Panama – The perfect place for your hightech/software company (5)

Why Panama – Immigration and IRS

These are the 2 issues non-US citizens should be most concerned about when considering The Valley as their business location. Seriously.

First, getting a green card or visa or citizenship really means some effort and is time-consuming. This why even cruise ships are considered, out in the North Pacific Ocean, to accommodate workforce and work around the immigration problem.

Once you’ve got your immigration status, you’ll become a US tax resident, even with a non-resident visa under circumstances. The rules are complicated and execution appears to be harsh.

Based on that, US citizens and even visa holders are not welcome in banks around the globe anymore, meaning special non-preferred treatment and extra costs.

With a permanent visa or as US citizen, you’ll never stop reporting to Uncle Sam your world-wide income, every year to come.  Think about it.

 

How does it work in Panama? Tranquilo!

 

007passportphotos

Source: 007passportcopies.com

There are some ways to get a residency in Panama:

  • proof of solvency by investing $300,000 into bank deposit or real estate,
  • Invest even less into reforestation,
  • being a citizen of one of 44 countries, considered in a friendly relationship with Panama, and willing to establish/run a small business.

As long as you are doing business with customers outside of Panama, you don’t have to report anything tax-wise to anybody.

When you employ workforce in Panama or do business within the country, then get established in one of 2 special economic zones. Find out where your business fits in.

Both zones offer favorable immigration and tax arrangements.

For software and other hightech stuff there is the City of Knowledge.

 

laopinionwebhostcompa

Source: laopinion.webhost.com.pa

For logistics, aviation etc. there is Panama Pacifico.

 

prlogorg

Source: prlog.org

Now it’s up to you to take a closer look at these essential issues. Don’t forget: it will influence your personal and business conditions in a significant way. So better be careful.

Panama: The perfect place for your high-tech/software company (4)

Why Panama – No natural hazards

As Panama is located between oceans and continents, it is luckily located outside any areas of natural hazards.

Hurricanes happen in the Caribbean, but don’t reach Panama.

Earthquakes happening in Colombia, Chile, Guatemala are sometimes felt, but have never hit Panama hard. Looking at the tectonic plates, Panama is placed in a sweet spot, right between, not inside active zones.

Look at California, which is in a very different position, literally.

Here’s the San Andreas fault, crossing the state from Southeast to Northwest, building tension for The Big One.

 

earthquake

(Source: Wikipedia)

Crossing the San Francisco Bay area, nobody knows when it will happen, but it will. Even a Small One will disrupt business and everyday routines for weeks. And a Plan B will not avoid this, possibly minimize consequences.

I still remember years ago, when Texas-based hosting provider Rackspace Inc. made the case for having their data centers in regions far away from earthquake-prone regions, like California. They’ve got a reason.

Data are precious, human lifes even more.

Conclusion: Building your business in Panama instead of California means that a Plan B for natural hazards is not necessary.

Get some peace of mind.     

Breaking news, well not so much

Right in the middle of my posts about why hightech companies can succeed anywhere, preferrably in Panama, there comes this:

Startups don’t have to be in Silicon Valley – you can scale from almost anywhere these days.

Bill (Gross) explains, “I really believe startups can scale everywhere. Talent is everywhere. Money is now everywhere. In Silicon Valley, talent is everywhere, but it’s moving from company to company. Other places are actually much more stable to start a company.”

Exponential technologies have democratized access to many of the resources you need to build a company. Great founders can build great technology companies all over the world.

It’s part of a Peter Diamandis blogpost, that you can find here, together with a lot of more relevant information.

Stay tuned for my next post and find out what Panama has to offer.

Panama: The perfect place for your high-tech/software company (3)

Panama – Country Quick Facts

Located in Central America, between Costa Rica and Colombia, separated by the latter through the Darien jungle, the Republic of Panama is geographically and politically stable. There is not even an army, as there is none in neighbouring Costa Rica.

 

worldview

Source: geology.com

 

It is most famous for the Panama Canal, connecting two oceans. Built 100 years ago, extended recently, handling 4% of global trade, making the country a logistics hub.

The Canal extension means a lot more business to be built around. Beside the 2nd largest free zone after Hongkong, in Colon, there are 2 more Special Economic Zones:

  • City of Knowledge, home of software and other hi-tech companies.
  • Panama Pacifico, for logistics, warehousing etc.   

Panama has become a preferred offshore business and finance center. Financial crisis since 2008 have had no influence in Panama, solid annual growth between 6 and 10%.

By far most ships globally are registered here. Incorporating and running offshore firms is therefore an everyday affair. Accordingly, Panama has successfully signed bi-lateral treaties to not be considered a tax haven by the OECD.  

cropped-dsc_0649

Source: anuvito

Panama City ’s skyline and infrastructure are impressive and GDP per capita has become #2 in Latin America ($21,800 in 2015). Middle class is growing, accumulating wealth. The country is a bit smaller than South Carolina, has a population of 3.6 mio, a coastline of 2,490 km, hundreds of islands in both oceans.

Half of the country is covered by tropical rainforest, including the Central American mountain range, reaching up to 3,475m (Volcano Baru). Thus there are several different climate zones to live in, and providing ideal conditions for tropical fruits, coffee and vegetables.

The Inter-American Highway is the backbone of the country, stretching over 775 km from the Costa Rican border until Yaviza. The Darien jungle is a natural boarder. Traffic to Colombia must use a ferry from Colon to Cartagena.

Panama City’s Tocumen International is named the “Hub of the Americas”, with numerous destinations between Montreal and Vancouver in the North, to Buenos Aires and Santiago de Chile in the South.

Conveniently, the currency is the USD, officially named as Balboa, the first European looking at the Pacific Ocean,  although there are no Balboa bills.

 

 

Panama: The perfect place for your high-tech/software company (2)

Why Panama – Your business’ bottom line

This is the most important issue for any great owner of a small business.

Let us look at your personal income situation now and assume you’re making $100,000 per year. (http://www.tax-rates.org/California/income-tax)

                                 California                        Panama

Income                    $100,000                         $100,000

Tax                            $32,000                            $0 *  

Subtotal                  $68,000                            $100,000

Condo rent            $36,000                            $18,000                                                                                                                    (www.zillow.com)          2/2 with 130 m²

Cost of living        $30,000                            $15,000  **

Total                       $2,000                              $67,000

Suggestion: This amount of $67,000 re-invested in Panama, buys ⅙ ownership/8 weeks occupancy in a 2/2 oceanview condo 130m², fully equipped and with concierge service.  (www.oceanview42.com)

* Having your company registered in Panama, charging foreign businesses only, there is no obligation to report anything. No tax declaration whatsoever. Call it freedom.  

** The cost of living numbers appear low. However, in our example, the Californian cannot spend more and we assume that cost of living in Panama is roughly half of California.

To grow a small business, having money left over after tax is essential. Working without other people’s money in early stage means independence, keeping control. Selling shares not before the company has some value, means to make more money, just later.

Conclusion: Having a global business based in Panama is best for your business’ bottom line.

 

supermoney

Disclaimer: We are not a financial or tax advisor. Information given is based on public Website information everybody can find. It may change or have already changed. No guarantees. Do your own math and research. (Picture: supermoney.com)

 

 

 

Panama: The perfect place for your high-tech/software company (1)

If you as an entrepreneur are confident to build the next unicorn, a start-up with 1b market capitalization, then go ahead and settle in the Silicon Valley. Best choice.

If not, there is a better place to start and run your business, to live and to invest.

Why Panama? Living here for 8 years already, let me present my thoughts in a series of posts. 

 

 

Conditions have changed significantly.

“The Valley” began as a center for the capital-intense semiconductor and computer industry, followed by Internet software developers and service providers in the late 90s.

Renting an office, hiring staff, setting up servers and workstations, purchasing software licenses was expensive and Venture Capital was a necessity to take off or to grow.  

These days are over. However, it has established a concentration of ideas and capital there as nowhere else in the world, now focusing to solve the big problems of mankind.   

Your ambitions are a bit smaller? Then you don’t have to pay the ridiculous price of living and working there.

Establishing a business nowadays is much easier than a decade ago.

No fancy office, desks and chairs.

No permament hires, beside a core staff, people work project-based.

No hardware investments, but BYOD.

No software licenses, get everything cloud-based.

No expensive marketing. Win followers by early release of a good-enough product.

Conclusion: The capital demand for new endavours is low, as are entry barriers. So who needs VCs anyway anymore?