Panama For The Win? Not Too Fast...
Updated: May 22, 2019
Well… my family and I visited Panama about five years ago. From the moment we landed we knew we had to move and invest in Panama. Fast forward… At the beginning of 2016 we made the big move. Very quickly we found a good school for our daughter put a down payment for our dream family home in Panama-Pacifico and found a good attorney to process our residency.
We loved it in Panama.
I was able to work full time and start my cosmetic production business. Our initial plans were far-reaching but we certainly had to make adjustments along the way. But some of the adjustments we made were quite costly… starting and running a business for example.
The key, of course, is to try… here are some of the things I learnt about working and starting a business in Panama. I encourage you to do your own research because things change very fast in Panama, so fast that sometimes even your attorney is unaware of the changes happening every so often.
Strong And Prosperous Economy In Panama
Panama is the most advanced nation in the region, the hub of the Americas, and one of the world’s biggest trading zones, thanks to geography and the Canal. The country has built its economy more on business, banking, and commerce than on tourism. But this is changing, as Panama is making a concerted effort to draw attention to her natural offerings, as well as her financial benefits. These elements, then, comprise the dual personality of this country that holds such an important geographic position.
Steadily increasing numbers of foreigners looking for inexpensive vacations and quality retirement are moving to Panama. The tourist industry accounts for about 10% of the GDP and has no doubt contributed to Panama’s economic boom. Special benefits for foreign retirees attract even more visitors and potential residents to the country.
Panama is a prosperous country that boasts continued stability and growth.
Working in Panama as a Foreigner
To begin working in Panama the employer should arrange for work visas. As competition is high for many top positions, there are restrictions on the percentage of foreigners a Panamanian company may hire (generally 10%). Exceptions exist for technical positions and temporary situations. According to Panamanian law, only 10% of employees in a company can be foreign. However, there are exceptions.
If a company requires specialized staff that is not readily available in the labor force in Panama, for example, it is permitted to hire technical or specialized staff. In this case, foreign employees still can’t exceed 15% of all the company’s employees.
Over the past decade, in large part due to economical, immigration, and technological improvement, labor force in Panama has evolved. Skilled personnel have now become much easier to find.
Websites such as Konzerta, Encuentra24, and OLX are available and regularly post positions.
Minimum Wage in Panama
The minimum wage here is less than US$600 a month. Therefore, Panamanians are hired first.
Obtaining A Work Permit
There are a few ways to obtain a work permit in Panama, however the easiest for foreigners is through the “Specific Countries” visa program. This program allows you to get a visa and residency in Panama, along with a work permit. The program statutes state that you simply need to prove that you are from one of the approved countries and that you have US$5,000 in the bank, any Panamanian bank, and an additional US$2000 in the account per dependent. You must also demonstrate an offer of employment and contract from a Panamanian business. There are a few other minor requirements, however through this process you will obtain a Panamanian work permit.
The work permit application can be initiated only after permanent residency has been granted, which, depending on your lawyer and connections can take 2 to 8 months. If your immediate goal is a work permit, this can be problematic, but this is an indefinite work permit, something only obtainable in Panama…a true Holy Grail.
Bringing Your Work to Panama
If you are moving your business to Panama, your best bet is to base yourself in the City of Knowledge, a technology and education park with a state-of-the-art communications infrastructure and bustling business population. You’ll be in good company: the United Nations’ Regional Headquarters are here. Costa del Este and Panama Pacifico, both offering certain tax exemptions and advantages to organizations.
Panama boasts over 400,000 registered corporations. It is second only to Hong Kong as a home to corporations and corporate subsidiaries.
For the last 30 years Panama has developed as the largest international banking center in Latin America. Here local law grants anyone who banks in this country the same rights as Panamanians. Banking accounts for over 10% of the country’s Gross National Product. More than 80 banks are currently in operation, however this number is supposed to consolidate in years to come.
Bank accounts in Panama are safe. This can be attributed largely to the fact that it is difficult to obtain a banking license. Tough laws and high standards are imposed on banks, especially after the revelations of the “Panama Papers.” Panamanian banks tend to be very conservative and do not enter into risky lending practices. You are required to put down at least 10% for a mortgage as a resident.
Panama is considered one of the most well-established pure tax havens in the Caribbean due to extensive legislation that strictly regulates the country's offshore jurisdiction and financial services.
Quality Medical Care
Medical care in Panama is generally of good quality. Both public hospitals and private clinics are available in Panama. However, medical services may vary greatly depending on where you go. The capital, Panama City has the best medical facilities and physicians. The doctors in Panama are usually well trained in the U.S., and speak English.
Panama Tax Haven
Panama's offshore jurisdiction offers a wide array of excellent financial services, including offshore banking, the incorporation of offshore companies, registration of ships and the formation of Panama trusts and foundations. There are no taxes imposed on offshore companies that only engage in business outside of the jurisdiction.
Immigration Visas Are Easily Obtained
There are a number of visa options available for foreign personnel, which makes it easy for foreign companies to bring to Panama their foreign executives and their families. Most company sponsored immigration visas are granted for one-year terms, renewable for up to six years. Employees must also obtain a work permit from the Ministry of Labor. However, visas for employees in companies operating under the multinational headquarters law are granted for five-year renewable terms. These employees are not required to obtain a work permit.
Panama-Pacifico also offers five-year visas. In addition there are visas available for shareholders or officers of a company that invest a minimum corporate capital of US$160,000.00 with the purpose of establishing commercial, financial or industrial activities in Panama.