Central America, cataloged since the beginning of time as an exciting upcoming market, has emerged as the new dream and jurisdiction of opportunities for potential investors and entrepreneurs. In the present case, Panama is the Central American ‘Diamond’, which has been refined over the years. The region has been receiving large inflows of FDI, is a strategic logistics hub, has the lowest tax rates in the region and has exceptional infrastructure. In summary, Panama, as the business hub of Central America, offers promises of opportunities for those seeking to expand their business operations. 

However, before jumping in and investing, it is important that you have a profound understanding of the local business environment in addition to the support of a local group to enable your operations and ensure your commercial success. 

Receive a Professional Assessment 

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It’s important to keep in mind when investing in a new country that the local market must be understood in depth.

It’s important to keep in mind when investing in a new country, the local market must be understood in depth. You must consider that not receiving a local market assessment represents a disservice to your future operations. The worst mistake you can make is to try to save a couple of dollars, by not contracting local advisors to guide you. Not seeking competent advice will imminently cause negative results and will not allow you to remain competitive in the Panamanian marketplace. 

Professional local advice will place you in a privileged and advantageous position, with local advisors being able to foresee fortuitous circumstances that could put your project at risk. 

Evaluation of the Profitability of your Project 

Before making any investment, whatever be its nature, it is advisable to conduct a market study. This study can include the following – market validation, competitor analysis, product feasibility, distribution channels, pricing, among others. The results of this study will provide you with foundations to direct your project to commercial success.  

Establish Your Business Through a Legal Entity 

It is not uncommon for investors and entrepreneurs to underestimate the future risks of owning assets and properties as a natural person (i.e an individual). In the unfortunate case that any litigation or dispute results in legal action, personal assets may be at risk. For this reason, many individuals choose to establish a legal entity to mitigate this risk. A legal entity can be used to safeguard the development of personal assets and investments.

The main types of legal entities in Panama are Public Limited Companies (S.A.), Limited Liability Companies (S.R.L.) and Nonprofit Private Interest Foundations. These entities are commonly used to separate the responsibilities of Natural Persons (individuals) and Legal Persons (corporations). Even so, the shareholders and executives of each one according to their structure, are subject to some liabilities, over financial, economic and administrative management of the legal entity.

Establish Migratory Stability 

Taking into account that you have already incorporated a Panamanian legal entity and you need to travel constantly to Panama for commercial reasons, it will be essential to evaluate the possibilities that you can acquire a Panamanian residency. Panama has become a global business hub, in which many individuals and companies have established themselves in for various socio-cultural, economic, commercial and political reasons. Being able to reside in the country to oversee operations is vital to the growth and development of your company. 

Once Panamanian residency has been acquired, under the viable migratory category, you will be able to apply for residency. It is worth noting that you may be subject to the acquisition of becoming a ‘fiscal residence’, which will allow you to pay taxes only in Panama. Panama has the fiscal benefit of extremely low tax rates. 

Acquire Property

It is important for us to provide you with information regarding the possibility of acquiring a property in Panama. Properties are profitable assets, which increase in value over the years. Given the popularity of Panama not only as a business hub but also as a place to live and retire, certain areas have turned into ‘exclusive zones’ and there are large profits to be made on real estate investments. As mentioned above, the equity value of properties in the City, have had an upward trend in their value over the years, which means that it can be a smart investment to acquire a property in Panama. 

Need More Information? 

Panama has a robust financial system and service sectors that continue growing. It should be noted that Panama enjoys strong sovereignty and political stability in comparison with other countries in the region. For this reason plus more, Panama is a great investment location for individuals and companies alike. Many investors have already landed upon the shores of Panama and are experience exciting commercial success. 

If you want to take part in the Panamanian market and establish a business, Biz Latin Hub has a team of local and international experts who can provide you with personalized support. Do not hesitate and contact our Senior Attorney, Mr. Dennis Acosta at our email [email protected] for personalized assistance on how to enter and operate in the local marketplace.

Are you looking to incorporate a local company in one of the Latin American countries? If so, it is important that you have a sound understand of your accounting and taxation requirements. Check out our short video below and see how our tailored business services can enable your commercial operations in Latin America.