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Panama – City of Knowledge offers no taxes for research and high tech corporations

November 28, 2012 Comments off

Panama has established City of Knowledge in order to attract research and high tech corporations. This includes internet commerce, bio and nano tech corporations. Only 15 minutes drive from down town Panama City it also offer great life style possibilities.

 

Panama City, Republic of Panama     Picture courtesy of Photoatlas

City of Knowledge

Being part of the City of Knowledge implies a commitment to innovation and sustainable development, but it also involves a broad range of benefits designed to make your operations more effective.

Here are some of the direct benefits for affiliates and users recognized by the City of Knowledge:

  1. Tax and immigration benefits through affiliation to the City of Knowledge Foundation project.
  2. Telecommunications, IT and educational technology services, including an intelligent high-tech center with the required capacity for teleconferences, distance learning, fast internet connections, and other services.
  1. A Point of Presence -POP- with direct access to the land portion of 5 International Fiber Optic cables that go across Panama (PAC, SAC, ARCOS, Pan-American and MAYA).
  2. Infrastructure and buildings in good maintenance condition, easily adaptable to various uses.
  3. Technical, administrative and consulting services. Constant electricity flow (99.9%) with redundant power supply from the Panama Canal thermal plant located 300 m (328 yards) away in the Miraflores locks.
  4. Complementary accommodation and catering service.
  5. Sports and recreation facilities.
  6. Access to the major higher learning and scientific research centers in the country.
  7. Access to the Panama Canal Basin, a living laboratory for scientific research and technological innovation on advanced tropical ecosystem management.
  8. Central location: next to the Panama Canal, 15 minutes from downtown Panama City, 5 minutes from Amador resort and 45 minutes from Colón city, located on the Atlantic entrance to the Panama Canal.

Here are the incentives for those participating in the project under Executive Order # 6 of February 10, 1998, which states the basis for the Panamanian State’s support to the City of Knowledge Foundation.

Tax Benefits

  1. Exemption from all taxes, levies, fees or import duties on machines, equipment, furniture, vehicles, appliances or materials necessary for the operation of companies accepted into the City of Knowledge Technopark.
  2. Exemption from Service and Personal Tangible Asset Transfer Tax (ITBMS) on machinery, equipment, vehicles, appliances and materials purchased or necessary for the operation of companies accepted into the City of Knowledge Technopark.
  3. Exemption from any taxes, fees, duties or levies on overseas money remittance when such money remittance or transfer is done for the purposes of companies accepted into the City of Knowledge Technopark.
  4. Innovating companies producing, assembling or processing high-tech goods or rendering similar services for sale in the local or international market at the International Technopark of Panama (ITP) will have the following benefits:
    1. Their activities, operations, transactions, procedures and transfers of personal and real property, purchase and import of equipment and construction material, raw materials, machinery, tools, accessories and supplies will be a hundred percent free of direct taxes, levies, fees, duties and national taxes. This includes income tax exemption for companies.
    2. Their capital will be free from direct national taxes, including patent or license tax.

Immigration Benefits

The State will grant special visas to foreign staff entering the country to contribute to the development of the City of Knowledge project. For further information, see the Immigration and Naturalization Bureau website.

Labor Benefits

Companies affiliated to the City of Knowledge are authorized to hire any international staff necessary for their operation.

taxmoneyhavens.com

Barbados to tap Latin American trade opportunites

November 9, 2011 Comments off

Barbados Minister of Tourism, Richard Sealy has welcomed the ‘highly productive’ meetings held with officials and business leaders in Panama aimed at enhancing bilateral trade and boosting tourism receipts for both countries.

Both countries committed during the five-day trip to enhance bilateral trade and look at opportunities for exporters in Barbados to tap the Latin American market using existing infrastructure and trade arrangements, including through Panama’s Colon Free Trade Zone.

The Colón Free Trade Zone is situated at the Atlantic gateway to the Panama Canal and acts as a tax-free re-export hub. More than 2,500 companies are established there, shipping more than USD 16bn of goods annually.

Representatives of the Chambers of Commerce from the Organisation of Eastern Caribbean States have praised the initiative, stating that the Caribbean needs “to work together to realise tangible trade benefits and the mission was a good start”. They urged Caribbean territories to work together on international trade issues rather than competing with one another.

Talks were also held for the first time with Copa Airlines on establishing air links between Barbados and Panama.

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Private Foundations

May 12, 2010 Comments off

We can help you to establish a Private Foundation. Essentially, Private Foundations act as a holding entity for assets transferred to them.  The transfer is usually in the form of a gift, by a person referred to as the donor and in some jurisdictions, the term “settlor” is used.

The Private Foundation have traditionally been used over the centuries for benevolent or charitable purposes, often being associated with pieces of art or other valuable collections. The Private Foundation works well for individuals desiring a straight forward asset holding/protection structure designed to provide beneficiaries with an asset-derived income.

Foundations cannot be used for trading activities or for conducting financial service business activities.  However, the buying and selling of assets (real estate, shares in trading companies, investments etc.) is not considered a trading activity. Foundations can act as a shareholder but not a director or officer, in a trading entity like a corporation.

There is no gift tax to pay at the time a Foundation is established, and earnings generated by the Foundation are tax exempt. However, incomes paid by Foundations to its beneficiaries, once declared by beneficiaries, might be subject to local taxation at their place of domicile.

Because the Foundation’s assets are gifted, the donor receives no payment in return. The Foundation becomes the owner of the assets endowed to it and, as such, the entity has a separate legal personality. It is in this area that Foundations fundamentally differ from trusts, since trusts are not considered to be legal entities.  In the case of a trust, legal title of its assets is held in the name of the trustee.

In order for the Foundation to function, the assets need to have been endowed and placed at the disposal of the Foundation and its officers.  This endowment satisfies the tax inspector’s question “has the property ceased to be the asset of the tax-payer (donor)”. One of the documents required at the time of registration of a Foundation is a Certificate of Initial Assets signed by its officers. This declaration must confirm that assets of not less than US$ 10,000 in value have been endowed to the Foundation. Upon receipt of the Certificate of Initial Assets, the Registry will issue a ‘Certificate of Endorsement of Statement of Value of Initial Assets’.  The specific assets endowed at the time of registration need not be named and additional assets can be gifted at anytime, again without any public record of their value or their source.

Unlike trusts, once assets are placed in a Foundation, they cannot be withdrawn at will by the donor.  A statement relating to the endowed assets also needs to be included in the Memorandum of Endowment signed by the donor and submitted with the application to register. The Memorandum is not filed, but is returned to the Foundation attached to a Certificate of Endorsement of Documents issued. An ‘Extract of Particulars of the Memorandum of Endowment’, signed by the Secretary of the Foundation is filed. The names, addresses and specimen signatures of the appointed officers and the Secretary, and details of the address to be used for the service of documents to the donor are included in this Extract. The name of the donor does not appear in the Extract and, therefore, need not become public information. In addition, more than one donor is permissible, and there are no restrictions on residency or nationality of the donor.  However, a donor cannot act as an officer or be appointed as the Secretary of the Foundation, but can participate in its supervisory board, if one is appointed.  Moreover, the donor can be one of the beneficiaries.

Management responsibility of a Private Foundation sits with its officers who determine the distribution of income and capital in accordance with the donor’s instructions.

A minimum of three officers need to be appointed, and at least two officers must be physical persons. One of the officers can also act as the Secretary, and a corporate Secretary is permitted. Consent to Act declarations for each officer and the Secretary need to be submitted with the application to register the Foundation, and these are filed together with the Extract. As with the donor, there are no restrictions on residency or nationality for the officers and/or the Secretary. Officers can delegate their powers to one another. To assist in the management of a Foundation, the officers may decide to appoint a Supervisory Board comprised of at least three physical persons.  Private Foundation Law permits a donor to participate on the Supervisory Board.

The Supervisory Board must be established as a body that is independent of its officers and beneficiaries. The Board acts like the Protector of a trust. Similarly, auditors may also be appointed. The procedural rules for running a Foundation are set out in the Management Articles, a document that is very similar in scope to the bylaws of a corporation. The Articles are signed by the donor and submitted with the application to register the Foundation. Like the Memorandum, the Management Articles are not filed, but returned to the Foundation attached to a Certificate of Endorsement of Documents.

A typical function of a Private Foundation is to provide beneficiaries with an income derived from an asset(s) endowed to it from a donor(s). As has been outlined above, the donor provides guidelines as to how the Foundation is to be managed and also defines who the beneficiaries will be, what payments should be paid to the beneficiaries, and when payments should occur.

While the officers of the Foundation need to know the names of the beneficiaries, such information is not required to be filed. A donor can also provide further guidance to assist officers to manage the Foundation in the form of a Letter of Wishes and, from time to time, change the beneficiaries. The Letter of Wishes is an internal document and not, therefore, filed.

Once formed, a mandatory annual return for the Foundation, signed by the Secretary must be submitted.  The annual return must confirm that the information filed in the Extract remains correct and that proper accounts have been maintained.  Annual returns are not publicly filed.

The Private Foundation provides a perfect holding structure for emerging financial and asset empires, while distancing the donor from otherwise taxable events.  The Foundation permits income generated from assets held by the Foundation to be available to the donor and subsequently his heirs in accordance with the (changing) wishes of the donor/settlor.   At the same time, the Foundation keeps intact the wealth-generating activities of a family (shipping operation, hotels, property, licenses, royalties, manufacturing or service activities).

The above concept is based on Austrian law and also used in Liberian Private Foundations. Similar foundations are available other places like Panama and Mauritius.

Contact us if you are interested to set up a Private Foundation.

taxmoneyhavens.com

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