Personal And Corporate Taxation

Oct. 26, 2010

"Kathleen, I am a member and am obviously seeking to relocate in retirement. I have read your e-mails, including the recent ones on Panama. I know that you are offering the complete conference package on Panama at a very good discount right now.

"I have had a look before on Panama on the Internet. I know what you say about the validity of what you read in the Internet...

"Still, my research has raised questions for me, and, before I order your Panama conference kit, I would appreciate answers to two questions in particular.

1) The humidity seems very high in Panama. Does this cause problems for people?

2) Your article says 'Panama's pensionado program of special benefits for foreign retirees is the Gold Standard. As a foreign resident, you can pay zero local tax.'

"Yet everything I read on the web seems to show Panama as being far from a tax haven.

"I would appreciate your comments on both points."

--Bert H., United States

The humidity is high on the coasts and especially in Panama City...but not so much in the mountains. There could be some health concerns aggravated by constant high humidity. Otherwise, I wouldn't say it causes a problem for anyone...just makes you feel really uncomfortable sometimes.

The response to your second question is more straightforward: Without question, Panama is a tax haven. As a resident you pay taxes only on income earned in Panama. If you set up a Panama corporation for an international business and operate the business outside Panama, you pay no corporate income taxes in this country.

Tax rates in Panama aren't super low for income, but the capital gains tax rate is only 10%.

Bottom line, you can live in Panama tax-free if your income is from outside the country. In addition, the profits of your Panama corporation can be tax-free in Panama if the company is operating outside the country.

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