How much tax do I need to pay after receiving a permit in Panama?

Panama is actively adjusting its legislation in the field of finance, which is considered a promising area for the crypto business. At the state level, there is active support for startups and distributed ledger technology. In addition, the state has an attractive tax policy, so many firms prefer the Panama crypto license.

What to expect from taxes?

Taxation here creates a favourable environment for firms’ financial activities. Corporate tax is meagre at 10%. There is no taxation on dividends or capital gains. Suppose an organisation in Panama is classified as an IBC. In that case, it will not be taxed on the income it receives from business activities outside of this area. An essential aspect for organisations is that digital coins are not subject to taxation today. But, a bill has already been created to control activities related to virtual assets. Therefore, if it is approved, the following points will come into force:

• It will be possible to pay taxes using virtual currency.
• The tax system will work on the territorial taxation principle, so trading in digital coins invested here will be subject to capital gains tax at a rate of 4%.

Consequently, tax policy represents an economically advantageous time for VA companies to operate. Having received permission for crypto activities here, the firm will be able to make more profits due to low taxation.

Conditions for obtaining a license

To obtain licensing, you must first register the firm as a legal entity whose activities belong to the SFI type. From the beginning of registration, the firm will be controlled by Panama’s Ministry of Economy. Then, it will come under the control of the Regulator, which oversees the payment of duties and mandatory fees.

To receive permitting for an exchange here, the Regulator will need to prepare the following documents:

• a business project with a description of the company’s program of activities and a list of services that you plan to provide;
• copies of passports, resumes and police clearance certificates of all management personnel and leading managers;
• report on technical equipment and software;
• a certificate from the bank confirming that there is sufficient money in the account for cryptocurrency activities;
• completed documents on implementing AML and KYC policies and established procedures for monitoring financial transactions and risk assessment.

When the entire package of documents is ready, you must pay the state fee for licensing, and upon receiving a payment receipt, attach it to the package of documents.

Advantages of Panamanian licensing for cryptocurrency activities

If you decide to obtain permission for crypto activities here, you will receive many advantages, and these are:

• Developed infrastructure provides access to innovative technologies necessary for carrying out financial activities with digital coins.
• A small number of restrictions for cryptocurrency organisations so that you can conduct business more freely.
• Preferential taxation, allowing for reducing the cost part of the income received.
• Flexible regulatory rules and government support.
• Favourable geographical location makes engaging in financial activities from different parts of the world possible.

From all this, it follows that Panamanian licensing for activities with virtual assets helps reduce cash costs through taxation and provides the opportunity for more free activity thanks to flexible and loyal regulation by the state.

How does the licensing process work?

A company must go through several stages to obtain permission for crypto activities:

1. Collect the necessary papers. When the company’s name is invented, you must collect copies of managers’ and critical employees’ passports and registration certificates.
2. Register a firm. An application and a package of papers are submitted to include your firm in the State Register of Panamanian Companies. Pay the state registration fee.
3. Open a corporate bank account. It would help if you approached the choice of a bank thoroughly to select the bank that will meet your company’s requirements. You should also pay attention to whether this bank has an AML program. To open an account, the bank will request some papers, including a certificate of the legal origin of your capital, a list of key business partners, movement of funds, etc.

This area will be the best jurisdiction if you want to save on taxes and use a developed infrastructure for cryptocurrency activities.