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By: Staff at Panama Offshore Legal Services
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Elsie and her husband, Josef, have moved from Germany where they had an arts and crafts business for many years. Now they are thinking about starting a similar business in Panama. Panama offers many benefits for starting a business here. The four most important benefits are:
- U.S. Dollar: Panama has always had its Balboa currency pegged to the U.S. Dollar.
- Labor is cheap: The low cost of living keeps wages low. Aside from airports and maritime employees, the highest minimum wage is $2.89 an hour. Wages are only 25% of what they are in Europe.
- Panama’s strong economy: For more than a decade, Panama’s economy has been strong and growing, even during the global economic crisis in 2008. There are no signs of its economy slowing down. This has brought about a growing middle class with money to spend, which is good for business.
- Low taxes: If Elsie and Josef choose to run their local arts and crafts business as sole proprietors they will be happy to know that Panama has one of the lowest income tax structures in the world. Individual income tax doesn’t even begin until a person earns more than $11,000 USD a year. Individuals earning between $11,000 to $50,000 only pay a 15% rate. Those earning more than $50,000 pay 25%. Even if Josef and Elsie incorporate their business, the maximum corporate tax rate is 25%. Individuals enjoy several income tax deductions like $800 for married couples filing jointly. Family home mortgage can be deducted up to $15,000 a year. Panama corporations have the usual tax deductions as in the U.S. and Canada.
Hire a Panama business lawyer to advise you on the best ownership structure and tax deductions.