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Lack of money is no obstacle, lack of an idea is.

Lack of money is no obstacle, lack of an idea is. Why Panama?. Panama has become the new Switzerland. It is fast becoming the jurisdiction of choice for offshore asset protection structures. Panama has the Strongest Bank Secrecy Laws that are Actually Enforced.

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Lack of money is no obstacle, lack of an idea is.

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  1. Lack of money is no obstacle, lack of an idea is.

  2. Why Panama? Panama has become the new Switzerland. It is fast becoming the jurisdiction of choice for offshore asset protection structures. Panama has the Strongest Bank Secrecy Laws that are Actually Enforced

  3. Other jurisdictions like the the Cayman Islands have similar laws, but it is our experience that Panama enforces these laws strictly while we have seen some fishy behavior from other Jurisdictions. Panama has stood its ground on bank secrecy issues in the face of pressure from foreign governments including large revenue agencies seeking to find information on tax evasion suspects. Panama has no tax treaties with any other countries. In some circumstances tax treaties are helpful because they prevent double taxation. Since Panama has a 0% tax rate for foreign derived income, entering into tax treaties makes no sense.

  4. The Anonymous Bearer Share Corporation This option is powerful because the ownership of the offshore corporation is based on who ever physically holds the share certificates. There is no need to explain how convenient, flexible and powerful this feature is in an asset protection structure. An Offshore Corporation owned by an Offshore Foundation

  5. While an offshore foundation is limited because it cannot engage in for profit business activities, it can own assets such as boats, cars, houses, etc. It can also own a corporation. The corporation can then engage in business activities. The combination of the offshore company and offshore foundation is very powerful. It is also very important to note that an offshore foundation legally is not owned by anyone. Yet a foundation is a respected institution everywhere in the world. This makes it very attractive in any plan to protect your assets. One of the reasons this option is often used instead of a bearer share corporation, is the fact that a foundation is respectable. While a bearer share corporation is private, it lacks a certain respectability. Often this is not an issue since there is no way to determine that the corporation has issued it's shares in bearer form. On the other hand, there are times when it becomes critical.

  6. Take, for example, the situation where a person is sued. When the judge learns that the assets in question are no longer owned by the defendant, but rather are owned by an offshore foundation, the judge cannot proceed any further. To do so would be pointless because the judge will realize that a foundation is not owned by anyone. It is simply a dead end. He cannot order the defendant to repatriate the assets because that would be an illegal order. A court cannot issue an order to illegally take funds from a foundation. In a bearer share corporation situation, if the judge is suspicious, he may try various techniques to see if you in fact own the corporation. Since the ownership is unknown he may simply ask you under oath if you are in fact the owner of the corporation. This can be a sticky situation that is completely avoided by an offshore foundation.

  7. Panama is home to some of the largest and well established offshore banks managing billions of dollars. Panama bank accounts come with a visa ATM card good all around the world for both shopping and cash withdrawals from bank machines. They provide English service for their customers. They also offshore full service online banking which includes the ability to send wires.

  8. Panama Bank Secrecy Laws

  9. Panama is the "new Switzerland". Switzerland was once known for numbered bank accounts, but today these types of accounts are no longer available. Panama does not have numbered accounts, but it does have the next best thing. Panama has bearer share corporations which can own a bank account. These corporations have no ownership records. The person in possession of the share certificates owns the corporation, and thus the bank account.

  10. Who's name is on the bank account? Someone has to sign on the bank account. Every corporation has one or more people with signing authority on its bank accounts. This does NOT mean they are the owner of the funds. It merely means the corporation has assigned them the responsibility of managing the bank account. The beneficial owner of the bank account is the corporation, not the signatory. Take Walmart for example. Walmart has certain employees who are authorized to sign on one or more of their many bank accounts. Walmart is the beneficial owner of the money, while the signatory is just an employee. If the employee were to be sued because someone slipped on his/her driveway walmart's money is not at risk. Similarly the employee does not claim walmart's money on his/her taxes.

  11. I understand I am just a signatory on the bank account and the bearer share corporation owns the money but I still want to know who can find out I sign on the bank account and how? Panama has strong bank secrecy laws, both on paper and in practice. Here are some of the more relevant sections of Panamanian banking law: Article 74 of Decree 238 prevents the Panama banking commission from conducting investigations on individual banking clients. Any information it uncovers while doing its regulatory operations cannot be revealed to any person or authority, unless subpoenaed by a Panama court order. Anyone found violating this order is subject to Article 101 which states: " Any person who furnishes information in violation of this Cabinet Decree, or who violates any of the prohibitions established in it, for which no specific punishment is provided for, shall be subject to a monetary fine as determined by the Banking Commission, without prejudice to applicable criminal and civil liabilities."

  12. Article 65 of Cabinet Decree 238 regulates how the National Banking Commission gets access to banking information and documents. It clearly states that the Commission may only inspect the books of the bank in general and cannot single out individual bank accounts. This includes both deposits and securities held by the bank. Again this can only be broken by a court order. Now look at Article 170. "Any person that in the course of his occupation, employment, profession or activity obtains knowledge of confidential information that in the event of being made public could inflict damages, and such person discloses that information without the consent of the concerned party; or in the case that disclosure of such information were not necessary to safeguard a higher interest, shall be punishable by imprisonment of 10 months to 2 years or a comparable fine, and the inability to practice his occupation, employment, profession or activity for not more than 2 years." Now that we have established that the signatory's privacy is protected by Panama bank secrecy laws, there are still a few loose ends to tie up.

  13. Under what circumstances will a Panama court allow banking secrecy protection to be lifted? In today's world there are 3 reasons in which your banking secrecy can be violated no matter what jurisdiction your bank in. They are severe criminal activity like terrorism, money laundering and drug smuggling. Tax evasion is NOT a crime in Panama, and no court in Panama will allow your banking secrecy to be violated for tax related issues. (Under no circumstances are we recommending you commit tax evasion in your home country.)

  14. What about MLAT (Mutual Legal Assistance Treaty)? Panama is a member of this treaty. Since 9/11 all jurisdictions that can move funds in and out the North America and Europe are in this treaty. At first this treaty looks dangerous, but on further investigation it is not so bad and here is why: The activity under investigation must be a crime in BOTH countries. (again tax evasion is not a crime in Panama The requesting country MUST show that there is no other way for it to obtain this information and that without this information it cannot successfully prosecute the case. The requested information must be specific. No fishing expeditions. The requesting country must file a criminal case in its NATIONAL courts. Minor criminal cases usually are not brought into the NATIONAL courts After all these conditions are met, the request is sent through diplomatic channels (which are slow). Panama then considers the request. Panama does not like to break its banking secrecy laws. Panama may then ask for more information or clarification or do its own investigation into the matter to see if the matter warrants breaking banking secrecy. Many of these request are NOT honored by Panama.. Panama can deny the request on any of the grounds listed above.

  15. Panama will not and does not comply with information requests unless the matter is a serious criminal activity. The proceedings are slow and often end in the request being denied. What about Tax Treaties? PANAMA DOES NOT PARTICIPATE IN ANY TAX TREATIES PERIOD, nor does it recognize tax related investigations as criminal. As such, Panama will not disclose your financial information for any tax related reasons.

  16. Panama Bank Accounts

  17. Bank Account Safety Bank accounts in Panama are safe. There have not been any bank failures in Panama in the past 100 years. It is very difficult to get a banking license in Panama. The bar is set very high on purpose. Banking regulations are strong. Banking secrecy is of little value if the assets being protected are not safe. Panama is a safe place to keep assets since it has conservative banking laws designed to protect the depositor. It is also important to note that Panama is not subject to hurricanes and other natural disasters. We have witnessed people unable to get access to their money for several weeks after a hurricane in Caribbean tax havens after a direct hit from a hurricane.

  18. Panama banks have never entered into risky lending practices. No sub-prime mortgages... no 10% down mortgages... no 5% down mortgages. Panama banks have always required at least 25% down to get a mortgage. The government is elected much the same as in Canada or the USA. Although the American military left Panama a decade ago, they left behind a stable government based on democracy. No Panama banks are NOT government insured. Offshore jurisdictions do not have bank accounts that are insured. That is why Panama, with its large banks, and political stability, is a good place to keep your money. We put our clients into a large bank with over billions of dollars in assets.

  19. Panama Asset Protection vs Swiss Asset Protection

  20. Making a decision as to where you will protect your assets can be difficult. Asset protection in Panama is the best alternative to Switzerland today. Although Switzerland was once the offshore asset protection capital of the world, it has caved in to pressure from the US and other countries. Switzerland now regularly co-operates with tax authorities from other countries under a myriad of tax treaties. It also co-operates with tax evasion investigations. Bank secrecy in Switzerland is all but gone. Panama, however, having no tax treaties, does not co-operate with any other countries inquiries. Panama does not consider tax evasion a crime and as such does not help other countries in their investigations. This includes MLAT requests.

  21. Switzerland was once "down to earth", protecting those oppressed by offering them numbered accounts. Those days are long gone. Now Switzerland bankers walk around with their "noses in the air". Minimum deposit requirements are now at a staggering $250K for the well established banks. Even the small banks require a $10k minimum balance. Swiss bankers do not like a declining balance over several months. If you operate your account in this way, depending on the age of your account, you may be asked to close your account. This is a very snobbish attitude, but very real. A new Swiss bank account holder should be wary of this restriction. Panama banks do not take issue with a large deposit followed by regular withdrawals.

  22. The banks in Switzerland are large and well respected. They do provide a safe place to store your money. The problem is that bank secrecy in Switzerland has eroded so much that they now ask you for social security number (if you are US citizen). Panama, of course, does not have this requirement and has strong bank secrecy laws, both on the books, and in practice. Under Swiss law, must exchange tax information freely, under their many tax treaties (including a USA - Swiss Tax Treaty). Sadly, this has caused the demise of the once world famous Swiss bank secrecy. Today Panama is the new Country of choice when it comes to asset protection and bank secrecy. Panama does not co-operate with any countries and has no tax treaties. Only in severe criminal investigations is bank secrecy lifted. Panama doesn't recognize tax evasion as a crime, since it is not a crime in Panama.

  23. Although Swiss banks are larger than Panama banks, many people are now choosing Panama to protect their assets. Panama has much stronger bank secrecy laws, both on the books, and in practice. Panama banks are also very large and well established by anyone's standards.

  24. Panama Private Interest Foundations“Foundations are the favored asset protection toolsof the Super Rich such as the Rockefellers and Rothschilds” Generally, a Panama company owned by a Panama foundation, which owns a bank account is considered the ultimate asset protection strategy. It is stronger than the old swiss numbered bank accounts. Many people ask why they need a corporation and not just a foundation. It is true that a foundation can own a bank account BUT a foundation cannot enter into business activities. For this reason it is quite limited. Having the foundation own a corporation gives you the best of both worlds. It also adds layers to make piercing the corporate veil much more difficult, if not impossible.

  25. What is a Panama Foundation? The Panama Private Interest Foundation is an asset protection tool par excellence. A foundation is a hybrid asset protection vehicle that encompasses some of the elements of a trust, a corporation and a will all wrapped up into one that is better than any one of them. What Can a Foundation Do? It can own bank accounts, stock brokerage accounts, real estate anywhere in the world, art, gold, boats, airplanes, automobiles and it can own corporations. It is similar to a holding company but much more dynamic. What Can a Foundation Not Do? A Panama Foundation may not directly engage in commercial activities. However the foundation can own a corporation from Panama or anywhere else and this corporation that it owns can operate commercially.

  26. Does a Panama Foundation Have a Tax Obligation in Panama?  If all the Panama Foundation income is derived outside of Panama there is no income tax due and no need to file a tax return in Panama. Panama has no capital gains tax on bank interest or stock market gains and no inheritance tax. Who owns a Panama Foundation? Under Panama law a foundation cannot have an owner, thus ownership is impossible. This enables one to arrange for the Panama Foundation to own the shares of a Panama Bearer Share Corporation. What our competition is not telling you is that many countries consider the beneficiary to be the owner. These same countries also have foreign ownership reporting laws if you own 10% or more of a foreign entity. Thus many people are breaking the law and they don't realize it, because the law firm they hired didn't bother to tell them what they were doing was illegal in their home country. Fortunately, there is a legal way to setup truly self owned structure

  27. A Panama Private Interest Foundation is a judicial or unnatural person like a corporation. A offshore trust is not a judicial person; it is merely a written agreement as to how assets are managed. It has its own assets and liabilities separate from those of the founder, protector or beneficiaries. Foundation Beneficiaries The foundation can have a secret letter of wishes that is basically beneficiary instructions. These instructions are not in any public registry and are not filed with the government, thus they are private or secret. Beneficiaries can be changed at anytime. The beneficiary is not an owner and their debts are not debts of the foundation. Foundation Founder Our law firm normally provides a founder for the foundation so you need not be the founder. The foundation founder is not an owner or controller of the foundation.

  28. Foundation Nominee Council Members  These are nominee employees that are very similar to the nominee board of directors of a Panama Corporation. There is very little they can do. They will execute signed but undated resignation letters. They will also generate to you a general power of attorney so you can act carte blanche on behalf of the foundation. Foundation Protector  This is an office generally held by the one requesting the foundation be formed. It is a position of control but not ownership.It can be documented with a written employment contract stating duties including signing on the bank account, keeping the books and records and seeing that the overall foundation goals are being met.

  29. We generally have these agreements customer created to suit and they are signed by the nominee foundation council members, then notarized and apostilled. Foundation Asset Protection Panama has special laws to protect foundation assets from pre-trial freezes except if the foundation does something directly incorrect like it breaks a written contract for no good cause. We prefer the foundation to just act as a holding entity to avoid this. Foundation Beneficiaries Fighting The beneficiary instructions set forth in a foundation will be enforced by the Panama court exactly. You will not hear of the children suing each other and fighting over the estate of the parents. There is no inheritance tax in Panama. The Panama Foundation is the best possible asset protection vehicle.

  30. Panama Corporations Panama Corporations are the most anonymous corporations in the world. Incorporating your offshore company in Panama has many advantages. Panama Corporation Anonymity * Under Panama law an S.A. corporation (bearer share corporation) can be owned by the physical holder of certificates of stock with no recorded owner in any database or public registry. In fact the government does not even know who the owners of a bearer share corporation are. The Nominee Directors names are recorded in the public registry to preserve your anonymity. * You can effectively transfer the stock certificates privately with no record of the sale appearing anywhere. The new owner of the offshore company can replace the directors with his own directors and even have resignation letters in his possession for the directors.

  31. What can you do with your Panama Offshore Company? A Panama corporation can own bank accounts, stock trading accounts, real estate, boats, planes, cars, art, jewelry, businesses, and other valuable assets all without revealing the actual ownership of the offshore company. Additional complex strategies can be employed using the lawyer to perform certain functions for the corporation. In Panama there is strong privileged communication between the attorney and the client. Please enquire by phone regarding any specific needs you may have.

  32. The Panama IBC, Banking Secrecy and Offshore Company Formation A bank anywhere in the civilized world will require a beneficial owner for any bank account and will also require identity documents. In Panama, the beneficial owner can be a foundation, which is not owned by anyone. Some countries do consider the beneficiary of the foundation to be the beneficial owner. Combined with foreign corporation ownership reporting requirements, this can pose a problem. To avoid this problem a self-owned trust structure can be created.

  33. * For a Corporation in Panama the shares may be issued in physical bearer form similar to the old bearer bonds with or without any par value assigned to the shares. The only documents publicly recorded are the articles of incorporation, which typically will list the officers and directors who are the nominee directors provided for you by us as your the registered agent. The actual owners would be the natural or judicial persons who actually have the physical shares of the offshore company, which may be made out, in blank with no names on them. The identity of the owners do not appear in any public record of any sort and the government of Panama does not even know who they are. There is no requirement to report any changes in ownership to anyone.

  34. * There are annual fees Panama Government charges for Panamanian Corporations. * Panama requires no minimum amount of paid in capital for a corporation. * Annual meetings of the shareholders, which would be the owners, or directors, which would be the nominee directors of the corporation, are not required. * The corporations financial records can be kept anywhere in the world which makes legal discovery exasperating. * The Panama Corporation Resident Agent does not need to keep the share certificates in his possession and has no obligation to maintain any records for the corporation. Share certificates can be kept at any location in the world and the location need not be disclosed to anyone.

  35. Tax Evasion vs Tax Planning

  36. This is a very important area to consider if you are going to build your asset base. Tax evasion is illegal in some countries and we would never recommend it. In fact, we are not going to speak about any particular Country's tax laws. Everything you read on this page is NOT to be construed as tax advice. We are simply going to explore some tax planning ideas.

  37. Hiding income is tax evasion Tax evasion is when you hide / do not report income for the purpose of evading paying the taxes due. Do NOT do this! Even though it is possible to hide money in a Panama bank account because of the strong bank secrecy laws, it is tax evasion in some countries. Although tax evasion is not a crime in Panama and the Panamanian authorities would not co-operate with foreign tax authorities investigating you, it is a bad idea to hide money in Panama. If your tax plan requires you to hide money it is likely not a tax plan but rather tax evasion. Instead you should consider planning your affairs to legally reduce the amount of taxes due.

  38. Again, we cannot give you tax advice, but here are some tax planning ideas to explore with your local tax professionals: 1) Have a Panama bearer share corporation, or a Panama corporation owned by a foundation , own any intellectual property rights. Have your onshore company license or pay a royalty to the offshore corporation which owns the intellectual property rights. In almost any business, there are strategies, software, or business critical ideas, otherwise known as intellectual property, that are valuable. These ideas often make or break a company. When you setup your business don't just lump it all into one onshore business. Instead, use an offshore corporation while developing your ideas.

  39. That way the offshore corporation will own these rights. Consider a franchise. The franchisee pays a portion of all earnings to the franchiser for the rights to use their marketing ideas and concepts. Why can't you setup a similar structure? After paying the franchise / royalty fees your onshore business will likely make a modest profit which you can pay the legally owed taxes on. The offshore business will have to pay taxes in the jurisdiction where it is located. If you choose a jurisdiction wisely, like Panama for instance, only $300/year is due.

  40. Transfer pricing refers to the pricing of contributions (assets, tangible and intangible, services, and funds) transferred within an organization, or between related companies. In our case, this refers to the price the onshore entity charges for its services. The onshore order fulfillment company must charge what it's competitor's charge for the same service. Warning: The above ideas could become tax evasion if they are not implemented properly. Some countries have "arm's length" laws, which must be satisfied to avoid your tax plan becoming tax evasion. Arm's length laws are usually not a problem as long as you use fair transfer pricing (call for details). Please see our article on avoiding offshore tax evasion.

  41. 2) Tax deferring money coming from offshore to onshore -- Well this is the million dollar question. Sure money can collect in an bearer share offshore corporation, but when money is paid to you by the corporation onshore or offshore (offshore - if your country taxes on worldwide income) taxes become due. Is there any way to bring money onshore and pay taxes later or never? How about a loan or mortgage? What if an offshore corporation was to lend you money, or give you a mortgage? To be a valid mortgage, you would have to pay interest payments of course just like a normal mortgage (or loan). The following is an illegal loophole we do NOT recommend to anyone. In fact, this is a good example of where tax planning can become tax evasion: After 6 or 7 years, depending on the jurisdiction, records can be destroyed legally (and should be!). After that period one could theoretically stop making payments and default on the mortgage. At that point the only person that would know would be the offshore corporation since it ceased to received payments. If the offshore corporation doesn't come after you for the money, who would? Your records would all be destroyed after 6 or 7 years so nobody would know.

  42. This is tax evasion because the unpaid balance would legally become income and be taxable as soon as the mortgage was defaulted upon. Again this is tax evasion. Do NOT do it. Read this website carefully and make a tax plan. Remember the difference between tax planning and tax evasion is that a tax plan is when you reduce taxes by doing something that is legal. It is very easy to setup a tax plan to reduce your taxes by using an offshore corporation / offshore foundation and trusts. Read this website to learn more or call us for assistance. Using a bank loan to legally access offshore money

  43. The previous example utilizes a direct loan. In some countries, the loan may not be legal, if you own the offshore entity. This problem can be handled in two ways. The first option is to use a trust structure that forms a self-owned entity (call for details). The second option is to use a third party such as a bank to facilitate the loan. Most (if not all) countries allow you to borrow from any bank you want to. As discussed previously, a loan is not a taxable event. Banks in Panama will allow you to borrow up to 80% against a locked in investment like a CD. The offshore corporation can buy a CD, which you can borrow up to 80% of. The CD will be at a substantial interest rate. Generally, for most banks, the spread between the deposit interest rate and the loan interest rate is 2%. This solution is more costly because now you have to pay 2% interest on the money, but it allows you to access money offshore using a loan from a completely independent third party.

  44. Be very careful when doing any kind of tax planning. Consult your local tax professional to see what is legal in your country. The above ideas should only be used as food for thought. Your local tax professional will design a proper and legal tax plan for you. Do not call us for tax advice. We can only advise you of taxes payable in Panama. Taxes owed in other countries are not within our competency and we cannot advise you in such matters. We are, however, happy to assist you in your asset protection strategies.

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