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Doing Business In Panama

Kathleen Peddicord by Kathleen Peddicord
Jul 08, 2010
in Retirement/Living
0
The Tax Advantages of Operating A Business Offshore can be plenty in a country like Panama.
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Paris To Panama? What Were We Thinking?

In the past few months, since my “How To Retire Overseas” book was published, I’ve been interviewed by at least two dozen members of the media…and every one of them has wondered:

“You moved from Paris to Panama two years ago? Why would you do that?”

Here’s the truth. If we had no children, no business, and no agenda beyond pursuing the best possible quality of life, we’d have stayed put in Paris. For us, the City of Light (from which I write you today…we’re here for the month of July) is the best place in the world to call home.

However, about 2 ½ years ago, I did have another agenda. Having sold out my participation in the International Living group, where I’d been publisher for more than 23 years, I decided I wasn’t ready for retirement. What I wanted to do, I realized, was to start over…to build a new business from the ground up.

France, I knew from experience, was not the place for this. The French are not the nasty, rude people many Americans imagine them to be, but one French stereotype is real: They have little tolerance for the entrepreneurial imagination. The red tape, the bureaucracy, the taxes, and the labor law in this country make it one of the least appealing places on earth to start or operate a business.

Lief and I knew we’d have to relocate if I wanted to make a real go of a new business venture. But where?

We took stock of our previous entrepreneurial adventures. By that time, we’d run businesses in the United States, Ireland, France, Nicaragua, Honduras, Ecuador, Nicaragua, Mexico, and Panama.

When deciding where to base a business, you want to consider five things: the labor pool (how educated and at what cost); the infrastructure; relevant tax rates; the doing-business climate; and local labor law. Considering the world map and taking into account our own experiences, we concluded that, all things considered, Panama is the top choice worldwide if you’re in the market for a place to launch the kind of business I was in the market to launch.

No place in the world is as entrepreneur-friendly as the United States when it comes to labor law. Nowhere else, for example, can you fire at will (without incurring costly consequences). The rest of the world favors the employee over the employer. We used to joke in France and Ireland that employees were for life. You hired a new one understanding that you were taking a big risk and incurring a long-term liability.

This is much less true in Panama, but, still, sometimes, we miss the good old days in the States when we could ask an employee to leave on the spot–without written notices, without witnessed warnings, without the calling of tribunals–if his performance warranted it.

That aside, Panama checks every box you want checked when you set out to start a business. We’ve been delighted by the eclectic pool of labor we’ve been able to tap into in Panama City. In our downtown office today, we have a Romanian, a German, two Russians, three Americans, and four Panamanians. All are educated and hard-working.

In our high-rise office, we have high-speed wireless Internet, a VOIP phone system, and a telephone number that’s toll-free when dialed from the United States. As we’ve grown, we’ve been able to source bigger and more sophisticated IT and web-support systems, including an American IT pro in the city who responds immediately to our calls for help.

Panama business taxes? We aren’t liable for any. Structure your business in this country properly, and you won’t be either. Depending where and how your revenues are sourced and, again, how your company is set up, you can operate corporate tax-free.

The doing-business climate? Panama’s current President Ricardo Martinelli, a successful businessman himself, couldn’t be more pro-entrepreneur. Martinelli has made it his administration’s mission to make Panama the most business-friendly jurisdiction in the hemisphere, and he’s making good progress.

At a recent American Chamber of Commerce meeting I attended, the Vice Minister of Commerce reported to the assembled group on his ministry’s efforts to attract mega multi-national companies to Panama. They’ve signed on more than 40 big-time international operations to date. Their goal is 100 by year-end.

What’s getting the attention of the presidents and CEOs of some of the world’s biggest companies?

They’re looking at the same things I looked at 2 ½ years ago–the labor pool, the tax situation, the infrastructure, and the doing-business climate.

For them the stakes are much bigger. For my part, I can tell you that our little operation is thriving.

Kathleen Peddicord

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Kathleen Peddicord

Kathleen Peddicord

Kathleen Peddicord has covered the live, retire, and do business overseas beat for more than 30 years and is considered the world's foremost authority on these subjects. She has traveled to more than 75 countries, invested in real estate in 21, established businesses in 7, renovated historic properties in 6, and educated her children in 4.

Kathleen has moved children, staff, enterprises, household goods, and pets across three continents, from the East Coast of the United States to Waterford, Ireland... then to Paris, France... next to Panama City, where she has based her Live and Invest Overseas business. Most recently, Kathleen and her husband Lief Simon are dividing their time between Panama and Paris.

Kathleen was a partner with Agora Publishing’s International Living group for 23 years. In that capacity, she opened her first office overseas, in Waterford, Ireland, where she managed a staff of up to 30 employees for more than 10 years. Kathleen also opened, staffed, and operated International Living publishing and real estate marketing offices in Panama City, Panama; Granada, Nicaragua; Roatan, Honduras; San Miguel de Allende, Mexico; Quito, Ecuador; and Paris, France.

Kathleen moved on from her role with Agora in 2007 and launched her Live and Invest Overseas group in 2008. In the years since, she has built Live and Invest Overseas into a successful, recognized, and respected multi-million-dollar business that employs a staff of 35 in Panama City and dozens of writers and other resources around the world.

Kathleen has been quoted by The New York Times, Money magazine, MSNBC, Yahoo Finance, the AARP, and beyond. She has appeared often on radio and television (including Bloomberg and CNBC) and speaks regularly on topics to do with living, retiring, investing, and doing business around the world.

In addition to her own daily e-letter, the Overseas Opportunity Letter, with a circulation of more than 300,000 readers, Kathleen writes regularly for U.S. News & World Report and Forbes.

Her newest book, "How to Retire Overseas: Everything You Need to Know to Live Well (for Less) Abroad," published by Penguin Random House, is the culmination of decades of personal experience living and investing around the world.

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