Why Panama is the best jurisdiction for registering yachts and ships
Contributed by Caporaso & Partners Law Office
28 December, 2020
Panama is the best jurisdiction for registering yachts, ships and boats, and this is why it is the world leader in boat inscriptions.
Panama is the best jurisdiction for registering yachts, ships and boats and holds the highest number of registered ships regarding tonnage. The most recent data show that at least 16% of the world fleet navigates under the Panamanian flag. Why is this happening?
Content of this article
- Flags on boats, a subject with centuries of history
- How to register a ship in Panama
- Panama grants nationality to a ship regardless of the operator's residence
- The owners can be Panamanian or foreigners
- Panama is the best jurisdiction for registering yachts, ships and boats; see the documents to be presented.
- Panama is the best jurisdiction for registering yachts, ships and boats; there are also lots of advantages
- Simple, expedited process for establishing new domiciliation, and discounts for a fleet.
Flags on boats, a subject with centuries of history
Boats have carried a country's flag for an awfully long time. In the XVIII and XIX centuries, the British showed the Norwegian flag on their ships so they could avoid the restrictions on fishing. They even began flying pirate flags. During the second World War, ship owners opted to registering their boats in neutral countries, to avoid battles with the nations involved in the war.
In 1987, Kuwait asked the United States and the then Soviet Union to change the registration of its ships to use the flag of these two countries, to obtain diplomatic protection. These days, it is essential that all vessels have a nationality and show the flag of the country where they are registered. When a boat is found in international waters, it is subject to the laws of the place where it was registered and, therefore, the State exercises jurisdiction over the ship and the people that are on it.
How to register a ship in Panama
Since 1917, beginning with the approval of Law 63, Panama has registered every type of vessel. In 2008, Law 57 was approved, regulating ship flagging in Panama. Thanks to this, it is now much simpler to register vessels with the system known as "open registry". Through this procedure, it is possible to go through the procedure much quicker, saving almost 80% of the time when compared to earlier delays. Plus, before this Law, ships were registered for only two years and a renewal was obligatory. Meanwhile, Law 57 establishes that the vessels are registered indefinitely.
Currently, Panama is not only the country with the highest number of registered vessels, but the leading nation in gross registered tonnage (GRT). In 2020, even during the Coronavirus pandemic, Panama registered 883 new boats that declared a total cargo capacity of 11.4million tons of GRT. This is why experts feel that Panama is the best jurisdiction for registering yachts and ships.
Panama grants nationality to a ship regardless of the operator's residence
Panama's Maritime Authority has the legal authority to grant nationality to a ship regardless of the operator's or owner's residence. All vessels with the Panamanian flag are governed by the laws of this country. Plus, the working conditions of the sailors must be those recognized by the International Maritime Labor Convention, of which Panama is signatory.
The act of granting nationality to a vessel offers benefits to both the country that registers it and to those who resort to it. For the country, the advantages come from the income that they receive from the payment for the right to register, although the State assumes responsibilities for the lives of the people on board the boats who are Panamanian nationals. For those who register the ship, not only do they comply with an international standard, but they also receive the legal support of the place where they have registered the vessel.
The owners can be Panamanian or foreigners
The Panamanian boat registry accepts vessels that belong to Panamanian citizens or foreigners. All ships have to comply with Maritime security, prevention and control of contamination standards, among others.
The procedure for registering vessels with the Panamanian flag is simple and very quick. Any person or offshore company an apply. The first step is to make the request for a Provisional Registration. This can be completed through a Panamanian lawyer or also at the Panamanian Consulates abroad. There are currently more than 96 offices for the Panamanian Ship Registry around the world.
Documents to be presented for registering a vessel in Panama
- Power of Attorney for the owner of the vessel. Said power must be apostilled.
- The vessel's title deed.
- Certificate of tonnage or capacity expedited by an authority recognized by Panama and its confirmation by the office in New York.
- Original certificate of purchase, Registration of the Deed.
- Certificate of cancellation of earlier registration.
- Technical certificates pertaining to the ship in accordance with international conventions.
- Request for Radio License.
Once all documents have been delivered and the taxes have been paid, the Consulate or main Office in Panama delivers a provisional license, which is valid for six months. Also, the requestor obtains a provisional radio license, valid for three months.
Finally, if all of the documentation is in order, the Regulation License and the Radio License will be issued, expedited in Panama. For the radio license, the interested party will have to present additional documentation on communication equipment that he will keep on board the vessel.
Advantages of registering a vessel in Panama
Registering a vessel in Panama offers many advantages. As we have explained, any person or business, regardless of nationality or where the company is located, can register a ship with the Panamanian flag.
This vessel is exonerated from payment of income taxes or charges for retention when the income obtained by the ship is the product of international commerce. The idea is like the way offshore companies in Panama work: income taxes are never paid when income is obtained abroad.
Another important advantage is that there's no need for a minimum tonnage to register a boat in Panama. Therefore, yachts and small containers can show the Panamanian flag.
Process for simple and expedited new residence and discounts for fleet
For those owners who already have a registered vessel, but wish to transfer it to Panama, the process is simple. The titleholder does not have to inspect his boat again if he already has the Safety and Tonnage Certificate. This way, the boat does not have to go through drydock for its registration. This way, the owner saves money. Added to this is the fact that Panama accepts double registration of boats; this means that the vessel can be registered in another country.
Furthermore, Panama accepts the registration of vessels that are up to 25 years old. This disposition contrasts with that of most nations, which only allow the registration of new ships.
For the owners of fleets of vessels, Panama is by far the best place to register these ships, because it offers significant discounts. For example, a fleet integrated by 5 to 15 boats obtains a 20% discount in the Ships Registry in Panama. Meanwhile, fleets of 16 to 5o boats receive a 35% discount. Those fleets with 50 or more vessels take advantage of a 60% discount.
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