Beyond Panama Properties - The Tax Advantages to Starting a Business

We've been talking to lots of people lately about not only buying real estate in Panama, but also opening a business there. They may have already decided to build a home on one of the gorgeous Panama properties, but aren't aware of the major tax advantages they'd receive if they also started a business.

In order to encourage tourism, and ecotourism in particular, the government of Panama passed two landmark pieces of legislation. The first, Panama Law 8, was meant to give financial incentives to those willing to build tourist-related businesses in Panama. The law includes tax breaks on business real estate in Panama, on some income earned from tourism businesses and also includes long-term exemptions from taxes on imported materials.

There are many ways you could build a business around tourism -- a bed and breakfast, a boat rental firm or an eco-tour company are all possibilities. The rules for what is and isn't considered tourism under Law 8 can be complex, but, depending on what area you're considering starting a business in, it could bring substantial tax advantages.

The other piece of legislation that should be of interest to would-be business investors is Panama Law 9. Hoping to revive interest in the old city (Casco Viejo) district of Panama City, this law was passed to offer big tax incentives for developing property there.

Imagine retiring to Panama and then investing in commercial property in Casco Viejo. You could be allowed a ten-year moratorium on income tax from the rental or sale of that property. You might also be allowed to exempt renovation materials from import taxes. Best of all, you could deduct all of the costs of that renovation from your income taxes!

As you can see, Panama is very serious about developing a vibrant tourism and commercial real estate sector. Not only do they hope to attract foreign investors like you, they also hope to give their local entrepreneurs more reason to expand. This kind of advantageous legislation, aimed at building a stronger financial base, is one more reason Panama is fast becoming the location of choice for savvy investors.

And so, if you've already decided to purchase real estate in the Canal Zone, do your tax burden a favor and look into investing in business there, too. It's just one more reason moving to Panama could be one of the best decisions you ever make.