Company Formation in Panama Overview
Company registration in Panama includes a wide range of services providing full support: from filing documents to providing a registered office and registered agent.
Time to register a company
1-3 days
Average register a company timeline
Typical paid-up capital
no minimum
The minimum paid-up capital
Tax rate
25% of net income
Corporate tax rate
What is included:
- payment of all registration fees and government duties;
- preparation of incorporation documents in Spanish, including the memorandum of association and articles of association;
- execution of the incorporation documents by a notary and their registration in the Panamanian Public Registry (Registro Publico);
- preparation of the subscriber’s decision on the appointment of directors and refusal to subscribe;
- preparation of share certificates and the shareholder register;
- provision of a certificate of company registration and an extract from the Registro Publico;
- translation of corporate documents into English;
- preparation of the minutes of the first meeting of the board of directors on the distribution of shares, appointment of directors, agent, and registered office;
- provision of registered office services for one year, including provision of the registered office address;
- provision of registered agent services for a period of one year;
- notarized and apostilled copies of corporate documents;
- delivery of originals of corporate documents, as well as their certified copies by cou
Additional services (optional):
- nominee director services (mandatory requirement for all Panamanian companies);
- nominee shareholder services;
- assistance in opening a bank account in Panama and other offshore jurisdictions.
One year after the company is registered, and annually thereafter, you must pay government tax, as well as registration agency and office fees.
The process of registering a company in Panama takes about 1-3 days, including the preparation of documents and their notarization. After submitting the documents to the Registro Publico, company registration usually takes about five business days.
Overview — Setting up a company in Panama
Panama is one of the most attractive jurisdictions for registering offshore companies due to its legal and economic climate. The country offers many advantages for international business, such as political stability, a favorable tax system, and a strategic location. The Panama Canal provides access to markets in Latin and North America, as well as Europe, making Panama an ideal location for trade and transportation operations.
One of Panama’s main advantages is its territorial tax system. This means that income earned outside the country is not taxed, making Panama an ideal location for companies conducting international business. More than 300,000 registered companies use Panama for offshore operations such as banking, shipping, and trade.
Panama is also known for its high degree of confidentiality. Banking and corporate secrecy laws provide reliable protection for the assets and identities of company owners. In addition, Panama has no currency controls, which allows for the unhindered transfer of funds around the world.
Panama does not have strict accounting and auditing requirements for offshore companies, and board and shareholder meetings are not mandatory. This makes Panamanian companies a convenient tool for asset protection, tax optimization, and confidentiality.
Panama continues to be one of the most popular jurisdictions for company registration thanks to this combination of advantages, making it an attractive location for those seeking an effective solution for international business.
General information
| Country name | Republic of Panama |
| Capital | Panama City |
| Official language | Spanish |
| Currency | Panamanian balboa (PAB) and US dollar (USD) |
| Time zone | Eastern Standard Time (UTC-5) |
| Business entities | Corporations, limited liability companies (LLCs), partnerships |
| Regulatory authority | Panama Maritime Authority (for maritime companies), Ministry of Commerce and Industry |
| Tax benefits | Tax incentives in certain zones (e.g., Panama-Pacifico), no capital gains tax for offshore companies |
| Foreign ownership | 100% foreign ownership is permitted in most sectors |
| Minimum share capital | There are no minimum share capital requirements for corporations; however, LLCs typically require US$10,000. |
Why Choose Panama for Your Offshore Company?
Registering a company in Panama is a simple and affordable way to start a business, offering many advantages. Panama is popular with entrepreneurs and investors due to its flexible legal system, attractive tax policies, and high standards of confidentiality.
The main advantages of registering a company in Panama are:
Tax Benefits
One of the main advantages is the territorial tax system. Income earned outside Panama is not taxed. This makes Panama an ideal location for international companies that can significantly reduce their tax liabilities by operating outside the country.
Fast Set-Up of a Company
Registering a company in Panama takes only 4-5 business days. This quick process allows entrepreneurs to quickly start a business and begin operations in the shortest possible time.
Panama as a Financial Services Center
Panama has a developed financial infrastructure, making it an attractive center for offshore companies. A strictly regulated banking sector, stable currency, and access to a variety of financial services create a reliable environment for international business.
Privacy and Confidentiality
Panama provides a high level of confidentiality for business owners. Banking secrecy and personal data protection laws guarantee reliable protection of confidentiality and assets. Information about company beneficiaries is carefully guarded, making Panama one of the most private places to do business.
Financial Reporting for Panama Companies
Financial reporting requirements are minimal. Companies are required to maintain accounting records, but may do so anywhere in the world. The only mandatory payment is an annual franchise tax, which keeps the company in good legal standing.
Apostille/Notarization/Legalization
Panamanian company documents can be notarized or legalized for use in other countries. Panama is a signatory to the Hague Convention, which allows for the use of a simplified apostille procedure for the official recognition of documents abroad.
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Service packages for registration in Panama
Legal Entities Available in Panama
When you set up a company in Panama, you will have access to a wide range of legal forms and types of businesses that will suit various business needs.
Panamanian jurisdiction offers several legal structure options, the most popular of which are as follows:
Corporation (Sociedad Anónima – SA)
A corporation in Panama is similar to a public joint-stock company. To establish one, you need between three and fifty founders, who can be citizens of any country. The main advantage is the ability to issue shares, and the liability of shareholders is limited to their contribution. This structure is suitable for large companies planning to raise capital by selling shares.
Closed Joint Stock Company (Sociedad Anónima Cerrada, SAC)
This is a form of corporation with limited transfer of shares. Shares cannot be freely sold on the open market, and their transfer often requires the consent of the other shareholders. This type of company is suitable for family businesses or organizations where shareholders want to control share ownership and exclude outside influence.
Limited Liability Company (Sociedad de Responsabilidad Limitada – SRL)
Limited liability companies (SRL) are popular among small and medium-sized businesses. Two to five founders are required to establish a company, and their liability is limited to the amount of capital invested. An SRL provides flexibility in management and profit distribution, making it suitable for entrepreneurs seeking to protect their personal assets and maintain flexibility in their business structure.
Sole proprietorship
This is the simplest type of business, owned by one person. The sole proprietor is fully responsible for the business, including its debts and obligations. This structure is suitable for small businesses and self-employed individuals who want to manage their business directly.
Private Interest Fund (Fundación de Interés Privado)
This structure is often used to manage personal assets and plan for inheritance. The fund protects assets from creditors and other risks while ensuring confidentiality. It is not intended for commercial activities but can be used for charitable or personal purposes.
Non-profit organizations (Fundaciones sin Fines de Lucro)
These organizations are created for charitable, educational, or religious purposes. In Panama, they are exempt from income tax, making them attractive to those who want to carry out socially significant activities without a commercial purpose.
International Business Companies (IBC)
International Business Companies (IBCs) are a popular form of offshore structure in Panama for international operations. These companies are exempt from taxes on income earned outside Panama, making them particularly attractive for international business. IBCs can have one founder and one director, who can be individuals or legal entities of any nationality.
The advantage of an IBC is complete confidentiality and flexibility in management. This structure is suitable for companies engaged in foreign trade, as well as those seeking legal protection and tax relief.
When deciding to register a company in Panama, a number of factors must be taken into account, including the specifics of the business, the number of founders, the degree of liability of the participants, and the tax implications.
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Our team of experts will guide you through every step of the openning process, ensuring a smooth and efficient experience.
Types of business in Panama
Panama offers a wide range of opportunities for establishing and conducting various types of business:
- Holding
- Trust
- Financial Services
- Asset Management
- E-commerce
A holding company manages shares in other companies, thus creating a business group. The main purpose of such a company is to own and control subsidiaries, investments, or other assets, which allows for optimized management and a reduced tax burden. Holding companies are popular with international investors because income earned outside Panama is not taxed.
Trust companies in Panama are created to protect and manage assets in the interests of beneficiaries. A trust allows assets to be transferred to a third party (trustee) for management in order to protect them from creditors, divide assets, and ensure confidentiality.
The advantage of trusts is the high degree of asset protection and the ability to maintain the anonymity of the owner. This structure is suitable for those who want to protect their assets and ensure their transfer by inheritance.
Financial companies in Panama provide services in the areas of banking, insurance, and investment. The jurisdiction offers a developed financial infrastructure and favorable legislation for such organizations. Panama’s banking system is one of the most stable in the region, and privacy laws protect personal and corporate information.
The advantage of financial services in Panama is the ability to operate in a stable economy with minimal tax obligations. This form of business is suitable for international banks, insurance companies, and investment funds.
Asset management companies in this jurisdiction are engaged in investing and managing clients’ financial portfolios, including stocks, bonds, and real estate. Panama is an attractive jurisdiction for such companies due to its tax regime and high standards of confidentiality.
The advantage of asset management in Panama is the ability to work with international clients and minimize taxes on income earned abroad. It is suitable for private and corporate investors who want to manage their capital effectively.
E-commerce is the sale of goods and services via the Internet. Panama provides a favorable environment for startups and online companies due to the absence of taxation on income earned outside the country and a high level of confidentiality.
Advantages of e-commerce in Panama: low operating costs, no taxation of foreign income, and the ability to reach a global audience. Suitable for owners of online stores, IT companies, and startups focused on international markets.
Types of companies
| Corporation (South Africa) | The most common form: limited liability, flexible structure. |
| Limited liability company (LLC) | Suitable for small businesses; fewer formalities. |
| Partnership | General and limited partnerships are permitted. |
| Branch | Foreign companies can open a branch in Panama. |
Process for Opening a Company in Panama
Opening a company in Panama is a simple and fairly quick process for entrepreneurs who want to start a business in this investment-friendly jurisdiction.
Registration process and company formation timeframe
Company registration begins with planning. At this stage, decisions are made about the company’s operating mode, name, and shareholder structure. G&S Corporate Services assists in preparing all necessary documents and ensures their legalization, simplifying the process for clients. Once the planning stage is complete, our team manages the entire registration process, sending regular updates to clients via email and sending a set of corporate documents after successful registration.
Company members
To register a company in Panama, a minimum of three directors are required, who can be either individuals or legal entities. One shareholder is also sufficient, who may be a foreigner, which simplifies the process for foreign investors.
Company documents
Registering a company in Panama requires the preparation of a number of documents, including:
Remote registration
Panama offers remote registration, allowing entrepreneurs to set up companies without having to be physically present in the country. Thanks to professional services such as G&S Corporate Services, the registration process is convenient and fast. Clients can start the registration process from anywhere in the world, avoiding the hassle of travel and focusing entirely on their business.
Post-registration procedures
After registering a company, the next step is to open a bank account. Although this process can be complicated, G&S Corporate Services offers professional assistance, making it easier and faster for clients.
Necessary Documents to set up a company in Panama
To register a company in Panama, you must submit an application signed by all founders, as well as a number of documents that are submitted to the State Registry:
- Memorandum of Association and Articles of Association;
- Minutes of the founders’ meeting;
- Decision on the appointment of directors and shareholders;
- Copies of the founders’ passports;
- utility bills – electricity, water, or internet bills issued in the name of the founder and not older than three months;
- bank statement, not older than three months;
- certificate of residence confirming the founder’s address.
All these documents must be notarized.
All members of the corporation, including directors (or managers in LLCs), shareholders (or participants in LLCs), ultimate beneficial owners (UBOs), and contact persons, are required to provide documents proving their identity and address. This requires:
- certified color copies of passports – valid passports of all members;
- taxpayer identification number;
- proof of income (latest tax return or financial/bank statement for the last 12 months);
- a letter of recommendation from a bank, lawyer, attorney, or solicitor;
- proof of address, e.g., utility bills no older than three months.
Applicable legal framework and regulations
Panama’s legal system is based on the civil law system inherited from Spain, with influences from English common law. The regulation of offshore services in Panama is a combination of these legal systems, including the recognition of trusts and the creation of a developed infrastructure for financial services.
Legal basis for business in Panama:
- The Corporations Act (No. 32 of 1927) sets out the rules for the creation and operation of Panamanian corporations.
- The Trust Act (No. 1 of 1984) regulates the creation and management of trusts in Panama.
- The Limited Liability Companies Act (No. 4 of 2009) establishes the rules for the creation of limited liability companies (LLCs).
- The Private Funds Act (No. 25 of 1995) allowed for the creation of incorporated trusts used to protect assets and manage wealth.
- The Panama Commercial Code establishes general principles for the creation, management, and liquidation of companies.
- The Panama Civil Code contains the basic rules of civil law, including property rights, contracts, and torts, as well as provisions on family law and inheritance.
- The Panama Tax Code describes the various types of taxes applicable to individuals and legal entities in the country, as well as the procedures for filing tax returns.
- The Labor Code of Panama regulates labor relations, establishes the rights and obligations of employers and employees, the procedure for concluding employment contracts, working conditions, and minimum wages.
Laws on attracting foreign investment
The Panamanian government passed Law No. 32 on Free Trade Zones (2011) to attract foreign investment and promote economic development.
Additional laws
There are also other laws, such as Law No. 45 on Consumer Protection (2007) and Law No. 81 on Personal Data Protection (2019), which regulate certain aspects of business.
Overall, the legal framework for doing business in Panama is considered modern and favorable, with the government actively working to simplify the regulatory process and reduce red tape.
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Taxation System in Panama
Panama has a business-friendly tax system that offers companies and investors a number of advantageous conditions. The list of main taxes includes:
- Corporate taxes
The corporate income tax rate is 25% and 30% for companies with more than 40% state ownership. Tax returns are filed within three months after the end of the fiscal year, with the possibility of a one-month extension.
- Capital gains tax
When transferring ownership, a transfer tax of 2% is levied, and when selling real estate, a capital gains tax of 10% is levied on net income.
- Branch income tax
The profits of branches of foreign companies are subject to the same taxes as the profits of local companies.
- Value added tax (VAT)
The standard VAT rate is 7%, 10% for alcoholic beverages, and 15% for tobacco products. Some goods, such as food and medical services, are exempt from VAT.
- Advance tax on dividends
Companies are required to pay an additional tax of 4% on behalf of shareholders if dividends have not been paid. For companies in the free economic zone, the rate is 2%.
- Trade privilege tax
All registered companies are required to pay an annual tax of US$300, as well as a penalty for late payment.
- Annual license tax
Companies in the trade and industry sector pay a tax of 2% of net value, but not more than US$60,000.
- Social security tax
Employers and employees pay taxes at the established rates.
- Interest and dividend tax
Services and fees paid to residents are not taxed, except for dividends. Interest income and dividends are taxed at the normal rates, but only at 50% of the income.
Panamanian companies conducting international business enjoy significant tax benefits. They are completely exempt from all types of local taxes on income earned abroad.
Taxation
| Corporate tax rate | 25% of net income |
| VAT (value added tax) | Standard rate of 7%; applies to goods and services. |
| Capital gains tax | 10% on profits from the sale of assets. |
| Withholding tax | Depends on the type of payment (e.g., dividends, royalties). |
What are the other important requirements to register a company in Panama
The Panamanian Public Registry plays a key role in registering and controlling commercial activities in the country. However, information about directors is not publicly available. The company is required to maintain an internal register with information about directors, including their names, addresses, and copies of their identity documents.
The register of shareholders is not available to the public. Companies are required to keep shareholder data within the company. The internal register must contain information including the names, addresses, number of shares, and class of shares owned by each shareholder.
Nominee services
Panamanian law allows for the appointment of nominee directors or shareholders to enhance confidentiality and protect the identity of owners.
Corporate structure
| Minimum number of shareholders | 2 for most types of companies |
| Minimum number of directors | 3 (may be the same as the number of shareholders) |
| Shareholder residency requirement | None; foreign shareholders are permitted |
| Local registered office requirement | Yes; a registered office in Panama is required. |
| Public register of shareholders | No; shareholder information is confidential |
Economic substance
Although Panama is considered an offshore jurisdiction, it has introduced certain requirements for economic presence.
The main requirements for economic presence in Panama are:
- Local address and office: The company must have an official registered address in Panama and, as a rule, rent a physical office.
- Local employees: It is necessary to hire local employees on a full-time basis. The number of employees depends on the type of activity of the company and the scale of its operations.
- Bank accounts in Panama: The company must open and maintain bank accounts with local banks.
- Meetings in Panama: Regular meetings of directors and shareholders must be held in Panama or using appropriate technology.
- Note: Economic presence requirements may vary depending on the type of activity of the company and other factors
Banking services for companies in Panama
Panama’s banking system is one of the largest and most developed in Central America.
Advantages of the banking system in this jurisdiction:
- stability and reliability – Panama’s banking system is considered one of the most reliable in Central America;
- wide choice of banks – there are many local and international banks in the country offering a variety of banking products and services;
- confidentiality – Panama respects banking secrecy, which makes it an attractive place to do business.
As a rule, a corporate account in a Panamanian bank is opened within 1–2 business days after the company is registered.
List of documents and requirements for opening a corporate bank account:
- company registration certificate;
- Company charter;
- Documents confirming the identity and authority of the director;
- Documents confirming the source of funds (not always required).
Among the leading banks in the country are Banco General, Bladex, and Bancolombia Panama.
Banking in Panama
| State-owned banks | Several state-owned banks focus mainly on development financing. |
| Central bank | Banco Nacional de Panamá manages monetary policy and currency issuance. |
| Number of banks | Approximately 80 banks, including many international organizations. |
| International financial institutions | Includes the Inter-American Development Bank (IDB) and CABEI. |
| Credit rating | Rated Baa2 by Moody’s and BBB by S&P, indicating moderate credit risk. |
| Corruption ranking | Ranked 93rd in the world on Transparency International’s Corruption Perceptions Index. |
| Judicial system | Independent, but faces problems of inefficiency and corruption. |
| Executive | The President of Panama appoints the central bank’s board and influences monetary policy. |
Corporate information
| Possibility of purchasing ready-made companies | Available through various service providers; often referred to as “shelf companies.” |
| Legal System | Based on civil law, influenced by Spanish legislation, with a robust corporate governance structure. |
| Local registered office | Mandatory for all companies; must have a physical address in Panama. |
| Organizational and legal forms | Common forms include corporations (SA), limited liability companies (LLC), and partnerships. |
| BPA designation in the name | Company names must include “SA” for corporations or “LLC” for limited liability companies. |
| Local registered agent | Mandatory appointment of a local registered agent to ensure compliance with legal requirements and maintain correspondence. |
| Beneficiary information | Beneficial owner information is required but may remain confidential if a corporate structure is used. |
| Bearer shares | Permitted, but subject to certain rules; bearers must comply with due diligence and reporting requirements. |
| Typical share capital | The value usually starts at US$10,000, but may be higher depending on the needs of the business. |
| Terms of capital payment | Capital may be paid in full upon incorporation or in installments as specified in the company’s articles of association. |
| Standard par value of shares | Usually set at $1, but may vary depending on the company’s structure and preferences. |
Corporate governance
| Minimum paid-up capital | For most types of companies, there is no minimum |
| Bearer shares | Permitted, but must be registered |
| Auditor requirement | Not required for all companies |
| Requirement to hold an annual general meeting | Yes, must be held annually |
About company registration in Panama (faq)
How to open a company in Panama?
The process of opening a business in Panama includes choosing the type and name of the company, registering with the Panamanian registry, obtaining a tax number, and opening a bank account. You can learn more about this from G&S Corporate Services business consultants.
How much does it cost to start a company in Panama?
The cost of opening a company in Panama can vary depending on various factors, such as the type of company, agent services, office expenses, and other additional services. The government fee for registering a company in Panama is $500 for corporations and $250 for limited liability companies.
How long does it take to register a company in Panama?
The entire process of registering a business in Panama takes about 4-5 days.
Why is company registration in Panama so popular today?
Company registration in Panama is popular due to favorable tax conditions (0% tax), political stability, and privacy laws. The ease of registration, flexible company structures, and strategic location for international trade make the country attractive to companies seeking offshore opportunities.
How to open a bank account in Panama?
To open a bank account in Panama, you need to choose a bank, prepare the necessary documents, submit them to a bank employee, undergo an identity verification procedure, and, after your application is approved, receive your current account details.
