Offshore investment remains steady in Panama, and that means lots of opportunities for business and banking. One of the most functional and feasible options in this region when it comes to business, retirement, or relocation is to open a Panama bank account as soon as you can. Panama has long had a reputation for secure offshore banking, and has very favorable laws for both offshore investors, and residents. If you want to open a bank account in Panama, however, you’ll need to do a few things ahead of time to prepare. The process is much easier than practically every country in Latin America, and with a small investment and a good lawyer, this can be done quickly, and painlessly. Here are 5 solid steps you’ll need to take before you open a bank account in Panama:

1. Pick the right bank.

With over 100 different banks operating out of Panama, finding the right one is not only important; it’s a bit of a challenge. Your best bet is to check and see if your current bank operates in Panama first. You can open a bank account in Panama with the same institution, but as a separate entity, which makes it easier to move money between accounts, and expedites the acceptance process. Another tip is to find small, yet reliable banks that offer great interest rates as an incentive to increase business.

2. Prepare your documents and funds well in advance.

As is the case in many parts of Latin America, getting financial institutions to process documents can take more time than expected, so get a head start well in advance. If you’re looking at relocating to or investing in Panama in April, apply for a bank account in September. It only takes $1,000 to open an account in most banks, but you’ll also need to provide multiple references, identification, work certificates, tax returns, and proof of income.

3. Make sure your taxes are up to date.

While Panama once had a reputation for being a tax haven, both the US and Panama have gone to great lengths (see FACTA) to turn this around. If you plan to open a bank account in Panama, first check with your accountant that you have no withstanding taxes, or audits from your country’s tax administrators. This will ensure that your finances are protected once in the country and that the Panamanian banks can’t put a hold on any of your funds.

4. Start building credit in Panama.

If you’re simply putting money away for investment purposes, this isn’t necessarily helpful. But if you want to relocate to retire or start a small business, this can be really beneficial. Even if your credit is less than solid in your home country, you can easily start to build credit through your Panamanian bank. This will give you lots of flexibility for small business loans, mortgages, and automobile loans. You can start this process as soon as your bank account is approved; whether you’re physically in the country or not.

5. Have a bilingual attorney assist you.

While many of Panama’s banks will have English speaking associates, especially on the top level, it’s not a guarantee, and a lot can be lost in translation. If Spanish is your first language, or you’re bilingual, this obviously isn’t going to be an issue. However, many offshore investors and expats don’t have this luxury. If you have a local attorney or trusted accountant who is fluent in both languages, you can make sure that communication is clear on all sides. Miscommunication can be costly, and that’s something you can’t afford when you open a bank account in Panama.

The post Need to open a bank account in Panama? Here’s how! appeared first on POLS Attorneys.

Considering moving to Panama or doing business in Panama? Where and how you bank is something you need to think about, and with priority. If you are relocating to Panama, either as an expat, retiree, or investor, chances are you have a bank account from your home country, or the country where you do your business in. Many of these banks are international, and thanks to the nature of digital banking in the 21st-Century, business can be done from anywhere without actually changing your bank account or moving it to another financial jurisdiction. There are, however, a few catches.

You may not NEED a Panama bank account, but having one will make things exponentially easier

Due to many factors, using your local (foreign) bank account to do day-to-day withdrawals, debit card purchases, and online payments for services shouldn’t be a problem. The problems, however, arise when you need your account for more than that. If you are planning to live full-time in Panama, or invest into the business infrastructure here, then having a local bank account will save you both time and money. Things like payroll, home financing, car financing, small business loans, and cheques all require a local bank.

Another big advantage allotted to you when you open a Panama bank account is the immigration and visa process. One of the fastest ways to get a residency visa, whether still working or a retiree in Panama, is to open a Panama bank account and make deposits there. Having a Panama bank account is part of the qualification process for all of Panama’s visa programs, especially ones involving businesses.

Start a Panama corporation with a Panama bank account

Even if you don’t plan on physically spending any time in Panama, you can use a Panama bank to open a Panama offshore corporation. Panama offshore corporations allow you run a business in or through Panama as an anonymous entity to institutions outside of Panamanian jurisdiction. This means that you can open an account, make business deposits via multiple entities in multiple countries, and protect them under Panama’s corporate and tax laws.

How to open a Panama bank account

The quickest way to start the process to open a Panama bank account, like most things in Panama, is to contract an experienced, reputed Panama law firm. You’ll need to prove solvency from your current bank, apply for your intended purpose for doing business or living in Panama, and will be required to make a minimum deposit as well. There are over 100 banks operating in Panama which gives you a lot of options to choose from before you decide.
Opening a Panama bank account can be a simple, painless process that will net you many benefits for the duration of the time you choose to work, live, or invest in Panama. To get started, contact us today, and we’d be happy to answer any questions, as well as assist in the process going forward. You will not regret it!

The post Why You Should Open a Panama Bank Account appeared first on POLS Attorneys.

Offshore investment remains steady in Panama, and that means lots of opportunities for business and banking. One of the most functional and feasible options in this region when it comes to business, retirement, or relocation is to open a Panama bank account as soon as you can. Panama has long had a reputation for secure offshore banking, and has very favorable laws for both offshore investors, and residents. If you want to open a bank account in Panama, however, you’ll need to do a few things ahead of time to prepare. The process is much easier than practically every country in Latin America, and with a small investment and a good lawyer, this can be done quickly, and painlessly. Here are 5 solid steps you’ll need to take before you open a bank account in Panama:

1. Pick the right bank.

With over 100 different banks operating out of Panama, finding the right one is not only important; it’s a bit of a challenge. Your best bet is to check and see if your current bank operates in Panama first. You can open a bank account in Panama with the same institution, but as a separate entity, which makes it easier to move money between accounts, and expedites the acceptance process. Another tip is to find small, yet reliable banks that offer great interest rates as an incentive to increase business.

2. Prepare your documents and funds well in advance.

As is the case in many parts of Latin America, getting financial institutions to process documents can take more time than expected, so get a head start well in advance. If you’re looking at relocating to or investing in Panama in April, apply for a bank account in September. It only takes $1,000 to open an account in most banks, but you’ll also need to provide multiple references, identification, work certificates, tax returns, and proof of income.

3. Make sure your taxes are up to date.

While Panama once had a reputation for being a tax haven, both the US and Panama have gone to great lengths (see FACTA) to turn this around. If you plan to open a bank account in Panama, first check with your accountant that you have no withstanding taxes, or audits from your country’s tax administrators. This will ensure that your finances are protected once in the country and that the Panamanian banks can’t put a hold on any of your funds.

4. Start building credit in Panama.

If you’re simply putting money away for investment purposes, this isn’t necessarily helpful. But if you want to relocate to retire or start a small business, this can be really beneficial. Even if your credit is less than solid in your home country, you can easily start to build credit through your Panamanian bank. This will give you lots of flexibility for small business loans, mortgages, and automobile loans. You can start this process as soon as your bank account is approved; whether you’re physically in the country or not.

5. Have a bilingual attorney assist you.

While many of Panama’s banks will have English speaking associates, especially on the top level, it’s not a guarantee, and a lot can be lost in translation. If Spanish is your first language, or you’re bilingual, this obviously isn’t going to be an issue. However, many offshore investors and expats don’t have this luxury. If you have a local attorney or trusted accountant who is fluent in both languages, you can make sure that communication is clear on all sides. Miscommunication can be costly, and that’s something you can’t afford when you open a bank account in Panama.

The post Five important steps to take to open a bank account in Panama appeared first on POLS Attorneys.

Panama has been trying to market itself as a Latin American tech hub for quite some time now, and with mobile payments and e-commerce, they’re keeping to that promise. Although Latin America, in general, has been slower than other parts of the world to adapt to the e-commerce market, Panama is looking to change that in the immediate future. And international investors and startups are looking at investing in Panama as an ideal growth market for this type of commerce.

The consumer market in Panama is strong, and buyers need more options on how to shop, pay, and assign delivery for products and services. Mobile payments, innovative apps, and creative e-commerce websites could offer a viable, and profitable solution for both businesses and consumers; and that’s a win/win for Panama’s economy.

A saturated smartphone market that’s primed for mobile payments and e-commerce

One of the main reasons Panama is primed for mobile pay and e-commerce is its smartphone saturation. In Panama, smartphone penetration is close to 100%, meaning that nearly every person within the demo of a smartphone user owns and uses one. And that’s huge for business as we head into 2019. Being able to buy, research, and pay for products/services on your smartphone makes business more efficient for the Panamanian consumer, even if it’s something they’re not used to. There’s lots of room to grow and innovate because the market is already there. Purchasing power is expanded greatly with smartphones, and when combined with easy mobile payment solutions, the possibilities are endless for the market.

Innovative businesses designed for the Panama market

One of the big reasons Panama is primed for e-commerce is the nature of how business is done here. In Panama City and its suburbs, traffic, time, and access to brick and mortar commerce can be difficult for a large part of the population. But that part of the population is still buying. Therefore, creating innovative apps and websites that make it easier for people to bank, shop for goods, book services and travel, and save time is absolutely in demand. Panamanians can now order pizza, book a flight, reserve a table at a restaurant, hire a taxi, and find a mechanic, all from their smartphone. They can also pay for it with the touch of a button. But wait, there’s a catch.

Overcoming the “unbanked” hurdle

Despite having a great consumer market that’s primed and ready for e-commerce, there are a few hurdles businesses have to address before investing in Panama. One of these biggest hurdles is disrupting the cash economy. Despite having around 100 different banks operating out of the country, many Panamanians are “unbanked”, meaning that they don’t have a checking account or a bank account at all. And even if they have a bank account, there is a cultural trend to use cash only for small purchases.

This is where mobile payment services come into play

The future of e-commerce in Panama, in our opinion, has to rely on simple, efficient mobile payment services. Much like in other markets in Africa, Asia, and Europe, companies are testing new mobile payment services that will allow Panamanians to charge cash onto their phone for mobile credit (much like how telecom services work in the country). Once the money is on the smartphone, it can be used through various e-commerce apps, or in person at shops or services. This will allow Panamanians a new level of purchasing power, which should open a huge selling potential for both traditional businesses and new companies alike.

While full-scale e-commerce and mobile payment rollout might not be prevalent to the casual observer now, look for major movement this year, and continuig into the immediate future. You should see Panama’s heavy services-based industry adapt first, with bigger commodities industries soon to follow. Business as usual as we know it in Panama is changing at the speed of technology, and it’s exciting to see where this will lead.

The post The growth and future of mobile and e-payment commerce in Panama, explained. appeared first on POLS Attorneys.

Panama’s Ministry of Finance issued a decree requiring real property lenders to withhold funds on mortgages to pay for the property tax. The new decree takes effect on January 1, 2019.  In addition, another decree around the same time provides benefits to primary residences’ property tax.

Property Tax Law

Law 66 of 2017 lowered Panama property tax rates in general, which in all cases continue having a “Progressive Combined Tax” (see table below). The law also provided an exemption of the first US$120,000 of the property’s registered value if the property qualifies as “Tributary Family Patrimony” (TFP) or “Primary Residence” (PR).

For properties that qualify as TFP or PR, the property tax for values from US$120,001 to $250,000 pay a property tax rate of 0.5%. Properties values of $250,001 and above pay a 0.7% rate.

Definition of Tributary Family Patrimony

Tributary Family Patrimony, or in Spanish, “Patrimonio Familiar Tributario” (PFT) is a property that is destined for permanent habitation family use by its owner(s), in accordance with the article 476 of the Family Code.

Definition of Primary Residence

Primary Residence, or in Spanish, “Vivienda Principal” (VP) is a property that is destined for permanent residential habitation use by its owner (whether it is a natural person or juridical person), and the property does not constitute a Tributary Family Patrimony.

New Executive Decrees

Executive Decree 363: On December 4, 2018 Executive Decree 363 established the requirements and process for new primary residence property tax rates. This is explained below.

Executive Decree 362 – Withholding of Property Taxes: Executive Decree 362 regulates the amount of property tax withholding and set up the process of collections.

The collection of property taxes becomes easier for the government with the new withholding requirements. In lieu of the reduced property tax rates, the government seeks to ensure all property taxes be collected in advance of the annual due date.

Property Tax FAQs

What Properties are Subject to the Withholding of Property Taxes?

Banks and other mortgage lenders will set aside part of the monthly mortgage payments for the withholding of property taxes. However, an exclusion exists for the principal family residence and other housing already exempt from the property tax. Therefore, the real properties subject to the withholding of property taxes include:

• Second homes;
• Raw land;
• Commercial properties; and
• Industrial properties.

Who is Responsible for Paying the Property Tax?

Executive Decree 362 makes the mortgage loan debtor responsible for paying the property tax. Even if the debtor does not own the property, by virtue of taking out a loan to pay for the property, the debtor bears sole responsibility.

How will the Government determine if the Lender is Withholding?

Every withholding agent (banks and other lenders) must file information with the government tax agency, Directorate General of Revenue (DGI), regarding all financing for the real properties subject to the withholding.

Staring January 1, 2019 banks and lenders will report on every new financing along with all canceled loans and those transferred to another lender. This will maintain constant updates regarding the real properties subject to withholding. All withholding of property taxes will be paid into the National Treasury.

What Type of Information does the Debtor Receive?

The banks (or lender) will inform their customers (the debtors) the amount withheld including interest and fees. Debits on existing balances of the loans paid by the debtor’s accounts will be made and designated as withholding tax on the customer’s statements.

If the Debtor does not have a Designated Account

The DGI must be informed by the lenders of any debtors not having designated accounts for loan payments with the bank or lender. If withholding cannot be performed because no designated account exits, the Treasury may ask the debtor to make the payments directly. If that fails, the DGI can follow up with collection.

Non-bank financial institutions and cooperatives will designate the withholding of funds for these purposes in their funding letter for the real property.

How often does Withholding Occur?

Banks can do them in either 1, 3, or 12 installments per year as agreed upon with their customers. However, if the withholding tax is annually taking place within the first two months of the year, the withholding will be 90% of the total property tax. The law provides a 10% discount for those paying the entire tax year within the first two months.

Withholding occurring three times per year will coincide with the current tax payments. The first payment by April 30, the second by August 31, and the final by December 31.

What if Claims are made?

DGI has the full authority to resolve any disputes and claims regarding the property tax assessment. The bank or lender has no jurisdiction to resolve any claims.

Who Pays for the Bank’s Costs?

Banks and lenders must pay for the accounting time and computer programming for the withholding system. However, the government provides a tax credit to compensate for these additional costs. Every year a tax credit of 1% of the total amounts withheld will be applied.

Primary Residence Property Tax

The government now provides benefits to the owners of their primary residence in Panama. The benefit applies to a family or a single person’s primary residence.  The benefit exonerates the first $120,000 of the primary residence’s value from property taxation. While the decree distinguishes between a family and a single person’s primary residence, the benefits apply equally to both.

A family’s primary residence includes married couples, with or without children, or single parents. In the case of two different married couples living in the same home, the benefits only apply to the primary residence so the $120,000 exoneration can only be used by the two married couples for the same property.

How does a Person or Family Apply for the Primary Residence Benefits?

The DGI will be issuing a special form along with the required documents to support it. While the decree comes into force on January 1, 2019, the DGI can receive the forms starting on December 4th. Since the first property tax payment is due in April, the form can be filed before that date. If there is no response from the DGI within 3 months from filing the form, it is understood that the form was approved. However, if the DGI later determines the form was fraudulent, the status may be revoked.

Horizontal Properties (Condominiums) Property Tax Exemption

Horizontal Properties (PH) having an existing property tax exemption will continue to receive the benefits of that exemption. However, if the owner files the form requesting primary residence status, the remaining years of property tax exoneration will be lost. The owner will then be subject to the normal primary residence property tax rates.

Future Valuations of the Property

Upon filing the primary residency form it is not required to update the property’s value. However, the property tax is based upon the higher value between what appears in the DGI records and in the Public Registry showing the changing value during the history of a property’s ownership transfers.

Property Tax Rates for Primary Residency

The property tax rates for a primary residency, as of 1 January 2019 are:

Example of a Primary Residency Property with a registered value of US$500,000

Note: The bank or financial institution holding the mortgage on the primary residence will not withhold the property taxes. The property owner pays the property taxes directly to the DGI when they become due.

Property Tax Rates for All Other Properties (not Primary Residency)

The property tax rates for all other properties, as of 1 January 2019 are:

Example of a Property with a registered value of US$500,000

Current Property Tax Exemptions for New Construction

As per law 28 of 2012, any new Residential construction with construction permits issued from 2012 to the 31^st of December 2018, may benefit from the following tax exemptions (on the construction improvements value only, not on the registered land value):

For all other Types of construction (commercial, industrial, etc) with any construction value, they receive a benefit of a 10 year tax exemption on the construction value (not on the registered land value).

The above mentioned tax exemptions on construction / improvements granted will continue their normal term, as long as the property owner does not register the property as a Tributary Family Patrimony or Primary Residence.

New Formula for New Construction Tax Exemptions

As per Article 4 of the new law 66 of 2017, all new residential construction that is the purchasers first residence and is constituted as Tributary Family Patrimony or Primary Residency, and the registered cadastral value is between US$120,000 to US$300,000, shall be exempt from property taxes for a period of 3 years, as of the date of the issuance of the occupation permit or the date of inscription in the Public Registry, whatever happens first.

As of the 1^st of January 2019, as per Article 764-A of Law 66, 2017, all properties with a value that does not exceed US$120,000 (including land and construction improvements), and that are registered as Tributary Family Patrimony or Primary Residency, will be exempt from property taxes.

Retired or Pensioner Property Tax Benefits

Any person who is retired or pensioned or is of legal age for retirement (57 years old for women and 62 years old for men) may incorporate their domicile (property) as Tributary Family Patrimony or Primary Residency.

The post New Panama Property Tax Withholding Law Goes into effect January, 2019 appeared first on POLS Attorneys.

For many in South Africa, the turmoil and uncertainty of recent years has become just too much, and staying put no longer seems like a good option. Right now, thousands of landowners in South Africa are under danger of either losing their land, or even worse, their lives, with no immediate end in sight, and little aid from the outside world. As chaotic as life is in South Africa, the resilience of its people is inspiring, and people are taking action into their own hands, and making the choice to emigrate. While this choice is never easy, it’s the best bet for those who want to improve their lifestyle, increase their safety, and continue to grow professionally, or as investors.

While there are many great options around the world for South Africans when it comes to emigrating, one place keeps popping up at the top of the list for people of all ages/backgrounds. That place is Panama.

What makes Panama so appealing to South Africans wanting to emigrate?

The list is long, and it’s different for everyone, so let’s start with the basics and move our way up. When South Africans choose to emigrate and expatriate to a new country to become full-time residents, they typically choose the UK, or other former British colonies. This is understandable due to the country’s history, many South Africans’ European cultural roots, language, and familiarity. The problem, however, is that all of these countries (UK, Australia, New Zealand, US, etc.) have a very high cost and long process to go through before achieving the proper legal status. In fact, the processes tend to be so long and expensive that it’s no longer a viable (or safe) option for some, as time is truly of the essence due to the current situation in South Africa itself.

South Africans need a country with a stable economy, investment opportunity, a welcoming culture/society, and a legal residency process that’s both efficient and economical. Here is where Panama fits in perfectly. Panama truly fits the bill when it comes to all of the aforementioned, and then some. With an economy that’s been in steady growth mode for a decade, the regions best banking, multi-sector investment opportunities, and a streamlined residency process, it’s no wonder why people from South Africa are starting to catch on to all of the benefits Panama has to offer them.

A variety of residency visas for all types of purposes, lifestyles, and at an incredible price

Panama currently has eight different visa options available for foreigners, that could include many of the potential demographics of South Africans heading abroad. These visas are:

1. Panama’s Pensioner (Retiree) Visa:

Anyone over 18 years of age with a lifetime pension or annuity paying a minimum of $1,000 USD per month qualifies. Another $250 must be paid per month by the annuity or pension for each dependent. The annuity or pension can be paid by a private company, military, government agencies, corporations, a bank, an insurance company, or a Trust. This Panama visa provides several discounts from movie theaters, restaurants, hotels, pharmacies, concerts, and domestic airlines along with other products or services.

2. Friendly Nations Visa:

Citizens from any of the 50 nations considered “friendly” to Panama can move here with their immediate family and acquire a faster permanent residency visa than any other Panama visa. To qualify, the friendly citizen can either buy an existing Panama business or create a new business here or be employed in a professional capacity for a Panama professional services company.

The Friendly nations visa offers permanent residency within 3-6 months and offers the option of getting a work permit. The cost is around $5,000 USD all said and done in order to obtain permanent residency (not including the work permit).

Learn more about the Friendly Nations Visa.

3. Professional Employment Visa:

Foreigners working for a Panama company in a “professional” capacity paying social security taxes and holding a college degree and a professional license (if required by his or her country) can become a permanent resident after two years of being a temporary resident. The term “professional” is not limited to the definition in Panama’s Constitution or the laws defining a professional for citizens.

4. Panama’s Reforestation Investor Visa:

A minimum investment of US$80,000 in a reforestation project certified by the government including purchasing a minimum of five hectares of titled land with an additional investment of $2,000 for each dependent.

5. Panama’s Self Economic Solvency Visa:

Three options exist to qualify for this visa created to attract wealthy foreigners:

-Minimum US$300,000 investment of equity in any Panama real estate with an additional $2,000 USD for each dependent.

-Minimum US$300,000 investment in a 3 year Panama bank CD. An additional $2,000 deposit is required for each dependent.

-Combining the first 2 options by investing in both a Panama bank CD and Panama real estate where the cash and equity total a minimum of US$300,000 (or foreign currency equivalent). An additional $2,000 USD must be invested for each dependent.

6.Panama’s Business Investor Visa:

A minimum US$160,000 investment in capital stock of a Panama corporation. The foreigner can be a shareholder and/or an officer. An additional $2,000 must be invested or each dependent.

7. Married to a Panama Citizen Visa:

This must be a valid marriage (not a sham) to a Panama citizen can apply for a permanent visa.

8. Parents of Child Born in Panama Visa:

The parents of a child born in Panama who is over five years old can apply for this permanent visa. The parents of future children born in Panama can apply for this permanent visa after the child’s fifth birthday.

Finding the right type of visa for you!

With so many options available, it’s highly recommendable that you look carefully at visa type and compare it to what suits you best, and what will serve you best when you make the transition to moving to Panama. For many South Africans, the easiest and best (and most cost efficient!) option to go with is the Friendly Nations Visa. According to a recent survey, it was discovered that Panama is the 2nd most affordable in the World as far as paying for the visa process, which is a huge bonus for those trying to be economically efficient as they make the big move.

Like anything of this magnitude, we suggest that you do plenty of due diligence before starting the process, and consult an experienced Panama immigration lawyer to help walk you through each of your options, and get the ball rolling in the right direction once you’ve chosen the route you want to take. Panama is a warm, welcoming, prosperous country, flush with new opportunities, and ready for relocation. Come see for yourself!

The post Immigrating to Panama from South Africa: What you need to know appeared first on POLS Attorneys.

Panama has been trying to market itself as a Latin American tech hub for quite some time now, and now with mobile payments and e-commerce, they’re keeping to that promise. Although Latin America, in general, has been slower than other parts of the world to adapt to the e-commerce market, Panama is looking to change that in the immediate future. And international investors and startups are looking at investing in Panama as an ideal growth market for this type of commerce.

The consumer market in Panama is strong, and buyers need more options on how to shop, pay, and assign delivery for products and services. Mobile payments, innovative apps, and creative e-commerce websites could offer a viable, and profitable solution for both businesses and consumers; and that’s a win/win for Panama’s economy. 

A saturated smartphone market that’s primed for mobile payments and e-commerce

One of the main reasons Panama is primed for mobile pay and e-commerce is its smartphone saturation. In Panama, smartphone penetration is close to 100%, meaning that nearly every person within the demo of a smartphone user owns and uses one. And that’s huge for business in 2016. Being able to buy, research, and pay for products/services on your smartphone makes business more efficient for the Panamanian consumer, even if it’s something they’re not used to. There’s lots of room to grow and innovate because the market is already there. Purchasing power is expanded greatly with smartphones, and when combined with easy mobile payment solutions, the possibilities are endless for the market.

Innovative businesses designed for the Panama market

Another reason Panama is primed for e-commerce is the nature of how business is done here. In Panama City and its suburbs, traffic, time, and access to brick and mortar commerce can be difficult for a large part of the population. But that part of the population is still buying. Therefore, creating innovative apps and websites that make it easier for people to bank, shop for goods, book services and travel, and save time is absolutely in demand. Panamanians can now order pizza, book a flight, reserve a table at a restaurant, hire a taxi, and find a mechanic, all from their smartphone. They can also pay for it with the touch of a button. But wait, there’s a catch.

Overcoming the “unbanked” hurdle

Despite having a great consumer market that’s primed and ready for e-commerce, there are a few hurdles businesses have to address before investing in Panama. One of these biggest hurdles is disrupting the cash economy. Despite having around 100 different banks operating out of the country, many Panamanians are “unbanked”, meaning that they don’t have a checking account, or a bank account at all. And even if they have a bank account, there is a cultural trend to use cash only for small purchases. 

Another hurdle e-commerce business operating in Panama have to face is finding a merchant account that can be attached to a Panama bank account. This has typically stalled a lot of e-commerce businesses to date, but it is expected to become too lucrative of a market for banks to balk at this any longer. The future of e-commerce is inevitable, and Panama banks are expected to become more welcoming of online businesses as demand continues to increase.

This is where mobile payment services come into play

The future of e-commerce in Panama, in our opinion, has to rely on simple, efficient mobile payment services. Much like in other markets in the U.S., Africa, Asia, and Europe, companies are testing new mobile payment services that could allow Panamanians to charge cash onto their phone for mobile credit (much like how telecom services work in the country). Once the money is on the smartphone, it can be used through various e-commerce apps, or in person at shops or services. This will allow Panamanians a new level of purchasing power, which should open a huge selling potential for both traditional businesses and new companies alike.

While full-scale e-commerce and mobile payment rollout might not be prevalent to the casual observer now, look for major movement within the next 2-3 years. You should see Panama’s heavy services-based industry adapt first, with bigger commodities industries soon to follow. Business as usual as we know it in Panama is changing at the speed of technology, and it’s exciting to see where this will lead.

The post Mobile Pay, E-Commerce Gains Momentum in Panama appeared first on POLS Attorneys.

Panama’s economy over the past six years, on average, has grown by nearly double digits. However in 2014, the economy slowed down a little bit, causing some to be cautious. Now, as we head full steam into 2016, it appears the slowdown was merely a hiccup, and Panama’s economy is showing strong, positive growth for the near future. Investments in Panama largely rely on future predictions, and long-term strategies; which is why steady positive growth, even if it’s not at the boom levels of 2010-2012, is very important to the overall economy in the country.

How much did Panama’s economy grow to end 2015?

According to the “Instituto Nacional de Estadistica y Censo (INEC) de la Controlaria General de la Republica,” during the third trimester of 2015, Panama’s economy generated $8.95 billion, which is nearly $475 million more than over the same period in 2014. This number represents a 5.6% growth, which is great news for the economy. And despite it being under the historically high numbers from about 5 years ago, it is still a significant leap; and one that won’t be lost on investors, both foreign and domestic. It’s also a great sign for 2016, as many of the positive economic contributors are expected to continue to grow.

Where Panama’s economy is growing

Panama’s economy continues to rely heavily on services, with logistics, shipping, tourism, and commercial/residential construction leading the way. But Panama is growing to diversify their economy, which could help expand overall growth through new industries and revenue generators. Industrial mining, commercial transportation, private health services, and eco-tourism are all industries that also look to expand going into 2016, and diversify growth of the long-term investments into the economy.

Panama’s economic growth is fueled by a partnership between public and private industry

Another aspect to look at is that not all of this investment in growth is private. Much of Panama’s economic growth is fueled by major publicly funded projects to help modernize and improve Panama. These include the Panama Canal, the Panama Metro, the Panamerican Highway renovations, and the 4^th Canal Bridge. These types of projects – even the ones that haven’t started yet – are a big reason why private industry feels confident in investing in Panama. Plus, with government’s cooperation with private industry and a favorable investment climate, it helps encourage rapid growth; something Panama expects, and is banking on for 2016.

Staying optimistic without getting ahead of ourselves

With the numbers looking up as we enter into 2016, it’s easy to become optimistic, and that’s great. We should, however, also be very diligent about investing wisely, and into areas with steady growth. After all, steady, long-term growth is much more reliable that small economic booms. Panama looks like 2016 will bring a lot of positive change, but let’s not forget that hiccups do happen, and even single digit growth is a positive outlook for the future. Let’s hope that in 2016, investment continues to grow, and Panama continues to build on its great business relationships; both in the rest of the region, and here at home. 

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Offshore investment is growing rapidly, and one of the most functional and feasible options in this region is to open a bank account in Panama. Panama has long had a reputation for secure offshore banking, and has very favorable laws for both offshore investors, and residents. If you want to open a bank account in Panama, however, you’ll need to do a few things ahead of time to prepare. The process is much easier than practically every country in Latin America, and with a small investment and a good lawyer, this can be done quickly, and painlessly.

Here are 5 solid steps you’ll need to take before you open a bank account in Panama:

1. Pick the right bank. With over 100 different banks operating out of Panama, finding the right one is not only important; it’s a bit of a challenge. Your best bet is to check and see if your current bank operates in Panama first. You can open a bank account in Panama with the same institution, but as a separate entity, which makes it easier to move money between accounts, and expedites the acceptance process. Another tip is to find small, yet reliable banks that offer great interest rates as an incentive to increase business.
2. Prepare your documents and funds well in advance. As is the case in many parts of Latin America, getting financial institutions to process documents can take more time than expected, so get a head start well in advance. If you’re looking at relocating to or investing in Panama in April, apply for a bank account in September. It only takes USD $1,000 to open an account in most banks, but you’ll also need to provide multiple references, identification, work certificates, tax returns, and proof of income.
3. Make sure your taxes are up to date. While Panama once had a reputation for being a tax haven, both the US and Panama have gone to great lengths (see FACTA) to turn this around. If you plan to open a bank account in Panama, first check with your accountant that you have no withstanding taxes, or audits from your country’s tax administrators. This will ensure that your finances are protected once in country, and that the Panamanian banks can’t put a hold on any of your funds.
4. Start building credit in Panama. If you’re simply putting money away for investment purposes, this isn’t necessarily helpful. But if you want to relocate to retire or start a small business, this can be really beneficial. Even if your credit is less than solid in your home country, you can easily start to build credit through your Panamanian bank. This will give you lots of flexibility for small business loans, mortgages, and automobile loans. You can start this process as soon as your bank account is approved; whether you’re physically in the country or not.
5. Have a bilingual attorney assist you. While many of Panama’s banks will have English speaking associates, especially on the top level, it’s not a guarantee, and a lot can be lost in translation. If Spanish is your first language, or you’re bilingual, this obviously isn’t going to be an issue. However, many offshore investors and expats don’t have this luxury. If you have a local attorney or trusted accountant who is fluent in both languages, you can make sure that communication is clear on all sides. Miscommunication can be costly, and that’s something you can’t afford when you open a bank account in Panama.

For more info on how to open a bank account in Panama, and how you can get the process started, Contact us today for a consultation.

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