Panama's offshore companies must keep accounting

[Caporaso and Partners]

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Law 624 of 2021 modifies the accounting systems of Panama’s offshore companies and real estate holdings.

Panama’s offshore companies are the ones that don’t carry out operations in Panama, but now the new Law 624 obligates them to keep accounting records. This law has taken investors and resident agents ”“ who receive an overload of work and additional expenses ”“ by surprise.

The approval of the projected Law 624 of 2021 by Panama’s National assembly, will increase controls over offshore companies’ accounting. This is another step toward humoring the demands of the Financial Action Task Force (FATF).

CPA Data Panama has just released a program that facilitate the books keeping for offshore entities.

Two years ago, the FATF included Panama in its “grey” list of countries with deficiencies in controlling money laundering. However, this international organization feels that the country hasn’t complied with the pact. And, to put more pressure, the FATF threatened to pass Panama onto the “blacklist”, which contains only Iran and North Korea.

Law 624 is among the legal steps adopted by the National assembly. It introduces important changes in several legislations. Said legislations are linked to international fiscal transparency, the prevention of money laundering and the Financing of Weapons of Mass Destruction Proliferation.

One of the modified laws is Law 52 of 2016, related to accounting records of companies in Panama. All legal persons who don’t carry out operations inside Panama, as well as those who only hold assets, will have to keep accounting records. Further, they will have to keep backup documentation.

Legal persons will have to offer information that shows the value of the assets that they hold, as well as the income deriving from said assets. This is in addition to liabilities linked to those assets. Meanwhile, legal persons that carry out trade outside of Panama will have to share a daily log and a longer one.

In operational terms, to get up to date with Law 624, it is required that low-cost offshore companies plan a budget. This is so they can create an accounting structure that is able to create informative output as demanded by the law.

 

[suzy]

Who is going to setup a company in Panama with the reputation it has?

 

[EuroKiss]

suzy said:
Who is going to setup a company in Panama with the reputation it has?
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Is that bad? I was thinking about a holding company there for crypto investing purposes and even thought about the Panama EMI license, what surprised me is that for EMI licensing they are way more strict and costly than Lithuania or Estonia.

 

[JohnnyDoe]

suzy said:
Who is going to setup a company in Panama with the reputation it has?
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The “reputation” it has is the consequence of defamation from a handful of idiot journalists and the bad practice of a single local law firm.

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[EuroKiss]

carlo39 said:
The “reputation” it has is the consequence of defamation from a handful of idiot journalists and the bad practice of a single local law firm.
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TBH I see a lot more value in Panama as a whole than UAE, unfortunely they are a peaceful country and are not buying a bunch of military equipment to please US and UK”¦otherwise, they wouldn’t be in any black list.

 

[aage]

Why would you see a lot more in Panama compared to the UAE ! nahhh, I don't think so. Much can be said, but the UAE is developing in the right direction in the yes of the rest of the world while Panama just stand still.

 

[EuroKiss]

Talking about life, nature, people, etc. Dubai is sand and oil, I could get a company there but never living in a microwave. UAE is also a military power involved in a - limited but we don’t know how it can grow- conflict and deep in area with a lot of issues.

 

[Golden Fleece]

EuroKiss said:
Talking about life, nature, people, etc.
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By contrast, Panama has over 1000 birds species identified in the country, which is more than the United States and Canada combined. Over time, birds have migrated there from both North and South America.

 

[bizman]

Birds, Sand and Oil .... I don't care when doing business 😀 I would anytime take 4 - 5 years in Dubai to grow my business and wealth.

However, Panama is not legit any longer in the eyes of governments around the globe while Dubai still is.

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[Sols]

bizman said:
However, Panama is not legit any longer in the eyes of governments around the globe while Dubai still is.
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Neither is exactly "legit" in the eyes of governments anymore: Financial crime watchdog adds UAE to 'grey' money laundering watch list

Panama is also on that same list, although is still has a worse reputation than UAE. Time will tell how swiftly and efficiently UAE gets off that list.

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This is the probably the answer to your question.

 

[EuroKiss]

Sols said:
Neither is exactly "legit" in the eyes of governments anymore: Financial crime watchdog adds UAE to 'grey' money laundering watch list

Panama is also on that same list, although is still has a worse reputation than UAE. Time will tell how swiftly and efficiently UAE gets off that list.
Click to expand...

UAE received Assad, welcomed all Russian sanctioned, ditched the purchase of F35 and just bought Chinese warplanes. I am suspecting this list can change fast”¦

 

[Golden Fleece]

Sols said:
Panama is also on that same list, although is still has a worse reputation than UAE.
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Banking reputation, perhaps. Panama has the healthiest economy in Latin America with a growing middle class, which provides great political stability. The Panama Canal is a cash cow, a new copper mine (one of the largest in the world) is slated to rival the Panama Canal for providing government revenue, and it has a diverse economy (Panama Canal, copper mining, tourism, banking, financial center, business hub, agriculture, etc.).

Panama has wisely used its government revenue to create jobs and to build infrastructure. It recently built another bridge over the Panama Canal so that the city can expand to the other side and ease congestion. It has plans to build a fourth bridge, costing about $1.5 billion. It now has a rapid transit system in its capital, which is slated for further expansion. Its wealthy families are all pro-business and they actively seek to draw business into the country with tax breaks and other incentives. Panama does almost everything right.

 

[Sols]

Golden Fleece said:
Banking reputation, perhaps.
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Exactly.

Golden Fleece said:
Panama has the healthiest economy in Latin America with a growing middle class, which provides great political stability. The Panama Canal is a cash cow, a new copper mine (one of the largest in the world) is slated to rival the Panama Canal for providing government revenue, and it has a diverse economy (Panama Canal, copper mining, tourism, banking, financial center, business hub, agriculture, etc.).

Panama has wisely used its government revenue to create jobs and to build infrastructure. It recently built another bridge over the Panama Canal so that the city can expand to the other side and ease congestion. It has plans to build a fourth bridge, costing about $1.5 billion. It now has a rapid transit system in its capital, which is slated for further expansion. Its wealthy families are all pro-business and they actively seek to draw business into the country with tax breaks and other incentives. Panama does almost everything right.
Click to expand...

This context gets lost in the eyes of tax authorities and financial institution that don't have exposure to Latin America.

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This is the probably the answer to your question.

 

[JackAlabama]

Golden Fleece said:
Banking reputation, perhaps. Panama has the healthiest economy in Latin America with a growing middle class, which provides great political stability. The Panama Canal is a cash cow, a new copper mine (one of the largest in the world) is slated to rival the Panama Canal for providing government revenue, and it has a diverse economy (Panama Canal, copper mining, tourism, banking, financial center, business hub, agriculture, etc.).

Panama has wisely used its government revenue to create jobs and to build infrastructure. It recently built another bridge over the Panama Canal so that the city can expand to the other side and ease congestion. It has plans to build a fourth bridge, costing about $1.5 billion. It now has a rapid transit system in its capital, which is slated for further expansion. Its wealthy families are all pro-business and they actively seek to draw business into the country with tax breaks and other incentives. Panama does almost everything right.
Click to expand...

They try maybe hard to reverse course of drowning, but I do not see any signs of success. They seem to make matters worse over the last short years by trying to overcomply out of the hole. I don't wanna be overly harsh but there are few negative points I came across there.

Covid theatre there was a horror show at its best, hard to be beaten in stupidity. Like only allowing men and women go outside on different weekdays lol.
They cancelled the friendly nations and now offer visa which is way to costly unless you become creative, which no serious investor should aim for which then again, leaves one only with a way overpriced entry ticket. But they get all the Chinese now, so no need to worry. 😉

Gov people are also highly unfriendly but at least the police in the touristy area does not demand protection dolares (if you are a gringo, it is different for unfortunate for others).

Banks in Panama are also pretty much unusable and the kyc crap there goes way overboard. These days even lawyers demand a re-kyc lol.

The city is also pretty boring with not much to do and it rains about 9m / year with the only great weather period being Dec-March. It is also very humid and the cost to live there is very high for the quality you get.
However traffic is rough and starts at 4pm and good luck there only getting from Casco Viejo into the banking area, which can easily take 1 hour or 2 (normal about 15mins).

Food is also not that great, except for Churrasco. Native food from other Latam places are oftentimes not that great and cost a lot. Forget about good exotic (in the context there Asian) food.
Security can also be an issue and one must ideally stay in the banking area or be prepared to adopt to third world living where 500$/month is already a lot.

One also must learn nativelevel Spanish in order to make stuff happen or be the forever gringo.

Nature is of course a big plus there and is very nice, also the people are overall pretty helpful (if you know how) and friendly when you know how to handle latin culture.
Internet also pretty fast and reliable at least in the city.

For my take it is ideal if you want an American lifestyle for cheaper, are retired and like slow pace in a gated community somewhere by the beach, speak Spanish like a native, have a good grasp for Latin American culture, do on the ground business ideally with agricultural products or work only online by using a USA LLC / US banking and no Panama entity.