Ever since the Paradise and Panama Papers came out a few years ago, my world got a whole lot more interesting….
As you can see in this article by the ABC, I was interviewed for my involvement with companies and high net-worth individuals seeking out Panama as a tax haven. Let me draw your eye to one particular quote:
“Mr. Black told the ABC he was surprised to hear about the leak but was not worried because his offshore company was completely legal.”
In fact, when I was interviewed for this article, the ABC informed that I was the only name that was found to be completely clean. 100% legal. Totally above board.
The Panama Papers cast a light on the financial workings of the rich and famous, especially their preference for Panama as a tax haven. And if you’ve ever wondered yourself if Panama could offer you the kind of tax benefits that seem too good to be true, it could just be a reality for you.
But first…
In 2016, all anybody could talk about was the massive leak of millions of documents from an offshore law firm based in Panama. The tax haven was popular among the rich and famous, and the papers leaked named names. Big names. Like Russian president big.
Yes, even Vladimir Putin was named in the leak, documented billions of dollars sheltered in Panama to avoid paying tax. In fact, politicians from around the globe were named in the leak, many of whom faced repercussions and intense public scrutiny for their activities.
While articles in The Guardian might shed light on who was involved, the legality was suspect. And although Panama is the lead culprit, you probably didn’t know that other countries were involved like the British Virgin Islands, the Bahamas, Seychelles, and Samoa.
But why Panama?
Let’s get this out of the way first.
If you’re a resident of Australia, you won’t find much in Panama to help you minimize your tax bill. That’s just a fact that I can’t avoid. There are other options open to you such as a Hong Kong pension fund, but Panama wouldn’t be where I steer you.
But if you’re a non-resident of Australia, you’re in luck.
A non-resident (for tax purposes) requires that you meet strict conditions. One of the biggest factors for non-residency is where you have your permanent home. If it’s outside of Australia, that’s good. In that case, you would only be taxed on income that comes from Australia, not from international sources.
And this is where Panama steps in.
Let’s just cover some of the main reasons why Panama is the ideal tax haven for the rich and famous.
I’ve taken a few trips to Panama, and one thing that always struck me was how flexible they are. Even at Customs, I went to declare some of the items in my luggage and I was waved through without issue.
That flexibility even extends to the tax laws. Technically, Panamanians are required to pay 25% tax rates on their income, but that is considered virtually optional for Westerners who have a business in-country.
Panama tax laws keep foreigners protected as long as they meet certain requirements. They impose no capital gains, no estate taxes, no income taxes, and no corporate taxes for anything operating outside of their jurisdiction.
Panama exists as a tax haven because there is extensive legislation protecting businesses and investments operating in the country. And in order to attract more people to Panama to take advantage of those laws, President Ricardo Martinelli introduced the Friendly Nations Visa.
This new Visa allowed Western nations to secure Panama’s permanent residency much faster than before. The fast-track now exists for 50 nations including Canada, Sweden, the USA, and of course, Australia.
They love welcoming foreign money there, and the laws have been designed to help you do it. The requirements to meet permanent residency are ridiculously easy such as starting (or buying) a Panama corporation or being employed by a Panamanian corporation with a very minimal bank deposit.
Much like Switzerland, Panama’s privacy laws keep are very strict. Banking secrecy laws are so strongly maintained because Panama depends on foreign investments. They don’t even have their own currency. Well, not really. The Panama Balboa is permanently fixed to the US dollar at a 1:1 ratio.
There are very severe penalties in place for breaching confidentiality, meaning that your name and account are never shared with any other nations.
No capital gains, estate, income, or corporate taxes for businesses operating outside Panama. It also helps that Panama as a tax haven has no treaties or exchange laws with other nations.
The secure legal framework in Panama is designed to safeguard the financial and personal interests of investors. This framework includes robust protections for private property and stringent legal measures that ensure the confidentiality of financial transactions.
Additionally, Panama’s legal system provides a stable and predictable environment, which is essential for investors looking to avoid the risks associated with more volatile jurisdictions. This security and predictability make Panama an attractive option for the rich and famous seeking a reliable tax haven.
Major tax advantages for non-residents, especially beneficial for Australians. Panama offers significant tax benefits for non-residents, including exemption from income tax on foreign-earned income and favorable tax rates on certain types of domestic income.
These benefits create a highly attractive environment for international investors and expatriates seeking to minimize their tax liabilities.
Ideal for protecting investments from various taxes. Panama is an excellent location for parking investments due to its stable economy, favorable tax policies, and robust legal protections for investors.
You might be asking what was the fallout after the leak of the Panama Papers? Well, Mossack Fonseca, one of the largest offshore law firms in the world, had to shut its doors just 2 years later. The consequences of revealing information are swift and brutal.
As long as you have an entirely legitimate business with no illegal dealings, you can rest assured that your name and business are secured behind thick firewalls. And for the rich and famous, this can really help a lot.
Informing you about the habits of the rich and famous is interesting, but you have to ask the question:
Would it work for me?
The answer depends on your situation and what you’re willing to do.
Sometimes, Australians get fed up with the tax laws in Australia, and they would prefer to pick up their bat and ball and just leave. That makes perfect sense, and I can see why they would do that.
Australians are among the most beaten down by tax laws, putting us up in the top echelons of the most-taxed nations. According to a report put out by Price Waterhouse Cooper on tax rates across several nations, Australians had to pay almost 40% of their own money to the government.
Their own money!
If you had a salary of $400,000, you had to unwillingly give up $163,000 of that as a generous “donation” to blokes in the ATO. Are you confident that they know what to do with your money?
Me neither!
So, how can Panama as a tax haven help?
Although I’ve heard that many internet-based businesses (such as options trading or e-commerce sites) like to establish banking in Panama, I’ve not found that it is the best option for Australians.
I would advise my clients that investments are ideally parked in Panama, protecting you against greedy capital gains and income that you derive from that investment.
It’s even better if you are willing to become a non-resident of Australia, opening up so many doors to legally pay $0 tax as long as everything is done correctly. Many wealthy earners are travelling extensively for work anyways, so why not spend less than 6 months in Australia and set up a permanent home offshore to legally reduce your tax bill to $0. If you go that route, there are several tax havens around the world you can use, depending on what suits your situation best. It becomes even easier if you’re willing to live in the tax haven itself
It’s possible, and I can show you how.
As I mentioned, I’m one of the few people referred to in that Panama Papers article that was completely legit with all my business in Panama. I rely on 100% legal ways to reduce your tax and advise your best option with your situation. I can show you the tax structures that will help save tens and hundreds of thousands of dollars of your own money.
Want to know more? Fill in the contact form and we can set a no-obligation 30-minute discussion about your personal situation. Most Australians aren’t aware of what a tax specialist can do to reduce their tax bill. Isn’t it time to find out how out-of-the-box financial planning can legally save you money?
Contact us today.
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