Taxation Advantages of Offshore Corporations

Offshore corporations in Panama are under a territorial system of taxation, which means that no income arising from activities or transactions conducted or property held outside of the territory of the Republic of Panama is subject to income tax.

This “offshore” feature of corporations in Panama has been in force since 1927, thus providing the following tax exemptions:

• There is no income tax applicable to income from sources outside of the territory of the Republic of Panama.
  
  
•  No capital gains tax applicable to capital gains through sources outside of the territory of the Republic of Panama.
  
  
• No taxation applicable to interests derived by savings accounts or certificates of deposit within or outside the Panamanian territory.
  
  
•  No taxation applicable to income arising from sales of products or services provided outside of the territory of the Republic of Panama.
  
  
•  No taxation applicable to dividends received from sources outside of the territory of the Republic of Panama.
  
  
• Exemption from any obligation to prepare or publish or submit financial statements and full freedom to carry its accounting as and where the corporation may decide when its income arises from sources outside of the territory of the Republic of Panama.
  
  
• Any corporation in Panama whose income arises only from sources outside of its territory does not have to file any tax return and may conduct its accounting as and where it pleases.