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Taxation of Panama Foundation

The Panama Tax Laws are based on the territoral principle, in other words any income that is sourced from abroad is tax exempt. There are also many types in income in Panama that are locally sourced, but not taxed, for example bank interest. An added layer of benefit is that no tax filing requirement exist and nor book keeping requirement for entirely offshore corporations and foundations. Many local investments will simply be subject to a withholding on dividend payments and such.

In summary, it is possible to completely shelter unlimited amount of money in a Panamanian Private Interest Foundation for only 300 dollars per year after initial setup costs. All capital gains, dividends, interest (including Panama sourced) and completely excempt from taxation. Of course any form of death tax is inherently avoided and hence at the 0 % level as well.

All transfers to and from Foundations are 100 % tax exempt if the following conditions are met:

- The assets are located abroad.
- Any deposits that are not from a Panamanian source or is otherwise not taxable in Panama.
- All forms of securities that were issued by non-Panamanian entities.

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