Taxation

All foundations are subject to payment of registration fees and annual franchise tax equivalent to those charged to Panamanian corporations. There are no taxes, duties, charges or fees on all kinds of constitution, modification, extinction, transfers or encumbrance regarding the foundation assets and income related with them, if these assets meet the following conditions:

1) they are located overseas;

2) money deposited by natural or juridical persons whose rent is not of Panamanian source or not taxable in Panama;

3) all kinds of stocks and securities, issued by corporations whose rent is not of Panamanian source or not taxable by any cause, even though those stocks or securities are deposited in Panama.

Purposes

They should be non-profitable for Private Interest Foundations. Nevertheless, commercial activities may be carried out and capital stock rights may be enforced by the foundation as long as the outcome of such activities is destined to the foundation's purposes.

Registration

Registration of the foundation instrument before the Public Registry Office shall invest legal capacity to the foundation, regardless of any other legal or administrative authorisation. This registration will also be of public record against third parties.

Foundation Capital

An important characteristic of the foundation capital is that it constitutes an independent property from the founder's personal property. For this reason, foundation capital may not be attached or garnished, except for damages or obligations incurred as the result of the foundation purposes. In any case, foundation capital will compensate personal obligations of the founder or the beneficiaries.

Irrevocability

Private Interest Foundations and transfers to the foundation are irrevocable.

Foundation Board

The main function of foundation board is to fulfill the foundation purposes. It should consist minimum of three members, in the case of natural or juridical persons.

Supervisory Organs

The foundation instrument, along with the foundation board, may provide for the appointment of supervisory organs (auditors, custodians, or other similar persons), appointed by the founder or majority of founders.

Dissolution

Specific causes are established in the Law, but in general they may be perpetual.

Foreign Foundations

Foreign foundations may be registered in the Republic of Panama and thus be legally continued as private interest foundations in Panama. On the other hand, private interest foundations constituted according to Panamanian Law, are entitled to be transferred to another jurisdiction.

Controversies

It may be settled in the foundation instrument that all controversy will be settled by arbitration. In lack of this provision, general Procedural law would be applicable.

Banking Secrecy

The foundation board and supervisory organ members, as well as private or public officers that are aware of the foundation activities or operations must provide banking confidentiality and reserve at all times, and are subject to criminal and civil responsibility for the observance of this rule.