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Panama is a small country of 4 million people with 1.5 million located in Panama City which is a modern international city, similar to Miami in look and feel. The country has always been “special”, due to the Panama Canal which is not only one of the wonders of the modern world but is also responsible for over 5% of the world trade. Due to this, there is perhaps, an unwritten consensus showing that most of the world’s countries try not to interfere with Panama and Panama tries to be friendly and indeed politically neutral towards all. This makes Panama an ideal hub to establish a centre of operations as it is neutral to many countries that have differing political views such as the United States, China, and Russia. Besides, Panama does not have an army and does not involve itself in world politics or interfere in the internal affairs of other countries, which makes it similar to Switzerland.


One of the freest countries in the world

Great life style at a low cost

The best place to retire

What to eat in Panama?

Panama´s most important cities

Panama is a small country of 4 million people with 1.5 million located in Panama City which is a modern international city, similar to Miami in look and feel. The country has always been “special”, due to the Panama Canal which is not only one of the wonders of the modern world but is also responsible for over 5% of the world trade. Due to this, there is perhaps, an unwritten consensus showing that most of the world’s countries try not to interfere with Panama and Panama tries to be friendly and indeed politically neutral towards all. This makes Panama an ideal hub to establish a centre of operations as it is neutral to many countries that have differing political views such as the United States, China, and Russia. Besides, Panama does not have an army and does not involve itself in world politics or interfere in the internal affairs of other countries, which makes it similar to Switzerland.

Panama obtains revenue of about 2 billion a year from the Panama Canal alone, which means that its economy is very stable considering its small population. Indeed, Panama has a rating. Due to this and the revenue to related industries such as the freezone (the largest in Latin America and one of the largest in the world) Panama does not need to levy exorbitant taxation on its population to pay for its welfare programmes.

It is not only because of this that Panama punches well above its weight. Over the years, but especially under the rule of former president Martinelli, Panama deliberately modeled itself on Singapore and tried to emulate Singapore´s legislation and policies on foreign investment.

Consequently, Panama has positioned itself as one of Latin America’s business, logistics and banking centre with a range of investor friendly legislation that has made it amongst other things, Latin America’s banking hub (often called the Switzerland of Latin America), Latin America’s trading hub with obvious transshipment and logistic advantages by air and sea, with an increasingly friendly business investment and freezone legislation.

Under Martinelli’s government, and indeed prior to him, Panama boasted the fastest GDP and economic growth rate in Latin America with many sectors including real estate booming at a monumental rate of 10%, a matter not even affected by the global economic crisis. Panama also won numerous international awards and acclaim for having the best retirement immigration policies in the world with numerous countries being allowed residency with no investment under the friendly nations visa policy .

The combination of a territorial taxation system (no tax on worldwide income), excellent freezone legislation, great schooling and living facilities and relatively low cost of real estate, made Panama one of the most, if not the most vibrant investment and business destinations in Latin America until 2017.

In 2017, an unfortunate combination of the release of the Panama Papers (an ICJ report designed to destroy Panama’s reputation) and a very weak president who failed to take any steps to support the country or the economy, lead very quickly to a major loss of confidence in the country by foreign investors. This is now rebounding back to its former status (see below).

Political stability -9 

Personal safety -8 

Lifestyle – 7.5 

Taxation -10

Investment potential -8 

TOTAL: 42.5 (out of 50) AAA

However recently, a number of events have occurred that have started returning Panama back to its former glory, and most experts and financial analysts predict that this economic renaissance will continue strongly over the next ten years. These include:

  • Panama has been removed from the OECD blacklist as it has agreed to comply with OECD standards and BEPS substance initiatives, but nevertheless has been allowed to maintain its territorial taxation system,  ie: no tax on worldwide income .
  • The President of China has visited Panama and has concluded a number of deals including a 14 billion infrastructure development into Panama, with consequential real state projects by China’s biggest developer (Citigroup). Chinese banks are now opening branch offices in Panama.
  • The Pope has visited Panama, thus bringing the attention of the World Catholic community on this small country and adding to an increasing tourism wave .
  • The Canal has been widened to accept bigger ships and twice more volume in shipping.
  • The biggest copper mine in the world has now started its production in Panama.

However, nothing has changed in Panama’s basic fundamentals so it is expected that the country will be experiencing a boom within the next five years which will eclipse its former growth. Some other  reasons why Mundo sees these opportunities include the following:

  1. Recently Nito Cortizo has been elected president of Panama. Nito comes from a Jewish business background and has vowed to increase Panama’s reputation and standing in the business world. Since Panama has a strong middle class and has always been pro business, as well as having the biggest Jewish community in Latin America, it is expected that the environment created by president Cortizo will increase foreign confidence and lead to a return in foreign investment.
  2. Panama has only territorial taxation, this means that companies and individuals with tax residency in Panama have zero tax on their world wide personal and corporate tax. Panama also has no inheritance tax, death duties and is free of many of the world’s most unattractive taxes. Indeed, in this respect Panamanians enjoy an income and lifestyle very similar to the one of Hong Kong, Singapore and Switzerland.
  3. Panama has one of the most enviable and beautiful lifestyles on earth. Multiple clean unpolluted and uncrowded beaches, great diving, great seafood and wonderful eco tourism opportunities as good as if not better than Costa Rica. There are dozens of foreign schools ranging from English and American to Chinese and Japanese, French and Italian, meaning that expats have a huge choice of schooling for their children. Panama has more restaurants per capita than any other country in the world as well as fantastic nightlife, clubs and casinos plus a 16th century old city which thrives with nightlife. 
  4. Opening a business is easy with no currency controls, low admin compliance, and due to the shortage of skills in Panama, almost any business that is opened will face success. This is coupled with an extremely friendly and easy migration and residency programme that means entrepreneurs, business men, skilled professionals and investors are welcome and can expect high returns and great lifestyle. 
  5. Medical facilities are on par with the best that the United States has to offer. There are numerous international hospital facilities in Panama city including a John Hopkins Hospital. Many doctors are graduates of top American medical schools.
  6. Panama has no communist or socialist leanings, its population is almost fully employed with major government housing subsidies, similar to Singapore and virtually free schooling and health care all paid for, largely by the canal and the middle class, and large entrepreneurs are very much in control of the country and its future direction. Investors are welcome and supported and wealth is admired.  The population is aware that low taxation benefits them and they support it. The chances of a situation like Venezuela, Ecuador or Argentina happening in Panama are much smaller than the same situation happening in France, Germany or the United States.

Panama Highlights

Advantages of Panama

Business Opportunities in Panama

Panama has virtually full employment for skilled professionals due to the fact that there are more business opportunities than there are skilled professionals to fill them. This is because Panama is a growing economy and there are huge opportunities in almost any sector, whether it is large, medium or small business. Although it is impossible to cover all the sectors, we will try to address the major ones below:

Panama has an abundance of wilderness and coast line equal to and indeed, in some cases superior to Costa Rica. This ranges from the Caribbean typical island of Bocas del Toro, with its amazing sea beach and island experiences, to the unexplored jungles of the Darien, where you can live with Indians and catch giant prehistoric size fishes in untouched waters. Yet, despite having the biggest biodiversity on earth, Panama’s tourism sector is virtually virgin. As an example, only two hours by boat from Panama are the Pearl Islands and yet, there are almost hundred untouched pristine islands ready for development and eco-tourism. The country abounds in tourism and eco-tourism opportunities and in fact the government has deferred tax incentives for tourism operations. Whether you wish to establish a game fishing lodge or develop an island eco-tourism and tourism in general, will be a booming industry in the years to come with low prices of land and readily available tourism licenses. 

Panama is crypto friendly, and indeed it supports a number of crypto exchanges and dealing in crypto is tax free. The free zones including Ciudad del Saber (City of Knowledge) contain a number of high tech and crypto and blockchain incubation startups and even several home grown crypto investment funds. The opportunity for entrepreneurs to establish blockchain and crypto related businesses is immense and soon Panama is expected to enact a crypto friendly regulation allowing companies to apply for licenses to trade in crypto. 

Panama has a growing financial sector with the opportunity to establish banks, lending institutions, and money management centers. Many Swiss money managers and finance professionals are moving to Panama, which many be called the Switzerland of Central America. PANAMA EVEN HAS ITS OWN STOCK MARKET. 

The construction industry has been experiencing a downturn due to the Panama Papers; however, this presents the opportunity for the acquisition of land and projects at excellent rates and in some cases at distressed sales. It is expected that with the new surge of Chinese and foreign investment, construction will again come back to its Martinelli days. Companies like Citigroup China are building the Tao Panama and a number of large scale luxury brands such as Fendi and Yoo are being built already, showing that these companies have done their research and expect growing demand. 

Panama has the biggest Cooper mine in Latin America and one of the biggest in the world. This will support a whole industry and infrastructure in servicing the mine from machine repair to engineering and housing for the workers. 

Despite the canal and the fact that surprisingly, there is no serious ship repair and maintenance, Panama has a demand for all maritime related industries . Already many foreign (especially Italian) companies are beginning to establish marine related industries here.

Key Business Areas 

Panama´s industry sectors 

Surprising facts about Panama’s economy

Panama has been consistently voted as the best retirement and lifestyle destination in Latin America by various international agencies and publications. The factors that have contributed to this assessment include the following: Panama is by far, the safest country in Latin America with a very low crime rate in Panama city and almost no violent crime; Panama has diverse living from mountains and cooler climate to tropical Caribbean beach paradises at very affordable prices; there are over 30 international schools: medical facilities are first-world and on par with the United States: the city is considered an international first class city with close access to the world. This is the reason why many business men are choosing to leave the United States, Europe, China, and Latin America and move their families to Panama. Indeed, Panama is extremely multicultural and extremely tolerant to foreigners. In any night you will see Jews, Arabs, Italians, Germans, Russians, Chinese and people of all races, cultures and religions mixing in the nightclubs. There is no religious intolerance, racial discrimination or terrorism here. Sounds like paradise? Well, it is. 

Those who want to have a residency in Panama have approximately 20 different options, however, the major types of residence that are the easiest and most common include :

Income tax is only levied on income derived from operations within Panama. This is true of both individuals and corporations.

This means that there are considerable advantages for a Panamanian individual or corporation to establish tax residency in Panama.  In terms of a corporation it is important to point out the following: 

 A Panama business entity can direct its offshore activities from Panama without becoming liable for tax. The Fiscal Code (Article 694) excludes the following types of income from taxation:

  • the profits of reinvoicing external goods or services;
  • the profits of operations that are directed from Panama but carried out externally;
  • the distribution of dividends derived from external income, including the above types of income.

Interest on deposits with Panamanian banks is exempt from taxation no matter the source of the cash.

An entity with both external and Panamanian business activities is taxed only on the Panama-derived income, and is subject to withholding tax only on that income. 


Panama business entities with only external operations are exempt from dividends (withholding) tax, undistributed profits tax, business tax and from stamp duty on contracts executed in Panama to be performed elsewhere.

An individual wishing to obtain tax residency in Panama must first obtain residency. After this, he/she must establish significant economic and social ties to the country sufficient to be granted a tax residency certificate. The granting of such a certificate depends on the assessment by the authorities as to his tax residency status at a particular time and is renewed each year. Of course, it is better to give up on an existing tax residency before applying for a Panamanian tax residency.

In order to maintain tax residency, the individual or company must file tax statements every year prepared by a locally certified accountant. Although tax needs to be paid on local income (apartment rental receipts, wages or consultancy earned within Panama, sale to local Panamanian entities, the good part is that your worldwide income is absolutely tax free and can be lawfully declared with zero tax.

Information on tax residency in Panama

Tax residency requirements

There are over 60 banks in Panama because Panama is the top banking and financial centre in Latin America. The reasons goes back to Panama’s friendly taxation system, ie, banks do not pay any tax on their international profit from foreign sources. This means that of course, banks can invest worldwide and not pay local tax. This has firmly placed Panama as a banking hub of Latin America. In fact, Panama has been called the Switzerland of Latin America [for a complete list of Panamanian banks click here].

Most serious banks prefer you or your corporation (preferably both) to be resident in Panama and to be tax resident in Panama. This saves them the huge paperwork of having to report to other countries under the CRS and makes the relationship far smoother and easier. If you, as the UBO of your company do not have tax residence in Panama, then generally the bank will request you to identify or certify the place of your tax residency, which is the place the bank will be obligated to report to. This is the same requirement for most countries (except the United States and several others) who have been forced by the OECD to report bank accounts to the place of residency under the OECD. 

Panama is an onshore banking destination with all the advantages of an offshore banking destination due to the territorial taxation system. Furthermore, many Panamanian banks have highly qualified international staff from Switzerland and other highly developed countries to take care of their foreign and expat clients. It is usually important for you to visit the bank so that a professional who can speak your language can be assigned to you, to work with your account or business. 

There are numerous types of banking options and below we deal only with the most common ones:

  1. The Brokerage Account in Panama 

There are a large variety of banks and brokerage houses which offer brokerage accounts to both residents and non-residents . The advantages of having a brokerage account in Panama include the following :

  • Having a brokerage account avoids most of the major risks of bank insolvency or collapse, since what you are buying are shares or bonds and since for example, bonds are securities, the only function of the bank or broker is to hold the securities in the name of yourself or your trust. That means you can move the securities to another custodian (bank or broker) without moving funds so that even if the bank collapses, the securities cannot be touched. Very few people know about this aspect of the law, because under international laws, if the bank holds money in its account, it is considered money belonging to the bank, whereas if the bank holds securities it is holding the securities as custodian or trustee for you. This makes all the difference if the bank is put into liquidation, administration or insolvency because of government problems, debt, etc. You cannot lose your securities but you will almost surely lose your bank deposit (remember Cyprus crisis). 
  • Panama is the ideal place to hold a brokerage account since there is no tax in Panama on such investment accounts. Further, you can buy for example bonds, such as bonds of Panamanian airport and other high yielding bonds that can pay up to 7% yearly interest which is much higher than bank rates and indeed safer in most cases. Indeed, most banks simply take your deposits and then invest them into the bond market themselves and live off the difference in the interest. A brokerage account allows you to cut out the middle man. Panama has a large number of highly experienced bond and equities brokers that can give you their expertise on the Latin American, European, Us and even Asian markets, at far less transactional cost than in many other places and at a far lower entry fee. 
  • You can create a borrowing facility against your bond investment which means that you can for example have a steady income of say 1000 000 USD at 7% but if you urgently need money to invest in other investments without touching your portfolio, you can borrow against your own funds at say 2%. This allows you to diversify your portfolio very quickly when the opportunity arises whilst not risking the capital invested. 

There are many other advantages which our experts can explain to you, the good news is that whilst most brokerages will require 1000 000 USD as a minimum to open an account, Mundo has an introductory offer from its expert brokers in Panama for as little as 100,000 USD.


Private banking in Panama 

Corporate banking in Panama 

From 2006 until 2016, real estate in Panama City was appreciating in value at a rate of around 10% a year . This rate was not even affected by the global financial crisis. The investment came from all over the world but especially from Latin American buyers who saw Panama City as a Miami in Latin America with safety, schooling and lifestyle; but at the fraction of the price. 

The combination of the “Panama Papers” and a government lead by president Varela, who tried to actively stop many investment projects started by Martinelli, essentially dampened foreign investment into the real estate sector and Panama buying slowed.

The slowdown which has occurred from around 2017 to mid 2019 has meant that many top properties in Panama are now being offered at close to construction prices. 

As Warren Buffet famously said, “be greedy when others are frightened and be frightened when others are greedy”, is a very good maxim for Real Estate Investment. Those who followed this advise during the United States property crises of 2008 have seen returns on their investments of many hundred percentage points. 

The Panamanian real estate market promises double digit growth and more, due to the fact that Panama is a fantastic city to live in and comparable in many ways to Miami but at a fraction of the cost. For example, high level luxury real estate in Miami which costs 1 000 000 USD minimum with architectural design, marble and waterfront can be acquired in Panama City for less than half and sometimes a quarter of the price. 

For investors with a holding strategy, there are a number of interesting distressed assets by developers including very affordable high end commercial real estate. Land and properties in the free zones can also be acquired at rock bottom prices, a situation which is not expected to last long.

Investors in residential real estate at present can pay from 2000-3500 dollars per square meter for prime real estate including highly valued brands. Second hand older but still excellent apartments can be bought for as little as 1500 per square meter.

Rental yields range around 5-7 per cent for residential property with expected gains of around 8 per cent a year and higher for select properties .

Commercial properties can be bought at very low cost at present .

There are many possible options for investment. We can only deal with some of them: 

  1. Panama City: this is a vibrant growing city of 1.5 million people and most of the real state growth and action is here as there is population pressure and predicted demand. Hot areas for investment include the Casco Viejo (old city), Avenida Balboa, Panama Pacifico, and San Francisco areas. There are also nice housing developments in Balboa, Ancon, Diablo, around 15 minutes from the city centre. There is interesting large commercial and residential free zone in Panama Pacifico.


    1. The islands around the Pearl Islands are amongst the most beautiful islands in Panama and only 2 hours by boat from Panama City. Some already have developments and represent very good buying. 
    2. The beach areas around Coronado and the Pacific which are around 2 hours drive from Panama City  are oversupplied and unless bought at extremely cheap prices are not a recommended purchase at this stage. There are hundreds of miles of coastline in Panama to choose from.
    3. Chiriquí is a province bordering with Costa Rica. Due to the intended railway, which will link Panama with Chiriquí, this could be fantastic buying for retirement properties. This area has Panama’s best farming and hill properties with permanent spring weather and is only a few hours away from some of Panama’s most beautiful Caribbean beaches, including the famous Bocas del Toro.

Investors from over the world find in Panama great security and confidentiality, which is why this country has become one of the most important financial centers.

We will discuss now the banking and other financial licenses that are available in Panama.

Types of banking licenses in Panama 

How to apply for a banking license in Panama? 

Other financial Licenses in Panama

Panama Financial Services License

Investment license  

E-money licence 

Gambling License  

Panama has a number of corporate structures that are ideal for international business establishment. These include:

  1. The Sociedad Anonima or SA which means the same is a company with a requisite of at least three directors. Since Panama has a territorial tax system, the income of the SA is not taxed in the country if it is sourced outside. In order to operate within the territory of Panama, the SA needs to apply for an operating license which is easily granted for most types of activities. The advantages of obtaining an operating license is that the company will be deemed a tax resident of Panama and if it operates via transactional business (not passive investment) under the CRS (Common Reporting Standards), the company will only need to report to the tax authorities of Panama. 
  2. The limited partnership is a look through an entity with limited liability. This means that there can be any number of partners who are taxed in their respective jurisdictions including, if necessary, Panama Partners. 
  3. The Foundation was modeled on the Liechtenstein Foundation Law and is the perfect asset protection vehicle which can hold passive assets. It is often best practice to hold the Panama companies or SA in a foundation. There has never been a case in Panama where the foundation  has been set aside so it is considered one of the best and indeed cost effective asset protection mechanisms. 

Panama is increasingly being considered an onshore solution because there are substance requirements including the filing of accounts. Panamanian accounts can be produced quickly and cost-effectively.

Panama Offshore Company

Foreign Corporation

General Partnership

Limited Partnership

Civil Partnership

Partnership En Commandite



There are 12 free zone regimes in Panama, the largest of which is the Colon Free zone which has over 800 acres of warehouses and stores and is the second largest free zone in the world. Noteworthy also are the City of Knowledge and the Panama Pacifico free zones, both located within minutes drive from Panama City. 

Panama law also permits companies to buy land and obtain permission from the government to establish their own free zone regimes.

Each free zone has its own specific features; however, the general free zone laws have the following common legislative framework:

  • A Panamanian company (SA) or entity can apply to obtain a free zone license at every reasonable low cost by simply registering its activities in the particular free zone and having an office and staff there.
  • There are banks operating inside the free zone and in most cases Panamanian banks will automatically accept that a company in the free zone is an operating company due to its activities and therefore, it will be deemed a tax resident of Panama. This means that, under the CRS, the company will only need to report to Panama. Under the free zone, all goods and services sold outside Panama are automatically excluded from all taxes including profit taxes. (There is currently only a 1% turnover tax; however, this does not apply in all cases). This is because a free zone company is automatically treated as having its income from sources outside Panama. 
  • The free zone company pays zero duty on the import of goods, services, and/or technology that is destined for export. This means that one can store both tangible and intangible goods and technology in the free zone duty free and export them to Latin America and indeed even to the rest of the world.
  • The free zone entitle you to assemble or put together imported elements of goods and services and have them considered to have been manufactured in Panama; this, in some cases, gives advantage to existing trade treaties between Panama and its neighbours.
  • The free zone is useful not only in the import of goods, it is being used as a centre for the development of blockchain and cryoto technologies, educational and learning facilities and startups.
  • In some cases, special regimes for large companies permit the shifting of an entire company and its staff to the free zone with favorable labor and visa regimes. In the case of large companies, special dispensations and regulations  can be enacted to smooth the transition.
  • With worldwide trade wars and disputes tightening, Panama is an ideal base to set up operations because it is politically neutral and well known as a transshipment hub. 

Besides, it is little known that establishing a free zone company and injecting over 160,000 USD into its founding capital automatically, provides residency and indeed subsequent tax residency to the shareholders who can also become directors. In such a case, they would pay no profit tax on their investments, paid into their personal account in Panama. The free zone company can therefore be considered an ideal base to have the centre of management and control of your international corporate structures.

The free zone zero tax corporation

Investment regimes in Panama

City of Knowledge

Baru free zone

Colon free Zone

Panama Pacifico

The Special System of Multinational Corporation Headquarters (MHQ) 

Free Trade Zones 

Free Zones registered in Panama