The Republic of Panama, with an area of approximately 29,157 sq miles, is located between Costa Rica and Colombia, is the southernmost country in Central America and forms the narrowest and lowest portion of the isthmus that links North and South America. The capital is Panama City where more than half of the country’s population reside.
There are two important dates in Panama’s history. Panama was settled by the Spanish in the 16th century and it later broke with Spain on 28th November, 1821. It then joined the union of the Republic of Gran Colombia, which dissolved in 1831 leaving Panama and Nueva Granada still joined. Nueva Granada later became the Republic of Colombia, and with the backing of the United States, Panama seceded from Colombia on 3rd November, 1903. Panamanians do not consider themselves former Colombians, and as such, they celebrate their independence from Spain on 28th November, 1821 and their separation from Colombia on 3rd November, 1903.
With the backing of the US and subsequent separation from Colombia, Panama was able to build the Panama Canal between 1904 and 1914. Total transfer of the canal from the US to Panama culminated on 31st December, 1999. Up to today’s date, revenue from canal tolls continues to represent a significant portion of Panama’s GDP giving Panama the second largest economy in Central America.
Panama’s domestic and international telecommunications facilities are well developed and include mobile, fixed line and internet services. Telecommunication facilities are available throughout the country.
Panama’s location, in the center of the Americas, makes it ideal for visitors wishing to travel to the country. Panama’s international airports accommodate direct flights from any city in North or South America. Additionally, there are easy connections for visitors from Europe, Asia and the rest of the world.
Airports in Panama include Tocumen International, Enrique Malek International, Rubén Cantú Airport, Captain Alonso Valderrama Airport, Penonomé Airport and Marcos A. Gelaber Airport to name a few.
The population of Panama is estimated to be 3,608,431 as of 2014. Most of the population is of Mestizo origins, descendants of Indian, African and Spanish heritages, although there is great ethnic diversity. As such, the population consists 70% Mestizo (mixed Amerindian and white), 14% Amerindian and mixed (West Indian), 10% white and 6% Amerindian. More than half of the population lives in the Panama City-Colon metropolitan corridor, which spans several cities. The country’s urban population surpasses the 70% mark, making Panama’s population the most urbanized in Central America.
Spanish is the official and spoken language. English is also spoken widely in urban areas and is used daily in commerce and international trade.
Government and Legal System
Panama’s legal system is that of a civil law system with judicial review of legislative acts in the Supreme Court of Justice.
The Executive Branch of the government consists of the President as the Chief of State along with the Vice President; the Head of Government, a role also assumed by the President; and the Cabinet appointed by the President. The President and Vice President are elected by popular vote for five-year terms.
The Legislative Branch is a unicameral National Assembly comprised of 71 seats filled by members elected by popular vote to serve five-year terms.
Panama’s Judicial Branch has the Supreme Court of Justice as its highest court. This court consists of 9 magistrates and 9 alternates and is divided into civil, criminal, administrative and general business chambers. Subordinate courts include the appellate courts, Labor Supreme Courts; Court of Audit; circuit courts; municipal courts; electoral, family, maritime and adolescent courts.
International Financial Services Industry
Panama is well known as one of the most secure and most developed international business center. It has the most modern and successful international banking center in Latin America. Its new banking law compliments the country’s already established banking center and meets the standards of leading financial centers around the world for transparency and regulation. In the financial industry, diverse investment opportunities exist in banking, investment capital financing, insurance and reinsurance.
The type of company used for international holding, trade and investment, in substance, is the equivalent of an International Business Company (IBC). Generally, corporations are incorporated under the Corporation Statute Law No. 32 of the 1927 Commercial Code. Limited Liability Companies and Limited Partnerships are also used.
Principal corporate legislation include Corporation Law No. 32 of 1927, Decree No. 130 of 1948, Decree No. 147 of 1996, Law No. 32 of 1978, Decree Law No. 5 of 1997 and Executive Decree 296 of 1997. Panama non-resident companies are a popular choice because of their administrative ease, privacy features and tax exempt status.
Some main uses of a Panama non-resident corporation include:
- the holding / ownership of investments and assets, such as real estate or shares or other property
- commercial transactions and international trading operations
- asset protection vehicles
- consultancy and personal service companies
The Panama non-resident corporation has been in existence since the inception of the law in 1927; however, Panama introduced in 2009 the offshore Limited Liability Company (LLC). The Panama LLC comes to complement international financial instruments offered by the jurisdiction. These also include the IBC previously mentioned, Public Limited Corporations, Private Interest Foundations, Trust and Banking Operations.
Panama Corporation Law (201.7 KiB)