Offshore Asset Protection BLOG - Bob Bauman

Time to Move Offshore - Literally!

The media reports that the American financial crisis, a weak U.S. economy and increased domestic competition for jobs are sending an untold number of banking, financial and other professionals running for the border -- literally.

Executive recruiters say more professionals, especially those in finance, have been inquiring about opportunities abroad in the past few months. Some undergraduate finance and MBA students are refocusing their job searches away from Wall Street to offshore venues. In a number of cases, people with families say they would pull up roots for the sake of job stability.

A Major Exodus

The fact that Americans are fleeing this country is hardly news to Sovereign Society members and readers. It's a hot topic I've commented on more than once.

For the decade since our founding, we at The Sovereign Society have noted sadly that each year hundreds of thousands of U.S. citizens and resident aliens have been leaving America to make a new home in other nations. Some estimate that upwards of 3 million leave the U.S. annually.

The August 5, 2008 issue of U.S. News and World Report noted that many younger people are leaving the United States. These young emigrants are taking their young families and seeking their fortune or an easier life in foreign lands.

If data collected from 2005 and 2007 is correct, it's possible that three million U.S. citizens are going abroad to live each year. Assuming that number is accurate, that's a huge increase over recent years -- and the current economic downturn may increase that exodus.

Better Jobs Offshore

Recent surveys from executive search firm Korn/Ferry International found that 53% of 438 respondents believe the best job opportunities are in developing economies like Brazil, Russia, India and China. Another showed that 20% of 718 respondents said they are more likely to accept an overseas work assignment now, in an economic downturn, than in a stable economy.

Although foreign markets are suffering as a result of the spreading credit crisis, the financial job market abroad hasn't been damaged as severely as it has been in New York and other U.S. financial hubs. U.S. employers cut 159,000 jobs in September, and that figure doesn't take into account the newest wave of job losses on Wall Street. Recruiters say job opportunities for finance professionals in Asia, the Middle East and Central and Eastern Europe still abound.

"There has been a gold rush to places like Dubai," says Alex Alcott, partner and head of U.S. investment banking at Heidrick & Struggles, an executive search firm. He cites Beijing, Shanghai and Moscow as areas of opportunity for finance professionals.

Asian Hot Spots

I've often written about financial job opportunities in Asia, especially in Hong Kong and Singapore where I visited as few years ago.

Over the last decade, the city-state of Singapore has built up an impressively financial services industry that challenges their rival, Hong Kong and is attracting lots of mutual fund and hedge fund business, including prime brokers and big international banks. Singapore is now Asia's third largest financial center, after Japan and Hong Kong, and it's quickly gaining market share.

Private banking has emerged as a leading source of revenue for Singapore. In fact, over the last five years, Singapore has matured as a leading private banking destination for international investors, drawing deposits away from kingpin Switzerland.

Unlike Switzerland, where an estimated one third of all private banking deposits are held, Singapore is not under constant political pressure from the European Union's (EU) Financial Action Task Force, which is constantly attempting to strip away Switzerland's tax advantages and privacy. And that's lured many European and international investors to Singapore.

Indeed, just as the current banking crisis has driven safety-seeking billions in deposits out of European and American banks, the European Union tax directive had a similar impact when it took effect in the 28 EU nations, plus Switzerland, in 2005. After all, money is a fungible commodity and it seeks both profits and safety.

Roadblocks to Freedom

One major worry I have about this free global movement of cash, investments -- and even individuals seeking foreign residence -- is what the next U.S. president and U.S. Congress may do to impede the freedom of international movement we now enjoy.

Candidate Barack Obama has made attacking offshore financial freedoms a constant theme in his campaign, He is a co-sponsor of radical anti-tax haven legislation that would disrupt Americans' rights to bank and invest freely where they wish.

It's well to recall that on the subject of the right of persons to travel freely, the United Nations Universal Declaration of Human Rights states:

Article 13 – Everyone has the right to freedom of movement and residence within the borders of each state. Everyone has the right to leave any country, including his own, and to return to his country.

Article 15 – Everyone has the right to a nationality. No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.

However these "rights" of free movement, travel and residence have been, and are, systematically violated by many nations, including both dictatorships and democracies. The United States and the United Kingdom have been among the worst violators when it suits the political convenience of the government in power at the moment.

All of which suggests that you, like those worried financial professionals, might want to consider relocating your money or yourself, while you still can.

Looking for Your Own Road Map Abroad? We Can Help

If offshore interests you, we can help you. The Sovereign Society exists to give advice and direction for those interested in "going offshore" in many different ways.

We can offer you a road map to offshore freedom, including legal ways to protect your assets, lower your taxes, expand profitable investments and how (and where) to move your residence and/or citizenship offshore.

If you're contemplating expatriation, I have the information to help you on such a global course in two of my books. I can tell you how to secure a second passport, and how to plan your finances abroad. Both books explain in detail how to live well offshore under what we call "the ultimate estate plan" - expatriation. And it's all legal.

As the late cartoonist Charles M. Schulz had one of his Peanuts say: "Don't worry about the world coming to an end today. It's already tomorrow in Australia."

And in Singapore, Hong Kong and many other places offshore.

Panama’s New Immigration Law

In recent decades the Republic of Panama deliberately has positioned itself as a first-class retirement haven, with some of the most appealing programs of special benefits for foreign residents and retirees anywhere in the world. Panama also offers a variety of visas for investors, persons of high net worth, wealthy retirees, small business and agricultural business entrepreneurs, and those who simply want to immigrate and become Panamanian citizens.

A liberal immigration law that offered many inducements has in the past been one of the most attractive features for foreigners considering retirement or a second home in Panama.

On February 22, 2008 a newly revised general immigration law was decreed by President Martin Torrijos, and, as is the legal custom in Panama, that original law was fleshed out by a series of rules decreed on August 8, 2008.

Eric Jackson of The Panama News has published an examination of the new law and the implementing rules that took effect on August 28th. Generally, fees for all services have been increased, some substantially.

For more details I suggest you review that article, but here are a few highlights:

* Foreigners who already have their legal residency in Panama are "grandfathered in" and retain their existing status, although the requirements have become more expensive.

* The so-called pensinado program that has been so popular with foreigners remains in place, but whereas an applicant in the past only had to prove an established pension income of $500 per month (or $750 per couple), that's upped to $1000 a month. However, a foreign retiree (rentista retirado) who owns Panama property worth at least $100,000 only need prove a pension of $750 per month. A pensionado with dependents must now pay $250 for each dependent.

* Investors visas have become more expensive. Example: it will now require an investment of $60,000 to get a visa as an agricultural or reforestation investor (inversionista forestal), rather than the previous $40,000. The costs of visas, permits and fees for filing various documents has also been raised.

* Tourist visas are granted for a maximum of 90 days, but the common practice is to leave the country for a few days and come back to get another three-month tourist visa.

* Every foreigner must register with a central registry (that has yet be established) and update their status with change in address, change in economic or martial status. All foreigners will be issued an identity card (cédula) which is the current practice.

* If you want to know more about Panama as a possible second home for you, as well as a tax and asset protection haven, click here for my book, Panama Money Secrets.

An Offshore Mystery

At the Sovereign Society we are very proud of the men and women who serve as members of our distinguished Council of Experts.

The Council consists of professionals located in the United States, Canada, the U.K., Switzerland, Panama and many selected tax and asset havens around the world. Our experts include professionals with impressive credentials as investment advisors, trust officers, bankers, insurance experts, accountants and attorneys -- people who well know the best global investments, the safest tax havens and the most secure legal devices that will return profits and protect your assets.

One of our distinguished Council members, a good friend of mine, Derek R. Sambrook, is managing director of Trust Services SA in Panama, a leading service for the creation of trusts, family foundations and corporations.

Derek has been an offshore trust and estate practitioner since 1979 and is a former member of the Latin America and Caribbean Banking Commission, as well as a former offshore financial services regulator for the British government.

Mr. Sambrook is also a prolific author whose articles and comments appear in Offshore Investment magazine and other international publications, as well as on his web site.

Two Island Tax Havens

The current issue of his Offshore Pilot Quarterly caught my eye when I read it yesterday because his theme is one I often address -- the hypocrisy of the governments of major nations, such as the U.S. and U.K., that continually attack offshore tax havens for fictional wrongs, while they themselves are the real culprits.

Indeed, in dollar and pound sterling volume in the multi-millions, two islands are the undisputed leading tax havens of the world -- the Borough of Manhattan in New York City and the City in London.

For reader interest, try and guess what international financial center Derek is describing in the current issue of Offshore Pilot Quarterly:

In Derek's inimitable words: "I had read about one financial services jurisdiction whose companies had been involved in the laundering of some $36 billion from the former Soviet Union; that is an amount that could finance the present Panama canal expansion project at least six times over. In this same jurisdiction, Russian officials had used companies to unlawfully divert $15 million in international aid meant to fund a safety upgrade of former Soviet nuclear power plants and in another case an individual had set up more than 2000 companies, established bank accounts for them without disclosing identities, and then passed some $1.4 billion through the accounts. It turned out, in fact, that one of those companies had received over 3,700 suspicious wire transfers which, during a two-year period, added up to just over $81 million. But the authorities could not pursue this case because they were unable to discover who owned the company due to the lax laws of the jurisdiction."

Major Money Laundering

Sounds pretty bad, doesn't it, all those millions of dirty cash sloshing around in secret accounts.

Do you think Mr. Sambrook is describing his home place of Panama? Perhaps some remote Pacific Island such as Vanuatu or Niue where rumors of the Russian Mafia have long circulated? How about exotic locals such as Monaco, Campione d'Italia or Andorra?

None of the above.

I invite you to click on the link below and read his full commentary, but here's Derek's hint that answers the question: "What country would allow such highly questionable financial activity?"

Says Mr. Sambrook: "I can tell you that none of the members of Senator Carl Levin’s U.S. Senate Subcommittee would need passports to visit it..."

LINK: Offshore Pilot Quarterly: The Evil that Walks Invisible.

* Discover the legal ways to bank and save taxes offshore; I tell you Where To Stash Your Cash: Click Here.

Report from Panama

A new study just out today by the Florida Museum of Natural History suggests the Isthmus of Panama was likely formed by a Central American peninsula colliding slowly with the South American continent through tectonic plate movement over millions of years.

The study used geologic, chemical and biologic methods to date rocks and fossils found in sides of the Gaillard Cut of the Panama Canal. The results show that instead of being formed by rising and subsiding ocean levels or existing as a string of islands, as scientists previously believed, the Isthmus of Panama was first a peninsula of southern Central America before the underlying tectonic plates merged it with South America 4 million years ago.

That's interesting news, but I doubt it will have much impact on the 3 million people who live in this famous country the size of South Carolina -- a small country that also happens to be the crossroads of world shipping -- as well as the site of one of history's major technological miracles -- the American built Panama Canal.

Back on the Isthmus Again

Since Wednesday I've been just a stone's throw from that Panama Canal at a conference of our sister Agora group, International Living. We`re meeting at one of Panama's many new developments constructed by master builder Jose Bern -- the Playa Bonita Hotel and Resort built on the site of the Officers Club at the former Howard Air Base just outside Panama City.

I was last here in Panama May when the Sovereign Society held its annual Panama meeting, and it's always good to see old friends and check out the domestic situation here.

Panama Politics

As in the United States, Panama, a country that loves the U.S. and Americans, is in the midst of a presidential campaign.

Current President Marin Torrijos Espino is nearing the end of his one five-year term the constitution permits. Yesterday was the 27th anniversary of the day Martin's
father, the dictator General Omar Torrijos, was killed in the crash into a mountain in central Panama of the small plane in which he was flying. It is a measure of the
great progess in democracy in Panama that the son of a dictator was freely elected many years later, and that Panama regulaly elects its leaders without the bloodshed and political turmoil that marks some Latin American countries.

Good News

For possible investors or prospective retirees considering the Republic of Panama the news is encouraging.

One of the Big Three international auditors, Deloitte Touche Tohmatus, predicts that the Panamanian economy will continue its booming growth through 2008, leading all other Latin American countries. Construction, banking, the Panama Canal and the services sector continue to be the principal engines of the national economy. Other good news for potential foreign retirees is the officisl reinstatement of the 20-year tax exemption for foreign property buyers here that expired last year.

As one the world's leading tax and asset protection havens, Panama continues to attract billions in investments and beyond foreign retirees, it is becoming a refugee nation for those escaping increasingly oppressive leftist political regimes in Venezuela, Bolivia, Ecuador and even Nicaragua.

Prospective investors in Panama, particularly those looking to escape the faltering U.S. economy, should be encouraged by this new economic report. It predicts healthy GDP growth in 2008 with growth at between 7% and 8%. Some analysts think the Panama dynamic economy, with many important private and public investment projects, will offset the negative impacts from the U.S. economy.

The biggest plus for Panama may be the massive expansion of the Panama Canal, approved in a referendum in 2006 and due for completion in 2014, exactly a century after the U.S. completed the original canal. Qatar Petroleum and Occidental Petroleum is planning construction of a major oil refinery worth about $7 to $8 billion. The Canal expansion has been estimated at $5.2 billion but probably will cost much more. Both are projected to create thousands of new jobs.

The real property tax exemption now covers all new construction with building permits issued before December 31, 2009. Resale properties are also exempt from property tax, with the 20-year exemption starting in the year the property was built. This means major tax savings for those buying existing or resale property or building their own property.

Some Problems

There are problems. Inflation for the last 12 months ending in May was at an unusually high rate of 9.6%, a reflection in part of the declining value of the U.S. dollar, the official currency here since 1912. Over the last 20 years inflation in Panama has avereage between a very low 2% and 3%. Many here worry about when and if the construction "bubble" -- if that is what it is -- may pop.

But all in all I found a lot of optimism here about what's ahead for the country, but also a lot of worry about the United States government and its policies, now and in the future.

* Learn all about Panama and its potential for investments and as a retirement home for foreigners. Click here for Panama Money Secrets.

Qualified Intermediary (QI) Rule

In the wake of the allegations that the world’s largest private bank, the Swiss UBS, assisted an unknown number of their American account holders to evade U.S. taxes, last week U.S. Internal Revenue Service officials revealed plans to tighten the rules of their so-called "Qualified Intermediary" (QI) program.

The little-noticed program has come under greater scrutiny amid a widening investigation into whether UBS misused the program to help American clients evade federal income taxes by non-reporting or using legal offshore entities such as trusts or family foundations.

Under the QI program foreign banks have held billions of dollars offshore for American clients without legally having to disclose their names to the IRS. In exchange, the banks promised to know who their clients are, withhold any taxes due on U.S. securities in their accounts and send that money to the IRS. More than 7,000 foreign banks are enrolled in the program and paid about $2 billion to the IRS last year.

Bankers as IRS Spies

In effect, the IRS, beginning in 2001, forced foreign banks and financial institutions into the unwelcome role of IRS informants, a.k.a. "qualified intermediaries" (QI). To put it plainly, just as American bankers were forced to spy on their customers under the terms of the Bank Secrecy Act and the PATRIOT Act, the QI program turned offshore bankers into spies on their U.S. clients, at least in certain defined situations.

Since the imposition of the QI rules U.S. persons holding U.S.-based investments purchased through their offshore banks did have a choice: 1) they could either have offshore banks report the American holdings to the IRS, or; 2) they could have the bank withhold a 30% tax on all interest and dividends paid to them. To avoid either event, the U.S. offshore account holder investor could (and we have recommended) not hold any U.S.-based investments through an offshore bank or financial institution. No U.S. investments -- no required reporting under the 2001 QI rules.

By comparison, foreign, non-U.S. investments held offshore by U.S. persons through an offshore financial institution until now have been exempt both from the QI reporting and the QI tax withholding rules.

Under the IRS Gun

The clear threat to offshore banks that underpinned the QI rules was the real possibility that an uncooperative foreign bank would be denied access to the entire American banking system, meaning they and their clients could not to do business with the major banking system of the world.

Barry Shott, a deputy commissioner of the IRS, claims that the agency since 2001 has halted the participation in the program by about 100 foreign banks that were accused of violating QI rules. But in my observation, far fewer banks were embargoed and those that were tended to be banks located in backwater places such as Vanuatu and the Solomon Islands where Russian criminal elements had established a financial presence.

U.S. Rule Imposed Worldwide

Bent on crushing possible offshore tax evasion, in effect the IRS imposed extraterritorial tax enforcement burdens on foreign nations and their banks. Banks were forced to meet IRS established anti-money laundering and "know your customer" standards in order to get the "QI" stamp of approval. Offshore banks that qualified in the eyes of the IRS received "approved status," meaning the 30% tax on U.S. source income did not need not be withheld on non-U.S. investments, plus reduced tax rates could be applied under terms of mutual double tax avoidance treaties with the U.S.

But IRS QI approval came loaded with onerous conditions that could end customer confidentiality for American offshore investors who didn't know how to apply the rules. It also gave the IRS leverage over foreign nations when demanding exchange of tax and other financial information, although those nations, such as Switzerland, Liechtenstein and Panama, that have strict financial privacy laws, legally were able to escape the worst anti-privacy parts of the QI rules.

Understand what happened. Under the high handed QI rules, cloaked in the guise of enforcement of U.S. tax laws and threatening to deny access to the U.S. financial system, the IRS demanded and got imperial approval of all foreign nations’ banking rules and reporting requirements.

Stop for a moment and think what the reaction of American banks (and of the IRS) might be if a foreign nation ordered them to follow strict rules imposed from abroad. It is to laugh!

Tough New IQ Rules?

IRS officials now say foreign banks will be required to determine whether their clients are United States persons, and to determined possible U.S. beneficial ownership of foreign corporations and trusts with bank accounts. If they are, then the bank must let the IRS know about the client and withhold taxes on dividends in the account at rates of up to 30 %. The IRS' Mr. Shott declined to say whether the new rules would be retroactive or only apply to new clients.

The IRS says it will soon allow foreign banks in the QI program to use third-party databases, such as those from credit reporting firms, to determine who their clients really are and what taxes they should pay.

Douglas H. Shulman, the I.R.S. Commissioner, said the goal of the coming QI changes "is to get a clear line of sight into the owners of the bank account, and to know where there’s fraud." Inherent in such an over reaching statement is the misguided IRS belief that everyone with an offshore bank account is engaged in tax evasion -- and that offshore banks have a duty to act as IRS informers.

Let me suggest that it is the duty of the American government to investigate and indict anyone suspected of violating laws -- on an individual case basis. It is not the government’s duty or right to coerce offshore bankers to act as IRS agents, or to presume tens of thousands of Americans legally engaged in offshore financial activity are therefore criminals.

Conflict of Laws

It remains to be seen how any new QI rules can be made to square with strict laws guaranteeing financial and banking secrecy in many nations, such as Switzerland, Liechtenstein, Andorra, Monaco, Singapore, Belize or Panama. Typically those laws make it a criminal act to reveal any information about bank account holders, foreign or domestic, unless order to do so by a court.

Offshore banks may be forced to choose between obedience to their home country laws, or to the grasping long arm laws of the IRS.

* There still are many legal ways to bank and save taxes offshore; I tell you Where To Stash Your Cash: Click Here.  And if you're interested in Switzerland, Click here for Swiss Money Secrets.

Income Taxes & the Destruction of Liberty

Today at the 2008 FreedomFest in Las Vegas, my friend and longtime associate Vernon Jacobs, CPA, presented a fascinating lecture on the American income tax and the U.S. Constitution. The title of his talk was "Income Taxes and the Destruction of Liberty".

I have read Vern's 49-page paper and it is a clear, concise and arresting exposition of the income tax and what it (and the IRS) have done to diminish American freedoms and liberties.

Mr. Jacobs is not one of those "tax protesters" who believes the income tax is illegal, (the 16th Amendment answers that question), or that it applies only to esoteric small groups defined by arcane Internal Revenue Code provisions as interpreted by self-serving fraudsters, many of whom charitably can be called "tax nuts."

Rather his presentation carefully establishes the history of American taxation, the ideological demand for an income tax from socialist and Communist theorists, the role financing American wars has played in expanding the tax, and lastly, the brutal polices of the IRS that view all citizens as tax evaders to be treated to the lash.

He also touches on illegal tax evasion vs. legal tax avoidance and the use of offshore tax havens and government attempts at blocking such use.

Jacobs makes the historic point that while the British Crown's restrictions on religious and other freedoms certainly were reasons for the American Revolution, the principal cause was excessive taxation and its brutal enforcement by King George's agents, as witness the Boston Tea Party.

For those who are interested in what Vern calls "a semi-academic history lesson on the income tax and the related portions of the Constitution" a copy in PDF format is available at http://www.offshorepress.com/liberty/constitution.pdf

I recommend it heartily.

Report from Panama

I spent the last eight days in Panama, and the answer is -- the Panama Boom goes on.

The Bubble, (if it can be called that), has not burst -- and it doesn't look as if the economy will cool anytime soon. The "crossroads of the world" is Latin America’s economic leader.

My recent close observation of all things Panamanian began in 1999. That's when I returned after an absence of 25 years. (In the 1970s I visited there five times, during the heated debate on the Panama Canal treaties). So I enjoy the advantage of perspective.

And the Panama I see continues to change and grow at a fast pace. It's come a long way from the American colonial days that ended in 1999 -- when the United States turned over full control and sovereignty over the Canal to the Republic of Panama.

No More Devils?

While we were holding our Sovereign Society Total Wealth Symposium in Panama City last week, President Martin Torrijos announced that the cosmopolitan metropolis of 1.5 million will no longer have to endure (or enjoy) those funky school busses known as Diablos Rojas (Red Devils). For as long as there has been motor traffic, these chugging, overloaded, wheezing transports have been as familiar as are red double-deckers in London. Next year they will be replaced with modern busses on regular routes and -- gasp -- with air conditioning!

The main waterfront traffic artery, Avenida Balboa, is being widened from six to 10 lanes, accompanied by a wide swath of green parks fringed with palm trees and flowers. Now -- if they can only get some traffic cops to control the gridlock and ticket the thousands of red light runners.

Bargains Over

What I've been saying for sometime now was confirmed many times over the last week -- if you're looking for low-priced real estate, especially condos, in Panama City, you're too late.

Oh, you may find an occasional bargain, but in spite of hundreds of towering condo blocks inching skyward all around, the prices of same are also elevating everyday. A new bay front condo that could be had two years ago for $140,00 is now going for $260,00 00 -- so Panama is edging toward South-Florida-before-the-U.S.-mortgage-collapse prices. In a suburban town house development along the way to and from Tocumen Airport, row houses that were on sale for $60,000 now bring twice that.

Major Growth

As in China, Panama's GDP is growing at a China-like rate -- over 10% last year, a projected 8% or 9% this year. Unemployment in a country with a lot of poverty is final going down. Rising incomes have produced a growing demand for creature and household comforts. Five years ago there were no major malls -- now there are four.

I dined with close friends and their friends last week in a modest, middle class home in the hills near Panama City and, except for the fact that almost everyone spoke only Spanish, it could have been South Florida - although, come to think of it, more folks speak English in Panama than in South Florida, where I live.

Panamanians are taking a close interest in the upcoming American presidential election. They are at the beginning of their own presidential election campaign, with President Torrijos limited to one 5-year term that ends next year. I spent an overnight at a new Pacific Ocean resort (The Decameron) and on the way the Pan-American Highway was plastered with political signs. Locals predict that Panama City's mayor Navarro may be the next president, and in any case, current pro-American policies will continue-- and, even if Washington doesn't like it, Panama will remain one of the world's first class tax havens.

Favorite Son?

Oddly enough, maybe because he was born in the Panama Canal Zone, a lot of Panamanians think the U.S. presidential winner could be John McCane. Then too, Panama has dealt with control-freak Americans for almost a century -- so may be they recognize Hillary and Obama for what they are.

* If you want to know Panama fundamentals, check out my special 3-part report, Panama Money Secrets. Click here http://web-purchases.com/190SPMON/W190H720/

Panama: Investment Grade in 2009?

I was in Panama two weeks ago and I can attest to the phenomenal growth the country is experiencing in many sectors, not just the real estate boom in Panama City. 

After too many years of a precarious national economy, reckless government spending and debt and with a stark disparity between the wealthy and the poor, the economy of the Republic of Panama is finally moving toward what could be general prosperity for all the 3.2 million people in this famous crossroads of the world.

Citigroup, which has long had a financial presence in Panama, has just issued a very positive current assessment of the nation's economy.

The Citigroup experts expect the country to attain an "investment grade" rating in the second half of 2009. Investment grade is the credit rating given a bond judged by ratings services such as Moodys and Standard and Poors likely to meet payment obligations so that banks are allowed to invest in them.

This will be a first for Panama and it comes at a time when major construction projects are underway, not just for the $6 billion expansion of the Panama Canal, but also for the building of major development projects, whole new cities and badly needed infrastructure improvements

Citigroup's optimistic outlook is based on the turnaround under President Martin Torrijos in the Panama government's fiscal accounts and on the country’s unique growth story. The Panama Canal expansion and fast capital accumulation should deliver the highest growth rates in the country’s recent history.

The prediction is for a 9.2% growth rate in 2007 and at least 9% in 2008. These impressive growth rates are likely to be the main driver behind the sharp decline in debt-to-GDP ratios that make investment bankers happy to lend. Citigroup also likes the credit for long-term investments. They expect the entire Panamanian society to experience meaningful economic, social, and political changes during this stage of high growth.

Immigration Boom

Not only are Americans, Canadians and Europeans flocking to Panama for retirement and/or second homes, wealthy Venezuelans now are emigrating to Panama in increasing numbers, buying luxury homes as they fear the far leftist President/would be dictator, Hugo Chavez, will hold onto power for life and wreck the country in the image of Castro's dismal failures in Communist Cuba.

With a shining new skyline, Panama rivals Miami as a refuge for Venezuelan and other Latin American expatriates, who are attracted by the Central American country's booming economy and a lively Latin-Caribbean culture like their own. And with all the onerous post 9-11 immigration restrictions imposed by the United States, foreigners are avoiding coming to America. The Venezuelan exodus is compounded by the irrationally anti-American Chavez pushing radical constitutional changes that would scrap presidential term limits and limit press and other freedoms.

Like Switzerland in Europe, Panama has long been a refuge for exiles from many nations, driven out by despotic governments or revolutions. This round of immigrants from Venezuela are just the latest of many groups finding a hospitable home in Panama.

* P.S. Have you been thinking about building a second home or just strengthening your portfolio with Panamanian real estate? Click here to learn how you can make this happen. http://web-purchases.com/190SPMON/W190H720/

OECD Complains Again

Those Left leaning busybodies at the Organization for Economic and Community Development (OECD), ensconced in the tax-free luxury of their Paris ivory towers, are whining again about the few stalwart nations that still defend the right to enjoy financial privacy and banking secrecy. (In America financial privacy is dead and gone, killed by the unconstitutional PATRIOT Act).

The most recent OECD criticism, (their anti-tax haven sideshow has been going on now for over a decade), is aimed in part at the Republic of Panama's continuing (and very correct) refusal to violate its own national bank secrecy laws by exchanging tax information with other governments. (Panama has no tax information exchange treaties with any nation).

But Panama is in very good company when it comes to the OECD targets. This round of OECD yapping is aimed not just at Panama but also Switzerland, Austria, Liechtenstein and Singapore -- all equally respectable offshore financial centers -- all with strict financial privacy laws that the OECD bureaucrats hate -- not only because the OECD represents the major nations' tax collectors, but because these high tax nations pay the OECD's tax-free salaries.

The OECD claims that many offshore financial centers are "making progress in improving transparency and international co-operation to counter offshore tax evasion" but they insist that those who don't tow the OECD line still fall short of "international standards."

The OECD says "significant restrictions on access to bank information for tax purposes remain in three OECD countries (Austria, Luxembourg and Switzerland) and in a number of offshore financial centers (e.g Cyprus, Liechtenstein, Panama and Singapore)."

That should be a major hint as to where you should do your banking offshore -- if you want guaranteed financial privacy. Unfortunately, there are only a few nations that still guarantee financial privacy by law.

If you're looking for maximum privacy and legal tax avoidance, we can explain where these places are and how you can take advantage of them. Click here for some ideas on where to look.  http://www1.youreletters.com/t/1357788/2309209/831463/4533/

Change in Panama? Not Really!

Regular readers know that we recommend Panama as one of the world's leading asset protection and tax havens. It's inviting menu for offshore investors features trusts, exempt corporations, world class banking and even family foundations to manage wealth. Unlike too many other jurisdictions, Panama stands by its iron clad financial privacy laws, waiving them only for probable cause of criminal activity. It has no tax treaties with any other nation and it does not tax foreigners who live there or base their offshore businesses there. Add to all that special residential and citizenship laws designed to attract foreigners, and you have some mighty inviting choices.

But whenever I recite this impressive litany, invariable I am asked, usually by an American: "How do you know that all this won't change? What if Panama sells out?"

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• Buy a luxury home at a 60% discount to comparable properties and pay NO REAL ESTATE TAXES for the next 15 years
• Legally shield your wealth from predatory lawyers and other busybodies; with iron-clad financial privacy laws
• Create your own international corporation and do business anywhere in the world - without leaving home, filing financial accounts or paying taxes to the local government

To discover how the very same opportunities are now waiting for you in Panama, click here.

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Of course nothing in life is certain, except eventual death. Not even taxes. And certainly not real estate prices, (more below). But the peculiar history of this tiny nation, (with asset protections laws dating back to the 1920's), makes it a wary friend of the United States government. A century ago, America helped to create Panama for Washington's geopolitical convenience, but the U.S. colonial control that ended on January 1, 2000, left behind a healthy Panamanian skepticism towards Uncle Sam, the Colossus of the North. Both that closeness and distance works to maintain Panama as an ideal tax haven that's not under the thumb of any nation. Compare that to the hapless British overseas territories whose offshore financial attractions have been curbed by the Labour government in London.

Time to Retire?

Recently our sister organization, International Living, in its 15th annual "Global Retirement Index" downgraded Panama from the top spot as the best place in the world for foreigners to establish a second or retirement home offshore. Mexico jumped four places to top the list. Panama fell in part because the price of real estate there has risen dramatically, almost irrationally, especially in Panama City. An added irritant has been the Torrijos government recently restricting tourist visas to just 30 days instead of the traditional 90 days, making it much more difficult for seasonal part-timers to shop for real estate or to live there. It is difficult to understand why Panama's politicians did not consider the importance of the 90-day visas before this change was made, but there is movement to repeal this thoughtless mistake.

Bubble Leak

But let's face it -- the big downer in Panama at the moment is the upward spiral of real estate prices, mainly in condo-saturated Panama City.

The great appeal to foreigners used to be the ability to buy a 3-bedroom, 2-bath condo with ocean view, a golf course town home, or a beach front cottage, for a third or half of what it cost in south Florida or California. With Panama City area prices now almost paralleling those in the U.S., practical foreigners eyeing residential Panama are less than impressed. (There are still many good bargains in beach front and mountain properties away from the city, but you have to be careful and do your shopping).

Understand that the unfortunate change I have described is economic and confined to real estate prices. Maybe the free market has gotten a bit too free. Meanwhile, Panama leads Latin America in GDP growth (9% this year), the expansion of the Panama Canal has started and will brings billions of dollars in construction and thousands of new jobs, and a new free trade agreement with the U.S. is pending.

The real estate bubble does not have a major impact on Panama as a tax haven, a financial privacy haven, an offshore banking center or as a place to base your global business -- all tax free. Its infrastructure is first-world and many of its offshore professionals are excellent. (Again, you need to be careful -- just as you should when doing business in America).      

Life is making do with what is best and at hand. For those who want legal tax savings, asset protection and privacy, history has made Panama an ideal 21st century offshore haven in a world where few remain. Panama has not "sold out." Yes, its real estate moguls and condo flippers have oversold themselves right out of the market. But just because the hot air is slowly leaking out of the Panama real estate bubble, (just as it has with a vengeance in the United States), does not mean Panama's other important attributes are impaired.

As a world class tax haven Panama still ranks at the top -- it's a nice place to have your cash and assets, even if, at the moment, you might not want to live there.

* Discover for yourself the real Panama and waht it has to offer; click here for latest edition of my book,  Panama Money Secrets.    LINK: http://web-purchases.com/190SPMON/W190H720/

* International Living 15th annual Global Retirement Index    LINK: http://www.internationalliving.com/retire/paid/09-01-07-top-heavens.html