Entrepreneurs in the United States often have to make the hard choice where to locate their business. Will the population of one state make it a better choice over another? What about the tax code, reporting requirements, or employment law? State laws vary and each state can have it’s own advantages and disadvantages, but for those looking to find an innovative option their business may want to look outside the country. While Panama is often thought of as the land of beaches and siestas, there are many compelling reasons to consider Panama for your business.
High Quality at a Much Lower Cost
Panama is at the top of many retiree and expat lists for a variety of reasons, but ranking high among those is the cost of living. While there are many rural villages and cities in the country, people are often surprised at the modern infrastructure in Panama City, David, Colón and other cities. Panama had a decades-long US military presence until 2000 and this involvement helped to make the infrastructure the best in Central America. Approximately 42% of the country’s roads are paved (compared to approximately 67% in the US and 40% in Canada) and internet speeds are comparable to those experience in rural U.S. communities.
The Power of People
Panama is a haven for expats from around the world. Americans have a 100+ year history in Panama, but others have been flocking to Panama in recent years. These expats and migrants come from countries such as Germany, France, UK, Australia, New Zealand, Venezuela, Colombia, Honduras, Costa Rica, Guatemala, Nicaragua, and beyond. There are a variety of visas available to those looking to live and work in Panama which makes it a favorable place to find a variety of workers and the low cost of living keeps this workforce cost effective.
Speaking of Residency and work permit options…
In 2012, Panama started a “Friendly Nations visa program” which makes it possible for anyone holding a passport from one of 50 countries on Panama’s Friendly Nations list are able to live and work legally in Panama almost immediately. It is also an easy place to establish residency and there are a variety of residency by investment programs as well as a permanent residency option available through the Panamanian pensionado program. To learn more about this, click here.
Favorable Tax Laws
Panama’s approach to taxation, both personal and corporate, means it’s possible to live and run a business you own in Panama with little tax liability. If the business is set up correctly (be sure to consult a tax professional in Panama), you could be liable for no tax in Panama.
Residents of the United States living abroad are often surprised by the US tax burden that follows them even as they live, work, and earn income in another country. Those looking to locate their business in Panama can create a favorable tax situation for themselves by paying themselves less than the amount of the Foreign Earned Income Exclusion (around $100,000 in 2018) and be liable for no tax to the US as well. There are additional requirements to qualify for this exemption so it’s wise to talk with a tax professional who has experience in foreign income and international living to figure out if you meet the particular requirements. You can learn more by visiting the website for the US Internal Revenue Service.
Dollar Dollar Bills
One of the more difficult things for those looking at living and working in another country is learning and internalizing the currency. Many countries use currencies that are not tied to the US dollar and therefore require currency conversion. This can lead to confusion and stress at first as people learn to navigate the new currency and re-learn what value items hold. In Panama, this hassle is avoided as the country uses the US dollar. This means there are no value fluctuations ( you won’t lose money just because you took money out of an ATM on one day vs the next, for example) or learning curve for conversions.
International banking has gotten more complicated for US citizens since the anti-money laundering Foreign Account Tax Compliance Act was passed in 2010 as some banks have decided that the hassles of compliance are not worth the business of Americans. This isn’t a Panama-specific issue,but rather a problem all over the world. That said, Panama is home to more than 70 local and international banks which means that there’s sure to be a financial institution that will meet your needs.
The Right Time
Another consideration for those looking to start a business, especially one that will provide goods or services to people in a different location, is time zone. While the cost of living makes southeast Asia a great place for internet-based expats and digital nomads, the time difference can put a damper on customer service and responsiveness. In contrast, Panama uses the same Eastern Standard Time that the east coast of the US does making it easy for those serving most of North America.
Living the Good Life
As mentioned, the cost of living is surprisingly low in Panama for the quantity and quality of amenities and services available. One of the largest expenses most people have is housing and Panama offers phenomenal options at affordable prices. Want a beachfront home for under $150,000? Panama is for you! Looking for a tropical luxury paradise? Panama is for you! See properties available now by clicking here.