Updates

The law of Foreign Account Tax Compliance Act (FATCA), it is a law american and Its purpose prevent the tax evasion of the American taxpayers through of information Exchange with financial institutions worldwide.

 

What is FATCA?

It is the law called Foreign Account Tax Compliance Act. ( FATCA. Issued in March 2010, with the objective of identifying and obtaining information about citizens, residents and taxpayers of the United States, whoever has money or other financial assets outside the United States.

 

 

When does it come into effect in Panama?

The main changes established in the norm come into effect on July 1, 2014. There being a delay in the signing of the IGA treaties while negotiating to eliminate a series of demands imposed by the United States as to exclude some entities from the financial sector.

 

Who are considered U.S. Person for compliance with FATCA?

American citizens (by birth or naturalization), tax residents (those who have Green Card residence cards meet the requirement of substantial presence greater than 183 days in the last 3 years). Likewise, companies incorporated in the United States, or in accordance with the legislation of the United States, and companies with at least one shareholder.

 

What are the main obligations of FATCA for financial institutions?

a- Identify US clients (U.S. Person) that comply with the indications and other conditions established by FATCA.

b- Report the information of the financial accounts of the clients that are considered US persons (U.S. Person), according to the FATCA regulations.

c- Withhold 30% of the income received from the US source, as a tax to customers who do not provide the required information

The incorporation of a S.A. corporation furthermore as being a quick and uncomplicated process, it just requires a minimum capital of $ 10,000.00 USD, which is signed, but it is not paid. In relation with shareholders, this figure seeks to protect his identity, since the shares may be issued in bearer or registered form, with or without par value and without restriction on the amount.

The S.A. Corporation is a form of capitalist organization type widely used by those who wish to formally engage an economic activity. All capital is divided into shares, which represent the participation of every partner in the company.

S.A.’s uses
A S.A. Corporation can be formed in order to perform commercial operations, while always pursuing profit Between the S.A.’s applications are:

• To engage in any lawful business.
• Owning property of any kind.
• Enter into contracts of all kinds.
• Be holders of bank accounts, trusts, etc..
• Take or give money on loans

  

Panamenian S.A.’s Advantages
The address of the company can be anywhere in the world, allowing it to maintain its accounts in the location of their choice. Annual or regular meetings of the Assembly or the Board are not required, also, the directors and officers can be natural or legal persons and don’t need to be shareholders, residents, citizens, or be domiciled in the Republic of Panama. Incomes from foreign operations are not considered income from Panamanian sources and, therefore, are not taxable under our tax law. In light of the foregoing, in Panama, the income tax is levied only on the net taxable income generated by the operations performed within the territory of the Republic of Panama. The duration of the company may be perpetual; however, a S.A. company may have a fixed term and may be dissolved at any time. Panama official currency is US Dollar.

Private Interest Fundations
The F.I.P. is an Asset Protection novel instrument, given that they are acts by which a person donates an asset to the achievement of the objectives previously established in the foundation charter by the Board of Governors for the benefit of the Beneficiaries. The founders, the protectors and board members of the foundation may be beneficiaries of the foundation. In Private Interest Foundations, there’s not attachment or confiscation of personal property

Uses of P. I. F.
Useful Foundations uses are:

• Protecting the family assets.
• With scientific, philanthropic, religious, humanitarian purposes.
• As sophisticated and efficient substitute will or last will.
• As a tool for receiving royalties.
• To hold bank accounts anywhere in the world

  

Benefits of a Panamenian P. I. F.
Simple procedures, administration and management. Tax exemption and statements in the Republic of Panama, including without limitation, income tax, tax on capital. No legal requirement to disclose the name of the beneficiary or real protector of the foundation, keeping in confidentiality and anonymity integrators. No maximum in terms of authorized capital. The capital is subscribed but is not paid. There is no limitation as regards perpetuities, accumulation of capital and other restrictions required in similar structures in other jurisdictions, such as the trust fund. Is considered a more flexible instrument that trustfounds, legal structures with certain similarities.

Recommendation
Both structures can be used individually or in assembly depending on your interests and goals, either, to develop economic activities or the protection of its assets. In any case, concerned about providing the best option, we offer our expertise and commitment to your questions on the subject.

In every circumstance of life, on- time payments of our duties, to companies and individuals, brings benefits and leaving them behind, negative consequences. It’s crucial to have a consistent track of our bills, being this the best way to achieve our companies’ goals

Which is our suggestion?
We highly recommend to our clients to pay in the first month of every year, in order to purchase the certificates of good standing, and so provide to you additional comfort and excellence in our work, tailored to your needs, from the smallest detail to overcome your expectations

What it’s a Certificate of Good Standing?
A certificate of good standing, it’s a document provided by The Ministry of Economy and Finance (known in Spanish as MEF) which is used to clarify on the fact that, a natural or legal person, doesn’t have any tax obligation, due to unpaid balances for taxes, including income tax, flat rate of annual fees, providing services, education insurance and employee-employer contributions and occupational hazards. The certificate of good standing will be granted, only to natural or legal persons who have fully met the obligations related to the provisions governing taxes

Why I need it?
The importance of the certificate of good standing, is it compulsoriness for contracts’ conclusions, in order to being effectives, and the ability to perform procedures in the different public institutions No Certificate will be issued when the contributor is in default with the National Treasure on the payment of any tax withheld

The inconvenience of not having a Certificate of Good Standing
When you don’t have the certificate of good standing your company will be facing difficulties as:

• The impossibility to perform transactions towards the State, like offering, hiring, selling, charging the services.
• Would generate additional late payment rate and collection costs.
• It won’t be authorized the expedition of any administrative acts, related to credit’s recognition
• Would remain in the negative report

What is a SEM?

 

A Regional Headquarters is an office that has management control in the region and from Panama, provides services to its Head Office, Subsidiary or Subsidiary in other countries.

These may operate as a foreign company registered in Panama or as a Panamanian company owned by the transnational company.

 

Why SEM?

 

The SEM establish several fiscal, migratory and labor incentives, both for the company with the Multinational Company Headquarters License and for the foreign personnel that work in it.

 

Benefits offered by SEM companies:

 

• Tax Benefits: Exemption from payment of income tax, personal property transfer tax and service provision, legal stability regime, exemption from income tax when their salaries come from a foreign source.

 

• Migratory Benefits: Grant visas specifically for foreign workers that the SEM contracts. Among them: Visa of Permanent Personnel of Sem, Visa of Dependent of Permanent Personnel of SEM, Visa of Temporary Personnel of SEM, Definitive Residence.

 

 

• Labor Benefits: The SEM may have the necessary number of trusted personnel and executives of senior management to perform their operations in Panama.

 

What activities can the SEM carry out to its own business group?

 

• Management and / or administration for operations in a specific geographical area.

• Logistics and / or storage of components.

• Technical assistance to companies in the business group or to customers who have purchased a product or service from the company.

• The accounting of the business group.

• Preparation of plans that are part of designs and / or constructions, typical of the business activity of the parent company or of any of its subsidiaries.

• Among others.

 

 

New regulations for the SEM:

 

At present, there is a project that modifies Law 41 of 2007, which creates a special regime for the establishment and operations of Multinational Centers.

 

The initiative seeks to update the standards in order to introduce new requirements to obtain an SEM license.

 

In the new requirements to obtain a SEM license, you must have a minimum of five full-time permanent employees and incur a minimum of annual operating expenses in Panama, which may be less than $ 500,000.00.

 

In the new bill, no changes are made in labor matters, that is, it does not affect the more than 60 professions reserved only for Panamanians, nor against the percentage allowed by law for the hiring of foreigners.

Diplomatic relations between Panama and Mainland China.

 

 

Panama, maintained diplomatic relations with China since 1911. Although in 1949, communism in mainland China and the withdrawal of the government of Taiwan were victorious, the Panamanian government decided to maintain diplomatic relations with China due to its positioning.

At present, in mid-2017, the bilateral relations between both countries are announced and they focus especially on the mutual cooperation of commercial relations.

China has announced several important projects that its companies will carry out in Panama, one of which will be the construction of a new recreational cruise port by the China Harbor Engineering Company LTD.

 

What are the concrete projects?

 

• Establishment of embassies in both countries, and the flexibilization of Stamped Authorized Visas for Chinese citizens.

• Maritime Cooperation Agreement between both countries.

 

What are the pending projects?

 

• Negotiations of the Free Trade Agreement (FTA), which will seek benefits for both countries

• The feasibility study for the Panama-Chiriqui train, developed by the company China Railway Corp., jointly by Panamanian companies, is under development.

• Establishment of several bank branches, including the Industrial and Commercial Bank of China, which plans the installation of its regional headquarters in Panama. This being the largest bank in China and the world for its stock market capitalization.

 

What are the migratory alternatives for the Chinese in Panama?

 

• Apply to the Macro-Investor visa. This visa grants the right of indefinite permanence or "residence" in the Panamanian territory. It will be applied through an investment with own capital to establish a company or activity through the constitution of a Public Limited Company.

• Visa by Decree. There is a visa by decree for those foreigners who have one year in the country, and may apply as long as there is a person who assumes the commitment and declares as RESPONSIBLE for the person who applies or a family group.

• Marrakesh agreement. It consists of the contract that is made by a private company to a foreign staff to provide a labor service. That worker will be granted a temporary residence permit.

Blockchain Technology and the connection with Smart Contracts

According with the Executive Director of the Tapscott Group, it is true that with the first generation of the digital revolution we were offered the internet of information. But with the second generation, promoted by blockchain technology we’ve being introduced to the Internet of assets; a new platform aimed to rearrange the business world and transform the old order of business.

It is presumed that blockchain is known as a supporting actor in the bitcoin revolution, considering that the technology or the system for encoding information is beneath the virtual currency.

What is the blockchain technology?

The block chain technology can be easily defined as the public and devolved accounting book design to record transactions in a safe environment. Also, it could be explained as the database used to record transactions, replicated on specific network.

Which is blockchain technology task?

In any transaction system it is mandatory an accounting book which provide the account balance of all the parties in the transaction. Traditionally these books are kept closed and restricted to public access, which is why are necessary the “trusted third parties”, such as banks, fiduciary and accounting institutions, to start manage and approve the transactions.

It is an open code and free computer system available worldwide, which look the withdraw of the already known” trusted third parties” in case an specific network share an accounting book online.

Is consider safe the blockchain technology?

The blockchain technology is safer than the current transaction networks. Because, even though the accounting book and the transactions are naturally public, the people involved in the blockchain preserve their anonymity, through encrypted public and private keys. On the other hand, considering that each validation point in the web has an updated record of the accounting book and to shift the transactions in the blockchain a professional hacker must hack at least be fifty one percent (51%) of the individual validation points worldwide in a given time.

What is the connection between block chain and Smart Contracts?

A simple transaction may not be uniquely and effectively in a blockchain, terms and conditions of a particular agreement can be part of the already mentioned blockchain, contracts like mortgages, employment and insurance are few examples of possible smart contracts. Smart contracts in a blockchain involves the terms of a contract and even the immediate execution through automated cash flows. Because of this the potential of the blockchain relies in Smart Contracts considering the execution of agreements and transactions in a trusty way without disclosing restricted information between parties and the already mention “trusted third parties”.

 

What are Smart Contracts?

A Smart Contract can be elaborated by people and/or legal entities, also by machines or programs that work autonomously; those are valid, without rely upon authorities considering de nature of the source. A Smart Contract is a visible code for all and it cannot be change when it exists in the blockchain technology, which gives it a decentralized, immutable and transparent character.

Which are the advantages and disadvantages contemplated on the Smart Contracts?

The advantages of smart contracts are:

• Autonomyàconsidering there is no need to look for a “trusted third parties” such as a lawyer or a notary for the cost of stay.

• Security and trustàthe blockchain is able to protect the information in an encrypted network that can be consulted anywhere in the world, pointing out speed and security.

The disadvantages of Smart Contracts are the technologies on which it is based:

• The Internet of Things (IOT)à allows the establishment with real assets but still exist a gap in safety area.

• Blockchainà it is safe but immutable considering the when terms and conditions are agreed, it cannot be changed, which is and adverse aspect for a contract.

 

What is Fintech?

The word Fintech results from the union of terms Finance and technology, that is to say Finance and Technology bring up together all the financial services companies that use cutting-edge technology and be able to offer innovative products and services.

What is it that Fintech companies do?

They are engaged to intermediate in the financial world in many aspects, from money transfers, loans, purchase to financial and investments advice like a brokers do.

What is PanaFintech main goal?

Promote the revitalization of the so-called Fintech ecosystem and financial innovation, whereof banks are undoubtedly the cornerstone and in the same way keeping the ideal of exposing the arguments by which to take advantage of financial innovation, Fintech is the only option that will guarantee long-term sustainability of Panamanian financial center because it will promote competition provisioning financial services and also provide better financial services to customers.

Do you know about Law Project No. 629?

The written proposal was submitted by De La Guardia to the national council past April, In order to improve financial industry competitiveness. Nevertheless, the proposal face some inconveniences but the must concerning is the permanent disagreements between community members (banks, insurance companies and Fintech community). The Fintech community has stated some objection to the written proposal. Besides our Government does not have the requested majority in the National Council, and this could interrupt the debate progress even not reaching consensus.