General Information

 Apart from the context of the pandemic, the Panamanian economy is proving to be solid with some of the highest growth rates in Latin America for years, due to investments for the expansion of the Canal, completed in 2016, in transport infrastructure and mining production (copper), as well as some political and societal regularisation. Some compare Panama City to the Dubai of the golden age since Panama's economy can be considered the most dynamic in the region since the 1990s. GDP has grown at over 3% per annum over the past 25 years. GDP per capita has grown from five million USD in 1990 to over 28.8 million USD in 2019, and poverty has declined, however, a high level of social imbalance remains.

It is clear that the role of the regional logistics centre is being strengthened following the modernisation of the Canal. The work, costing more than $5 billion, has doubled the Canal’s loading capacity, making possible the movement of large vessels and facilitating logistics, particularly between America (United States) and Asia (China). The transport of liquefied natural gas has been one of the leading sectors now benefiting from the expansion of the Canal. In addition, Panama has the world’s second-largest free trade zone (Colón Free Trade Zone).

About 65% of Panama’s GDP corresponds to the service sector, with 6% of its income from the Canal. The country has a very favourable framework for private foreign investment, having attracted 5.8 billion USD in FDI in 2019.
The country is a party to the EU-Central America Association Agreement, valid since 2013. However, 2020 saw a decrease of 86% to USD 589 million.

Panama is known for “banking confidentiality”. Companies can register as Sociedad Anonima / Offshore (IBC - International Business Corporation), in the form of bearer shares, and financial institutions manage bank accounts with a very high level of confidentiality. In these companies, it is very difficult to know the shareholding because there is no register of sales. In general, local banks do not give personal financial information to foreign banks; you have to go to the Court of Panama and obtain authorisation from a judge. However, some progress has been made in terms of international cooperation, such as an effort to remove the country from international blacklists of tax havens. Panama joined the blacklist updated by France in January 2020 and is one of the principal countries remaining on the 2016 list, due in part to the repercussions of the Panama Papers tax evasion scandal.

Capital can be freely transferred into Panama, as there are no taxes on income generated outside Panamanian territory (Principio de la Territorialidad). However, it is essential to be attentive to the regulations and to rely on good tax and legal professional, especially because of Panama’s classification as a tax haven, which can lead to increased tax impacts for capital remittances from France.