Panama Tax benefits & Incentives
Panama has tax incentives for investors and for people wishing to establish Panama as their second residence. Panama's popularity is Law 41, modeled on a Singapore's law that gives tax breaks, hiring privileges and other incentives for companies who want to establish a headquarters in Panama.
While in developed countries, home owners are obliged by law to pay a great deal of property taxes, in the provincial, state and federal system, there are several incentives for acquiring new properties in Panama. For example there is the exoneration of the property tax for a twenty year period and the preferential interest law for buying new properties.
The benefits given to the senior citizens or retirees by the Panamanian Government are of a broad variety. They even have the right to import a car every 2 years between other exemptions and bring up to USD 10,000.00 in furniture for their new house in Panama exempt of certain taxes. It is important to say that the personal and commercial loan transactions made by the senior citizens or retirees are exempted of the FECI (The special fund for interest compensation). Regarding the property tax, the law allows to freeze this tax in the case that the property is under the name of a retired person and this happens to be his or her only property in Panama.
On the other hand, there are different tax benefits for those that keep their bank accounts and Credit Deposits (CDs) at Panama’s International Banking Center. The most important advantage of this system is the non existence of government taxes over the generated interests in any of your bank accounts. Panama is a tax-friendly country. On the fiscal subject the Principle of Territoriality is in place. In consequence only the local income is taxable. For that reason, there is not a concept of double taxation for the nationals and the foreigners who reside in Panama.
These are just some of the tax incentives that the Panamanian Government gives in order to promote the acquisition of properties in this country. Panama is a young nation full of dynamism with the American Dollar as the common currency and with an inflation rate of around 1% to 2% per year. By investing in Panama you will have a great opportunity to get a better quality of life and your purchasing power will be way higher than in any other developed country, these applies to nationals as well as foreigners, who want to acquire a property within our beautiful country.