Year after year, as governments in the United States and other countries systematically eliminate the privacy of their citizens, both people and corporations search to find methods to secure their property, possessions and pertinent information.  Asset protection has become a relevant topic in both corporate and private sectors, especially as the judicial systems in the US and other countries have systematically weakened the trust structure.  While this weakening has negatively impacted trusts in the US, offshore trusts have become better options; the best country for offshore asset protection is Panama.

Panama Foundations

Panama implemented laws in 1995 to create the Panamanian foundation.  While this is a fairly new structure, it was patterned after the foundation structure of Liechtenstein, which has successfully existed for quite some time and has been a valuable asset protection vehicle.  In fact for those who are offshore, Panamanian foundation has several advantages over its Liechtenstein predecessor; it is much cheaper to establish a Panama foundation (approx. $3,000 for Panama as opposed to $10,000 or more for Liechtenstein), it is cheaper to maintain a Panama foundation and it offers more flexibility while protecting the assets of the holder.

To understand the idea and benefits of the foundation structure, it is important to first understand the difference between a trust and a corporation.  Most people create corporations as a vehicle to reduce tax liabilities and protect their assets from lawsuits or claims against their estate.  The corporate entity is used worldwide to protect its assets and liabilities separate from the personal wealth of the owner.  The key point is that the corporation’s assets and liabilities are separate and distinct from those of the shareholders.  Conversely, trusts are typical in Common Law countries and used as a haven in estate planning.  The common interpretation of trusts is that they are actually, in the eyes of the court, unique individuals and have rights under the law.  Because of the legal interpretation of trusts, they offer little protection for those who hold them.

This highlights another important fact; English speaking countries typically use Common Law and many non-English speaking countries traditionally use Civil Law.  Panama is a country that uses Civil Law and because of that, Panamanian foundations can offer better protection than trusts in Common Law countries, such as the US.  Because of these benefits, an offshore Panamanian foundation can be an excellent means of asset protection for many Americans.

Panama Corporations

Panama has become an ideal foreign base country for investors, financiers and businessmen to conduct worldwide operations and transactions.  Panama taxes are levied according to the territoriality principle; in other words, it does not tax foreign-source income, disregarding the citizenship of the taxpayer.  In addition, dividends are not included as income subject to tax.  Due to its legal structure, geographical position, political stability and characteristics of its economy, Panama has become a very important tax haven; perhaps one of the most important in the world.  Panama has excellent international transportation and communication systems and the United States dollar has been the currency of legal tender for more than one hundred years.

Panama has taken numerous steps to improve its economy and encourage foreign investment.  In addition to Panama foundations, most Panamanian and foreign investors choose to form corporations. There are no exchange regulations, currency problems or reporting requirements and there are no imposed limits on monetary transfers to and from the country.

Some of the benefits of a Panama Corporation:

• •   No reporting requirements. 
• •   It is possible to keep a business under direct control while maintaining anonymity.  Names of beneficial owners are not publicly available.
• •   Once it is registered, it is not required to file any changes to ownership schedule.
• •   It is not required to maintain a legal address.
• •   There are no citizenship or residency requirements or restrictions with respect to owners, directors and officers.
• •   Stockholders' and directors' meetings may be held anywhere in the world.
• •   Shares of the corporation may be issued as anonymous paper shares.  This is the ultimate protection of the corporation owner's identity and creates total privacy. 
• •   Funds and accumulated offshore profits can be deposited or invested in any country in the world without becoming subject to taxation in Panama.
• •   One person might hold all three positions of a President, Corporate Secretary and Treasurer. 

Other common advantages of Panama Corporations:

• •   Complete financial privacy
• •   Total asset Protection 
• •   Income Tax Reduction
• •   No inheritance, succession or gift taxes
• •   A hedge against inflation
• •   Reduction in legal liabilities in divorce or litigation
• •   Reduction in operating expenses
• •   Freedom from currency exchange control
• •   Information about owners and directors is not publicly available
• •   Easy access to North American and European capital markets
• •   No international trade tariffs
• •   No annual tax return requirements for all foreign-derived income
• •   No import/export quantity limitations
• •   No costly bureaucracy

Combining a Panama Foundation and a Panama Corporation

One limitation of a Panama foundation is that it legally cannot do business.  A foundation, however, can own companies that do perform business transactions.  By having a Panama foundation that owns a Panama corporation, this is not a problem.  The corporation can be used for conducting business as directed by its ownership, the foundation.  Since both corporations and foundations are basically anonymous, this allows the same protection for those in charge.  No other country offers such a high level of identity protection.

In addition, Panama’s legal and banking communities offer ultimate identity protection as well.  Using a Panama-based legal company for forming foundations and corporations ensures that the information convey to the attorney is protected by strict attorney-client confidentiality laws.  The same is true with Panama banks were identity protection is one of the most attractive benefits available.

Conclusion

Through a series of well-planned initiatives, Panama has become one the world leaders in the areas of asset and identity protection.  When combining Panama foundations, corporations, legal support and banking, foreign individuals and companies can find the protection that has been eliminated from many other countries.