The Republic of Panama is now becoming one of the key investment centers and exhibits high performance growth in a number of sectors of the national economy, including finance, real estate, logistics and tourism. For decades, Panama has been one of the key points of international transit, and now the country is considered the new «economic miracle», even outstripping the pace of development of Singapore, one of the four «East Asian Tigers», whose economy in a rapid jump has reached the level of developed countries. In terms of economic growth, the country now ranks second in Latin America after Chile and the second in the world after Switzerland in the financial services sector.


A key advantage of Panama that in particular allowed it to ensure a 12% growth in GDP in 2012, is its favorable geographical position. The country is located on the Isthmus of Panama between the Pacific Ocean and the Atlantic Ocean (via Caribbean Sea), which allows it to operate the Panama Canal for the import, export and re-export of goods in the Western Hemisphere. Panama ranks first in the list of countries with the largest merchant fleet (in terms of tonnage) and has one of the world’s oldest and largest public vessel registers. Annual revenue from cargo transit through the Panama Canal is more than $2 billion. Currently, work is underway to expand the Panama Canal, which will raise its capacity by 4 times and increase revenue to the state budget from transiting goods up to US$ 4.3 billion.

Panama has a successful free trade zone called «Colon». It was created in 1953, and after 30 years, it has already overtaken Hong Kong and has become the second largest source of national income of the country. Companies that carry on their trading business (more than 2000 firms, including representation of major transnational corporations such as Procter & Gamble, Coca-Cola, Philip Morris), receive tax, capital transit, licensing, administrative control preferences as well as labor and migration benefits. Panama also has Baru free zone (situated on the border with costa Rica) and a recently opened franc zone «Panama Pacifico» that has a large airport on its territory.

Banking system

Panama is characterized by the stability of the banking and legal systems, low rates of economic risks, favorable investment climate and the deliberate direction of state policy in the development of investment system. US dollar, being at par with the official currency of Balboa, in accordance with tax legislation, is also used as the official currency of Panama, which insures monetary stability of the state. Currency regulation is not applicable.

Panama has over 140 banks, including representatives of international financial institutions. While all the banks undertake to ensure strict confidentiality with their clients, Panama is still considered as jurisdiction that meets most of the requirements of standards for the exchange of tax information. It has been achieved through active government policy on countering the legalization of illegally obtained income.


An important advantage of the Panamanian economic system is operating here territorial principle of taxation. Companies registered in Panama, shall pay to the state budget income tax on income that was received in Panama; there is a zero tax rate on the profits derived from the implementation of trade and investment activities outside the state. This rule, stated in the Law of Panama number 32 «About the Companies», from February 26, 1927, has been operating for over 90 years and has become the basic rule for the country’s financial sector. The same legislative act established the principles of ensuring confidentiality of investors, registered a lack of necessity in having audit check, preparing financial reports or any other reports to regulatory authorities.

International status

Republic of Panama has signed agreements on avoidance of double taxation with Portugal, Spain, Italy, Israel, Singapore, Korea, UAE, Mexico, Luxembourg and several other countries. It also has free trade agreements with Japan and the EU.

Besides the advantages for business development, Panama offers great opportunities associated with tourism and permanent residence in the country. Subtropical climate, coastal strip of about 3000 km, diverse flora and fauna create perfect conditions for leisure; developing transport network and urban infrastructure, telecommunications and IT-infrastructure, constantly rising quality level of such social services like medicine, education and legal service sector guarantee comfortable life. The government implements a range of initiatives designed to encourage foreigners to migrate to Panama: tax incentives for investments in real estate, program of a second passport meant for investors, which allows the holder to travel visa-free to any country that has an agreement with Panama on mutual visa exemption.