Geography and climate
The Republic of Panama, located between the Republic of Costa Rica and the Republic of Colombia, is indeed the heart and pulse linking the Americas. Being a true crossroad of the world, at its narrowest point it is only 80 kilometres wide. Its Caribbean Sea coastline extends 1287.7 kilometres and on the Pacific Ocean side is 1700.6 kilometres long. The isthmus’s land mass is 75 517 square kilometres.
Panama has a tropical climate throughout the year with two seasons, the rainy season, from May to December, and the windy dry season from January to April. At sea-level temperature averages 27° to 33° Centigrade during the day (80° to 85° Fahrenheit), but cooler and pleasant at night.
Panama connects Central and South America, opening its doors and frontiers for the purposes of doing business, serving world trade and uniting human beings. As a passage, Panama plays the role of being a heterogenic, multiethnic country in addition to having a Tran-isthmus canal and commercial and financial areas. Its strategic position is bordered by two oceans, containing lush rainforest, rivers and national and marine parks with a huge diversity of flora, fauna and sea life. In autochthon language, its name meant plenty of fishes, birds, butterflies and trees. Alongside these natural scenarios, rests Panama City, a modern and cosmopolitan homonym capital, constantly developing.
Currency
Although Panama has its monetary currency, it does not have a central bank, as most countries do.
The banking act amended in 1998 organised the Superintendence of Banks which, in the place of a central bank, takes over the functions of determining a reserve system and interest rates.
Panamanian official currency is the «Balboa», which has the same value as the United States of America dollar. However, the «Balboa» only exists in the form of coins.
The coins are minted in the same size of US coins. The United States dollar is used as the legal tender (based on a disposition of Fiscal Code) and circulates freely along with Panamanian coins since 1904. Panama offers monetary stability, with its fully dollarised economy.
Economy
Panama’s economy is heavily service-oriented, with more than 70 percent of the Gross Domestic Product and 50 percent of the Nation’s eemployment resulting from this sector. There have been 810000 people working on service sector during 2005. Panama is a member State of the World Trade Organization (WTO) since 1997 by Law 23 of 1997. As a consequence of such affiliation, several economic changes have been taking place, including the privatisation of State-owned companies, as well as the drastic reduction in import tariffs, and tariff process in the agricultural sector.
Panama has signed comprehensive bilateral trade agreements, and the Government is not only currently negotiating a free trade agreement with the United States of America, the country’s major trading partner, but also it is engaged in negotiations of different free trade agreements (FTA) in order to enhance the country competitiveness in the international arena.
Foreign exchange regulations
As US dollar is a legal tender currency in Panama, it has free circulation, so there are no foreign exchange regulations.
Cost of living
Because Panama’s monetary system, inflation tends to be low. During 2005, despite lesser rates on previous years, the inflation rate has been reported at 2.9 percent. For an executive, the cost of living in Panama is very similar to that of major cities such as Miami, USA, San Juan, Puerto Rico and Sao Paulo, Brazil.
Panamanian Banking system
Panama is a country that has become in banking and financial emporium in the Americas with its more than 140 established banks, because the legal organisation is based on laws that enforces the banking secret, this guarantees the investors users of the Panamanian legal system (jurisdiction) the highest level of privacy in their operations.
Due to the necessity of exploiting the geographic position of Panama, legislation was established in 1970 for this purpose, guaranteeing the free movement of capitals and minimum taxes, as well as bank service rates a lot lower than the international standards. That’s how the biggest banks all over the world were constituted and also the ones with the greater amount of representation. All this is supervised by the bank superintendence.
The tributary system
Panama has as its tax doctrine, the territorial principle for tax legislation. This means that every income generated outside the territory of Republic of Panama is exempt from tax payment, as well as income tax reports, but can be presented as foreign operations, without resulting in any tax payment, whether the company is domiciled in the country or not, and it is important to understand that the Republic of Panama does not have any international treaty or agreement with any country in the world relating to tax regimes.
