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The Republic of Panama has a land mass of approximately 76,900 sq km, is located between Costa Rica and Colombia, forms the narrowest and lowest portion of the isthmus that links North and South America. It is best known for the Panama Canal which joins the Caribbean Sea to the North Pacific Ocean and connects Central America to South America.
The population of Panama is approximately 3.3 million, about 52% of which reside in Panama City, consisting of mainly the Mestizos (70%) and a mix of West Indians, Caucasians and Indians. The dominant religion is Roman Catholicism.
Panama was a Spanish colony until 1821. In 1903, Panama broke an alliance with Colombia and became an independent republic.
There are three Branches of Government:
The Executive Branch of the Government is at present composed of a President and two vice-presidents, elected by majority vote, for a five-year term. The Ministers of State are appointed by the President subject to approval by the Legislative Assembly.
The Legislative Assembly is composed of legislators elected from the electoral districts for a five-year term.
The Judicial Branch of Government consists of Supreme Court of Justice, five Superios Courts and three Courts of Appeal. The Supreme Court of Justice is presided over by nine judges appointed for a ten-year term.
An autonomous Electoral Tribunal supervises voter registration and all citizens over the age of 18 are required to vote.
The Colon Free Zone is located on the Caribbean side of the Isthmus of Panama near the Atlantic entrance to the Panama Canal. This Free Trade Zone is the second largest in the world after Hong Kong. Operations and transactions taking place in the Free Trade Zone are subject to a special tax treatment whereby imports from other parts of the world and re-exports to other countries are exempted from any import or export taxes imposed by Panama. Income earned from re-exports is taxed at specially reduced rates. Panama has the world's largest shipping registry and a well-established Banking centre. Economic growth will be bolstered by the Panama Canal expansion which began in 2007 and is expected to complete in 2014-15 at a cost of US$5.3 billion. The project will more than double the Canal's present capacity enabling it to accommodate the modern super tankers that are becoming too large to transverse the existing transoceanic crossway. Without the expansion, it was anticipated that the Panama Canal would be forced to turn away approximately 37 per cent of the world's container ships by 2011. Other areas of economic activity are in agriculture, manufacturing, construction, transport, tourism and financial services.
Spanish is the official and spoken language. English is also spoken widely in urban areas and is used daily in commerce and international trade.
United States Dollar.
Based on Spanish Civil Law; with many Common Law influences, particularly regarding Company Law.
Law No 25 of 12th June 1995
The Foundation may be used for charitable or non charitable purposes or simply to benefit a person or class of persons. The Foundation may be revocable and may be created inter-vivos or mortis-causa.
The Foundation can be created by one or more natural persons or by a body corporate and is established upon the successful registration of the "foundation charter" before the Public Registry Office.
A private Instrument subscribed by the founder, an attorney in fact or trustee, whose signature must be authenticated by a Notary Public, is submitted together with the following information:
This is a public document. The charter may be in any language but will require a Spanish translation.
A Foundation must have Regulations which include:
The regulations may provide for or restrict amendments to the foundation instrument or the foundation regulations. The Foundation Regulations may be in any language.
This is not a public document.
A Foundation can run in perpetuity unlike a trust which has a limited life span.
The Founder(s) undertake to contribution or donate an amount not less than or equivalent to US $10,000 to establish the Foundation. The Foundation Capital may be increased by the founder or by the Council Members of the Foundation:
A Panamanian Foundation has all the powers of a separate legal entity including the ability to manage and own assets in its own name and arrange for its own funding.
The Foundation Charter, which is a public record, can be in any language but a Spanish translation will be required.
The Foundation must maintain a local registered agent which is a duly authorised lawyer or law firm with a physical presence in Panama.
The name of the Foundation must end with the word "Foundation" and cannot be identical or similar to a name that already exists. Certain words may not be used, such as: insurance, Assurance, Seguros, Bank, Banco, Trust, Trustee, Fideicomiso, Fiduciario and Bolsa de Valores, or any other word with similar meaning.
Names can be expressed in any language using the Latin alphabet, if the Registrar of Companies is in receipt of a Spanish translation and the name is not considered undesirable.
A Foundation is similar to a company in that it carries limited liability.
Provided that the contributions received by a Foundation and the income from such contributions originate outside that fiscal territory of the Republic of Panama, a Foundation shall pay no taxes, save for a US$300 Annual Franchise Tax.
Whilst there is no requirement to file audited financial statements with the authorities, it is important to note that a Foundation is required to keep financial records, which reflect the financial position of the Foundation. The Foundation books of account may be kept in Panama or abroad.
The Founder(s) is one or more persons, whether natural persons or bodies corporate, similar to a Settlor in a trust. The law prescribes that the assets may be donated by declaration so as to keep the founders name confidential.
Founders have rights and obligations where the Foundation Charter grants the Founder full power, the Founder shall have the right and power to adopt the Foundation Regulations, amend them, freely appoint and remove the Foundation Council, the Protector and the Beneficiaries, act as adviser, protector or beneficiary, revoke the creation of the Foundation or any transfer made to it, receive and demand Statements of Account and redomicile the foundation and/or dissolve it.
After the registration of the Foundation, the Founder shall acquire the obligation of the contributions he has undertaken.
The Foundation's assets constitute an estate separate from the Founder's personal/corporate assets.
A protector, (known in law as "supervisory bodies") may be an individual or body corporate. The protector can be the Founder or a beneficiary but in practice it is someone that the founder trusts. The responsibilities of the Protector are specified in the Foundation Charter, which include but are not limited to the supervision of the Foundation Council.
Council Members are appointed similar to a Trustee of a trust and may be a natural person or body corporate. A minimum number of three council members of any nationality above the age of minority are required, their names and addresses are part of the public records. Council members are bound to act within the scope of the foundation rules and have exposure unlimited liability if they engage in misconduct.
Law does not require the name of the beneficiaries to be revealed however the regulations should state the names and what percentage each beneficiary is entitled to. The foundation founder can be named as a beneficiary. The beneficiaries may be natural persons, bodies corporate, institutions or charities.
Panamanian Private Foundation Fact Sheet (PDF)
Panamanian Private Foundation Questionnaire (PDF)
Panamanian Private Foundation Order Form (PDF)
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