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What are Trust
According to article 694 of the Fiscal Code, the income earned
by any person, either an individual or corporation, from sources
outside Panama, is exempt from taxes. Legislation expressly
provides that the following transactions are not subject to
income tax in Panama: - Invoicing to a company abroad (from
an office in Panama), the sale of goods for an amount greater
than that at which said goods were invoiced to the office
located in Panama, provided those goods are handled exclusively
abroad.
- Dividends from income earned by a company when produced
or earned abroad.
- Directing or managing (from an office in Panama) operations
and transactions that are executed, completed or take effect
abroad.
Features of the Panamanian trust are:
- Trust is created in a private document, with the only formality
that signature of settlor and trustee must be authenticated
by a Panamanian Notary, guaranteeing its confidentiality.
It is not necessary that the trust be executed in a public
deed or be registered in any public register unless real property
located in Panama is given in trust.
- Article 37 of Law No.1 expressly guarantees confidentiality
for its execution. It provides that trustee, representatives,
employees or any other person involved in its execution must
uphold the secrecy of the operation. Violation of this provision
is penalized with imprisonment of up to six (6) months and
a fine of up to US$50,000.
- Trust is not perpetual unless so stated by settlor. Trust
should have its duration expressly stated. It may also be
revocable or terminated before its expiration if it is so
provided by the settlor in the trust agreement.
- Trust can contain any lawful clause as settlor may need.
According to articles 5 and 9 of Law No. 1, trust may be created
for any purpose not contrary to the law or public policy.
- Both settlor and trustee and/or beneficiary may be a corporation.
They do not need to be individuals.
- Tax principles: The Law expressly states that the acts
of executing, modifying and terminating a trust as well as
the transfer, conveyance or encumbrance of trust funds and
the income or interest produced by assets and properties given
in trust are exempt from all taxes, contributions, assessments
or encumbrances, provided trust involves the following assets:
1. Interest paid by banks located in Panama to their customers
for savings accounts and time deposits kept in Panama;
2. Salary/fees earned by Directors, Officers and Executives
of Panamanian corporations located abroad.
These benefits have made of Panama the tax haven that it
is today and the reason why others from the region have tried
to imitate us.
Panama Legal Consultants
- Panama Law Firm -
For more information please contact us:
info@panamalegalconsultants.com
Tel: (507) 6714-9326
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