More Panama Offshore Companies by 2010

As Uruguay rules out the effectiveness of its offshore companies Panama will benefit from new business by 2010

The offshore companies sector in Panama is likely to receive a sudden wave of additional interest from those with structures currently incorporated in Uruguay as the Uruguayan Ministry of Finance introduced proposals to the government recently that will rule out the tax effectiveness of Financial Investment Corporations in Uruguay by 2010.

Financial Investment Corporations (or ‘SAFIs’ which is the Spanish short form of ‘Financial Investment Corporation’) already incorporated offshore in Uruguay are presently structured similarly to alternative offshore structures in Panama, therefore those who will lose out under the terms of the new legislative proposals in Uruguay have the option of transferring to an offshore structure to Panama.

The Uruguayan government is keen to introduce an all encompassing, fairer taxation regime for all; under the new proposals that are expected to be ratified by 2007 and implemented finally by 2010, Uruguay will remain an attractive taxation regime but it will lose its offshore status and its reputation as the ‘Switzerland of South America’.  In return the government hopes to attain acceptance by multilateral organizations such as the Organisation for Economic Co-operation and Development and benefit from increased trade and investment as a result.

For many with SAFIs in Uruguay which will lose their offshore taxation edge by 2010 Panama is a logical next jurisdiction – just like Uruguay Panama’s business language is Spanish, the political regime is stable, economically the tax haven is secure and Panamanian law (just like Uruguayan law) is based on the Spanish Civil Code meaning that those who choose to move their offshore company activities to Panama will face the least amount of upheaval and confusion possible.

A key benefit of a Panamanian offshore company is the fact that other than an annual fee of USD 300 those who do no business in Panama can take profits and income tax free. 

This change in legislation in Uruguay is seen by those with SAFIs as an annoyance and they believe that in reality it is only the lawyers in Panama who will profit from the proposals as there’s a requirement for a Panama offshore company to have a local lawyer or law firm to pose as its Registered Agent!

Cynics aside, this change in Uruguay tax law will affect all those who have an offshore company structure by 2010 at the latest and anyone potentially affected should seek advice and assistance immediately from those specialising in offshore company formation worldwide.