As from 1927, it is common knowledge that Panama has been establishing other types of legal entities other than corporations, as new vehicles for tax and estate planning with specific advantages for our local and international clientele known as Private Interest Foundations. Its regulatory framework has been useful for our clients as from the approval of Law 25 of 12th June 1995 due to the following advantages:
• Full Confidentiality: All members of the Foundation Council, as well as the Founder, the person designated as Protector, the Resident Agent, the Notaries and the officials of the Public Registry are under a legal mandate at all times to maintain complete reservation and full confidentiality of all activities, transactions or operations of the Foundation. Any violation of this confidentiality duty is punished with imprisonment of six (6) months and a fine of fifty thousand American Dollars (US$50,000.00), also, civil responsibility applies for any losses and damages that may have arisen.
Although if there is in effect an agreement to avoid double taxation or an agreement for the exchange of tax information, an exchange of information can be made due to fiscal matters, this is not automatically in effect in Panama’s case. It only applies when the premises established in the pertaining agreement and in the decree that regulates the exchange of information are complied with. Likewise, due to judicial investigations on crimes related to drug trafficking, terrorism, or money laundering within a Criminal Procedure in Panama. Only through a specific channel of a request by the Judge duly assigned as in change of a matter of such nature, the information could be given to the judge of the pertaining court on some of the aspects of the foundation or of the persons in the event of criminal conduct that have been duly established.
• Tax exemption: The transfers of the assets of the Foundation that are outside of Panama, the income, money deposits and profits from the assets in favor of the Foundation that does not arise from a local source, be these Bills of Sale of ownership of funds and titles or securities of any nature that arise from corporations whose income is not from a Panamanian source, are exempted from tax.
• Autonomous Patrimony: The assets transferred in favor of the Foundation cannot be subjected to attachment, embargo, or of a precautionary measure, as they constitute a separate patrimony from the patrimony of the Founder or of its beneficiaries. The Founder, at the time of making the transfer of its assets in favor of the Foundation, makes the Foundation the new owner of said assets