama offers one of the most stable environments for business registrations. The business environment in Panama is excellent, with low business taxes and a wealth of services accessible to aid in business success. In addition to having Special Economic Zones and Free Trade Zones, Panama has access to free trade agreements with many different countries which is another one of the advantages of registering a company in Panama.

    Read the article to learn how establishing a company in Panama can aid your company’s growth and expansion in Central America.

    Best reasons for setting up a business in Panama

    7 reasons for setting up a business in panama

    There are numerous benefits of registering a business in Panama, such as the country’s strategic location makes it simpler for businesses to reach other parts of the continent. Additionally, it offers business incentives and flexible communication and infrastructure facilities to companies.

    Here are the 7 reasons for setting up a business in Panama:

    1. Simple To Launch A Business

    • One of the reasons for setting up a business in Panama is that the nation is considered one of the easiest locations to set up businesses. 
    • A corporation in the nation can be incorporated within a week which serves as one of the crucial benefits of registering a business in Panama. 
    • This helps entrepreneurs save a lot of time, particularly in contrast to other nations in that area where the establishment of a firm might take a few months. 
    • In addition to that, opening a firm in Panama necessitates having a minimum of one stockholder and one director who can be of any nation. 
    • Additionally, 100% foreign ownership is permissible when forming a business in Panama, and foreign business proprietors can keep their business’s capital in US dollars which serves as another one of the advantages of registering a company in Panama.

    2. Strategic Location

    • One of the reasons for setting up a business in Panama is the strategic location of the nation. 
    • The Central American nation of Panama is a great location for business incorporation as it serves as a bridge between North and South America and provides firms with easier access to different locations. 
    • As a result, Panama has assumed the role of a global economic and commercial hub which is one of the benefits of registering a business in Panama. 
    • Additionally, the nation’s connection to the Atlantic and Pacific Oceans via the Panama Canal, which also links it to other continents, is an essential link to ensure the transportation of goods and services and promote global marine trade in the nation. This is another one of the advantages of registering a company in Panama.

    3. Politically Stable Economy

    • Another one of the reasons for setting up a business in Panama is that the nation offers a politically stable business environment. 
    • Furthermore, Panama has a stable political system, and impartial and free elections take place on a regular basis. 
    • The nation is also exceptionally secure and steady which is another one of the benefits of registering a business in Panama. 
    • The steady economy of Panama presents foreign companies and people with a  reliable and alluring place to invest.

    4. Currency Stability

    • Panama is a “dollarized economy,” meaning that the US dollar is the official unit of exchange in the country, this presents a significant advantage for foreign companies. 
    • As such, Panama and its economy are unaffected by changes in currency exchange rates. 
    • This significantly lowers the possibility of adverse financial repercussions on its economy which is another one of the advantages of registering a company in Panama. 
    • Additionally, there aren’t any unusual restrictions on the foreign currencies used by enterprises in Panama.

    5. Business Incentives

    Companies in Panama can take advantage of several business incentives which is another one of the reasons for setting up a business in Panama.

    The incentives received by tourism companies that contribute US$ 50,000 include:

    • Import duties exemptions for goods, equipment, and automobiles for a period of 20 years.
    • 20-year tax-free real estate ownership.
    • 10% yearly accelerated depreciation for all properties

    The following incentives are available to real estate businesses:

    • 10 years of corporation tax holiday for profits from property leasing and sales.
    • Taxes paid on renovation expenses are entirely deductible. 
    • 100% of the import tariffs to be incurred on construction supplies are waived.

    6. Flexible Communication & Infrastructural Facilities

    • Another one of the reasons for setting up a business in Panama is the country’s flexible communication and infrastructure facilities. 
    • Panama boasts contemporary telephone technology for making calls abroad as well as speedy internet connectivity all around the nation. 
    • Traveling by vehicle takes a little over 90 minutes because of the nation’s efficient roadway that connects the Pacific and Atlantic coasts. 
    • The majority of Panamanian significant regions have domestically operated airports that enable quick regional air travel. 
    • The Tocumen International Airport which is located in Panama is the biggest and busiest airport in Central America, with regularly scheduled flights to more than 100 popular worldwide locations, which is serviced by a number of foreign airlines which is one of the benefits of registering a business in Panama. 
    • The Panama Canal allows for the passage of massive ships across the two oceans, and its enormous ports make it simple to convey cargo. 
    • Hence, the numerous seaports that the nation has is another one of the significant advantages of registering a company in Panama.

    7. Favorable Tax Environment

    • Another one of the benefits of registering a business in Panama is its favorable tax environment. 
    • Due to the country’s advantageous tax environment, numerous investors consider setting up their corporations in Panama. 
    • Panama has a territorial tax structure, which exempts money earned outside of the nation from paying income tax.
    • Both residents of Panama and Panama-based businesses are covered by this zero taxation structure on overseas revenue. 
    • In addition, Panama has a number of “special economic zones” or duty-free zones where companies are able to import, gather, produce, and export goods and services without paying duties and typically with minimal or even no income tax which serves as another one of the tax advantages of registering a company in Panama.

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      Conclusion

      Entrepreneurs must think about the location that will best serve their needs and foster long-term growth when establishing a business. In addition, there are other elements that can support the expansion of the company, including tax benefits, commercial incentives, and national stability. Panama has all of these elements that are necessary for an organization to succeed. Panama’s location, infrastructural and transportation facilities make it an ideal nation for business incorporation.

      If you would like to register a firm in Panama and want assistance with the incorporation procedure, you can get in touch with our company formation experts at Odint Consulting. 

      FAQ’s

      Panama is a desirable place for business establishment because of its advantageous location, transportation and infrastructure options, tax advantages, and stable political climate.

      • Panama has a territorial tax structure, which exempts money earned outside of the nation from paying income tax. This 0% taxes policy on foreign income applies to both Panamanian citizens and enterprises with a Panamanian address. 
      • Additionally, there are several “special economic zones” or duty-free zones in Panama where businesses can import, gather, produce, and export goods and services without having to pay duties and typically with little to no income tax. 
      • The Tocumen International Airport, which is the biggest as well as the busiest airport in Central America offers regularly scheduled flights to more than 100 well-known international destinations. 
      • Massive ships can travel through the Panama Canal between the two oceans, and its sizable ports make it easy to transport cargo. 
      • The Panama Canal allows for the passage of massive ships across the two oceans, and its enormous ports make it simple to convey cargo. All of this makes it easier for companies to access various locations in Panama.

      It is straightforward to start a business in Panama because there must be at least one shareholder and one director, who can be from any country. Additionally, it only takes a week to incorporate a corporation in the country.

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