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Learn the Keys to Successful Investing in Panama

Panama is a country in much better shape financially than its Central American neighbors to the north, or Colombia to the south. Annual inflation has averaged 1.4% for the past 30 years, and during the 1990s, it barely exceeded 1% per year. Then there is the wealth represented by the Panama Canal. Its operations in 2001, according to the Panama Canal Authority, generated $630.8 million in total revenues, much of which was plowed back into constant maintenance. But the move that could turn the current flow of 14,000 annual ship transits into a flood is the widening of the canal and the building of bigger locks.

There are also thousands of acres of land from former U.S. military installations--prized real estate with an estimated value of $4 billion. Admittedly, its distribution and privatization has been slow and marked by charges of corruption, producing few of the general benefits promised or anticipated.

How to Invest in Panama and Build a Tax-Advantaged Enterprise in a Country Poised to Boom

An Incredible Panamanian Investment: Spend Just $50,000 Building a Guest House in the Hills of Boquete and Reap Enormous Tax Benefits

In 1994, Panama passed Law No. 8--the most modern and comprehensive law for the promotion of tourism investment in Latin America and the Caribbean.

Since the law was enacted, dozens of the world's largest hotel chains have swept in to take advantage of it, including Marriott, Radisson, Holiday Inn, Sheraton, and Intercontinental. But Panama's attractive tourism investment laws are not just for big business. Anyone willing to invest as little as $50,000 in a tourism project can take advantage of the enormous tax benefits and financial incentives available here.

You could build a guesthouse in the hills of Boquete…start a charter-dive operation on Bocas del Toro, or a whitewater rafting outfit in Chiriqui Viejo…open a surfboard rental shop at Playa Santa Catalina…trek tour groups through the wild and uncharted Darien Gap…open a marina, a hotel, or a nightspot along the beaches of the Pacific Coast…launch a horse-drawn carriage service on Isla Taboga, the "Island of Flowers," which has no cars…take tour groups through the historical ruins of Panama's colonial era…open a riverside restaurant in Boquete…the opportunities are endless…

With a minimum investment of $50,000 anywhere in Panama's interior you can receive:
* A 20-year exemption of any import taxes due on materials, furniture, equipment, and vehicles
* A 20-year exemption on real estate taxes for all assets of the enterprise
* An exemption from any tax levied for the use of airports and piers
* Accelerated depreciation for real estate assets of 10% per year.

And if you start up a tourism-related business in one of the specially designated tourist zones, you can also receive a 15-year exemption on your income taxes.

The Real Estate Investment Incentives

With its Law No. 9 of Aug. 27, 1997, the Panamanian government created great incentives for property developers interested in Panama City's Casco Viejo (the Old City).

For instance, any income you make from the sale or rental of your property is exempted from income tax for 10 years. You can also deduct 100% of the costs of the renovation from your income tax. Plus, you won't have to pay any duties on any materials you import to complete the renovation.

You won't have to pay any property taxes for 30 years. Nor will you have to pay any transfer taxes--providing the property costs $50,000 or more.

Signs of private investment prompted by these incentives are everywhere. You don't walk far without passing a restored building or one in process of renovation. Scaffolding seems to be on every corner. There's an almost "land rush" feel to condominium development in the area.