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Registering a Company in Panama: Pluses and Minuses



Below we discuss the advantages of registering a business company in Panama, a country in Central America on the Isthmus of Panama between the Caribbean Sea and the Pacific Ocean. Panama is among the countries that are highly popular with entrepreneurs and investors from different parts of the world. Fast economic growth, flexible fiscal legislation, various government programs aimed at attracting foreign investors, and friendly immigration policies: these are the main factors that make Panama attractive for investors.

Let us list the main ‘pluses’ of starting a business company in Panama:

  •       Flexible legislation;
  •       High speed of company formation;
  •       Loyal fiscal policies;
  •       Inexpensive office rent;
  •       High-speed Internet connection;
  •       Advanced infrastructure;
  •       Stable banking system;
  •       Comparatively low cost of living;
  •       Inexpensive labor force;
  •       12 Free Trade Zones in total with Colon Free Zones and Panama Pacifico area being the most prominent ones;
  •       Lack of currency control;
  •       Nominee services are legal;
  •       Extremely favorable geographical location;
  •       The US dollar is in free circulation.

You are welcome to visit this website if you would like to find out about other business opportunities that Panama offers.

Please note that foreign companies registered in Panama are not allowed to engage in some business areas. These include the following ones:

  •       Production and trade in explosives;
  •       Aviation industry;
  •       Telecommunication services;
  •       Mining industry.

If your Panamanian-registered company performs business operations in Panama, it has to pay all the taxes and obtain various licenses and permits. If it does business in foreign countries, however, it is tax-exempt in Panama.

Promising business areas that you should consider if you are thinking of registering a company in Panama:

  •       Travel business;
  •       Real estate market;
  •       International business;
  •       Agriculture;
  •       Virtual business;
  •       Services for emigrants;
  •       Franchising.

Please note that banks, trusts, insurance, and reinsurance companies have to obtain licenses in Panama.

Available forms of company ownership in Panama

Resident and non-resident companies have equal rights in Panama. Tax exemptions are available to Panamanian-based offshore companies deriving profits from business operations outside Panama.


Your offshore company in Panama can have one of the following forms of ownership:

  •       Foreign corporation;
  •       Limited liability company;
  •       Limited liability partnership;
  •       General partnership;
  •       Stock corporation;
  •       Professional partnership;
  •       Trust;
  •       Private foundation.

Limited liability companies and stock corporations are the most popular forms of offshore company ownership in Panama.

Key benefits that offshore companies enjoy in Panama and requirements that they have to meet

The benefits that foreign companies enjoy in Panama are substantial but they have to meet certain requirements anyway:

  •       No requirements as to the registered capital amount;
  •       If the income is derived from a foreign country, the income tax is 0%;
  •       The company registration fee is US$ 850 (although the amount may depend on the form of company ownership);
  •       The annual company registration extension fee is US$ 250;
  •       Both residents and non-residents of Panama can be beneficial owners of the company;
  •       Both private individuals and corporate entities can act as company owners;
  •       The company has to have an office in Panama.

If you are registering a stock corporation, you have to meet the following requirements:

  •       The company has to have at least 3 directors;
  •       A president (one of the directors);
  •       A Secretary; and
  •       A treasurer.

If you are registering an LLC in Panama, it can have only 1 member and 1 manager (it can be the same person). In other words, you can be the sole owner of an LLC in Panama.

Bank accounts in Panama

You can also open a corporate bank account in Panama. Please note that many Panamanian banks specialize in different sets of banking services. The following documents are required to apply for banking services in the country:

  •       Passport, ID card, or driver’s license;
  •       Utility bills;
  •       References from other banks;
  •       Bank statements;
  •       Recommendations from partners or lawyers;
  •       Tax declaration, etc.

All banks in Panama guarantee a high level of banking information confidentiality.

Taxation system in Panama

Panama has a territorial taxation system, which means that only the income made on the territory of Panama is taxed in the country. If profits are obtained abroad, no taxes are payable.

The same holds for companies registered in Free Trade Zones. They do not have to pay any import or export duties and they are exempted from a number of other taxes payable in ‘mainland’ Panama. Main tax benefits in Panama in brief:

  •       The dividend tax is 10%;
  •       No interest tax is charged;
  •       No property tax is charged;
  •       No inheritance tax is charged in Panama either.
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Because Panama plays by the international rules and participates in the automatic exchange of information between countries, you will have to acquire a TIN for your company. In addition to that, you will have to keep the financial records for five years and make them available on an official request.

Panama has free trade agreements with the United States, Peru, Singapore, Taiwan, Guatemala, Canada, Nicaragua, and other countries.

It takes about three weeks to register a company in Panama. You will have to supply fewer documents when applying for company registration in comparison to many other countries in the Americas and in Europe.

All offshore companies have to have the following items in Panama:

  •       A company office;
  •       A company representative (agent);
  •       A legal address.

You don’t have to pay a personal visit to Panama if you would like to register a company there as this can be done remotely with the help of a trusted agent.

List of documents that you have to have when applying for company registration in Panama

You have to prepare the following application documents:

  •       Articles of incorporation;
  •       Memorandum of association;
  •       registered agent;
  •       office with registered office address;
  •       Minutes with a resolution appointing a director;
  •       Trust declaration and shares certificates (if applicable);
  •       Power of attorney;
  •       Company seal.

All the documents have to be translated into Spanish if they are written in another language. The translations have to be notarized and apostilled.

Documents that you will receive when the company is registered:

  •       Certificate of Incorporation;
  •       Articles of association;
  •       Register of members;
  •       Share certificates;
  •       Declaration of Trust, if you are using nominee services.

Minuses in Panama

To conclude, let us point out some ‘minuses’ that Panama has:

  •       There are some restrictions for foreign company founders in Panama;
  •       If you fail to pay the annual company registration fee, the fine is going to be huge;
  •       Panamanian-registered companies have to have economic substance in the country;
  •       Personal information about company founders and beneficial owners is not available to the public but the Business Register will have it anyway. This information can be shared with third parties only on a court decision and it has to be a Panamanian court.

Panama is not flawless but this holds any other country too. In view of all the advantages that this Central American country offers, it would be reasonable to consider the opportunity of establishing a company in Panama.

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