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Company Formation Panama



Create a Company in Panama

Updated on Monday 13th January 2020

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Panama offers multiple investment opportunities and it has a number of well-developed sectors, such as finance and banking, trade and tourism.
Our team provides complete Panama incorporation services and our packages include assistance for selecting the business form, drawing up the Articles of Association as well as making the necessary submissions for registration. 

Reasons for investing in Panama

Foreign investors who wish to open a company in Panama enjoy a number of advantages. We list some of these below:
  1. A stable economy: the country has seen constant economic growth over the last years and it is a competitive economy among other jurisdictions in the Caribbean.
  2. Easy company formation: Panama incorporation is a simple process that takes a few days and can be assisted by our team of experts.
  3. Easy company management: local company laws allow for flexible company management as there is no need to hold meetings in Panama or to hold the accounts in this location. 
  4. Favorable taxation policies: Panama offers an attractive taxation regime as there is no tax on business activities or transactions performed abroad.
  5. Trade benefits: Panama has signed multiple free trade agreements and trade is liberalized; moreover, there is a free trade zone, among other special economic zones.
Investors who open a company in Panama can engage in all types of business activities. It is common for these companies to be involved in trade, asset acquisition, investment holding, and other purposes.

Steps for opening a company in Panama

Below, our team of agents who specialize in Panama incorporation list the main steps required to set up a company here:
  1. Choose the business form: there are several types of companies available, however, the S.A. or joint-stock company is one of the most popular and suited to many business purposes.
  2. Draft the company documents: investors are required to draft and then sign the company’s constitutive documents; we detail their content below.
  3. Register the company: the new legal entity is to be registered with the Public Registry.
  4. Open a bank account: this step can take place before registration if needed; the company will be required to have a local corporate bank account.
  5. Obtain licenses: some business activities require extra licensing, as per a particular business field; a financial services license is required for companies in this field, issued by the Superintendency of Banks.
Panama company formation is a simple process, especially when guided by a team of local experts. We recommend reaching out to our agents for more information on the process, in order to ensure that the incorporation takes place as fast as possible. The usual time needed to open a company is approximately five business days. In certain cases, our team can provide an expedite incorporation, under certain conditions. An alternative to incorporating a new S.A. or another type of company is to purchase an already existing and registered shelf company in Panama. Our agents can also provide details on this option. 
Investors who wish to benefit from a high degree of confidentiality can enlist the services of a nominee director. The local laws require the disclosure of the name of the company directors. Thus, when using this type of service, the beneficial owner’s name will not appear in the Panama registries, instead, the name of the nominee director will be used. The control of the company is still ensured by the beneficial owner who signs a fiduciary agreement with the nominee. The director appointed at a certain time can be removed through a letter of resignation. All of these details are discussed prior to concluding the agreement and enlisting the service. A similar option is available in case of shareholders who wish to maintain a high level of anonymity or who choose to refrain from disclosing all of their investments. The nominee shareholder package is available upon request.

Requirements for opening a corporation in Panama

The several times amended Law 32 of 1927 (of 26th February) On Corporations and the Commercial Code of Panama is regulating the activities of a popular form of business in Panama: the corporation.
First of all, before incorporation,  the company opened in Panama must reserve the name of the company at the Public Registry. If it’s available, it must contain one of the following terminations: Corp. (Corporation), Inc. (Incorporated) or SA (Sociedad Anonima)
A corporation in Panama is formed by a minimum of two founders and have its activities based on the Articles of Incorporation. The Articles are public and must be registered at the Panama Public Registry. It must state the name and the address of the founders, also the name, the address and objectives of the newly formed company, the total amount of the Corporate Capital and the way its divided into shares, details regarding the shares and the rights attached to it, the name and the addresses of the directors (it’s mandatory to be at least three), the name of the registered agent in Panama and other regulations decided by the members of the company and according to the law. If the Articles are written in another language than Spanish, an official translation must accompany it.
After incorporation of an offshore company in Panama, only a single shareholder is necessary in order to start the activities in this type of company.
The Board of Directors is taking all the daily decisions of a corporation and must be formed by at least three directors. Among their responsibilities, we can mention the appointing of the President of the company, the Secretary and the Treasurer. In some cases, officers and representatives must be appointed, also by the Board of Directors, but it’s not mandatory. The most important decision must be taken during the general meeting of the shareholders in matters which concerns the decrease or increase of the capital, any modification brought to the Articles of Incorporation, the decision of merger or liquidation of the company.
The Corporate Capital of this type of company is divided into shares which may have a nominal value or not. The shares have attached to it the rights and obligations of the owner, including the right to vote and must be paid at a date decided by the Board of Directors. Each shareholder receives a shares certificate where is stipulated the incorporation date of the company in the Mercantile Registry, the capital, the number of shares owned, if the shares were already paid, if not, the sum already paid, the rights and obligations attached to it and the classes of shares owned.
Another requirement of the corporations created in Panama is paying the annual registration fee. The industrial or commercial companies must have a Notice of Operation, before starting any activities. Exceptions are permitted.
The liquidation of a corporation established in Panama may occur if certain aspects were respected from the articles of association, if there was a unanimous decision of the shareholders, if the objectives of the company were achieved or if the Court decides that the company has broken several laws and needs to be liquidated.
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Below, our team of Panama offshore company formation agents answers a set of general questions regarding company registration and the requirements for businesses. 

What is the minimum share capital of a corporation in Panama?

There is no minimum share capital requested at the incorporation of a corporation in Panama.

How can I register for VAT in Panama?

The Value Added Tax has a value of 7 % for certain products and services, 10% for alcohol and 15% for cigarettes in Panama.
The registration may be voluntary or compulsory. The compulsory registration is made for the companies with an annual turnover above 36,000 USD or monthly turnover above 3,000 USD.
The registration is made by depositing certain specific documents at the Panamanian’s Taxpayers Registry and as a result, the certificate of registration is issued, that also specifies the taxpayer identification number. Foreign companies that are not operating in Panama are not allowed to register for VAT.

How can I open a bank account in Panama?

Opening a bank account in Panama requires the personal presence of the company’s representative because one of the requirements is a personal interview with him.
The company’s representative must also bring a set of documents such as: certified copies of the passport and another ID with photo, a copy of the document that proves that the staying in Panama is legal, two bank letters for each representative, credit references, a description of the business activities performed by the company, details regarding the provenience of the funds, the location of the company, the approximate annual or monthly funds that will be operated through the account and the reason why the bank account is opened. 

How can I recruit personnel in Panama?

The personnel of Panama it’s easy to be found through the recruitments agencies. The labor force is educated and the majority of candidates are English speaker which is clearly an advantage fro the foreign companies willing to operate a business here.

What are the uses of an offshore company in Panama?

Investors who open a company in Panama not only benefit from a favorable regime and no taxation, but they can also use and structure their legal entity as they see fit. Some of the common uses for an offshore company that is incorporated here include the following: trading company, shipping company, services company, investment company or holding company. The type of legal entity usually depends on the final use of the company, however, the commonly used business forms in Panama are suitable for all of these business purposes. For example, the S.A. can be used as a trading company or as an investment company. Likewise, investors may opt for a different business form.
A professional services company set up in Panama can be a beneficial business structure through which professionals such as business or financial consultants can offer their services to international clients. When incorporating here, they reduce their tax burden. Moreover, when providing services through a corporation, as opposed to a sole trader, investors limit the liability, as these would be registered by the company and not by themselves, as would be the case when providing services through a sole trader.
One of our agents can provide further details on the conditions that may apply to an offshore company according to its uses.

What is the overall economic situation in Panama?

Panama is situated in Central America, bordered by the Caribbean and the Pacific Ocean. It’s considered one of the most important offshore jurisdictions of the world.
Besides the money collected from the annual license fees paid by the offshore companies, Panama’s economy is based on the construction sector and also on the service sector: tourism, banking, commerce, trading.
Foreigners are attracted by the price discounts and advantageous taxes offered in the tourism sector. The infrastructure is highly developed, facilitating the exports and the imports of goods.
With a growing economy, liberalized trade and simple company formation, Panama is a recipient of foreign direct investments, as follows:
  • - foreign direct investments inflow in 2018: 5,549 million USD;
  • - foreign direct investments inflow in 2017: 4,569 million USD;
  • - investments inflow in 2016: 4,866 million USD.
Foreign investors are welcomed in Panama and they benefit from good business conditions, no corporate taxation, access to double taxation treaties as well as a minimum time to incorporate a new legal entity. Any currencies are permitted and there is no need to submit a mandatory minimum share capital, although a requirement for a minimum government fee for registration does apply. Investors who are interested in knowing more about the local conditions or wish to open a company in Panama can reach out to our agents for more detailed information about the applicable company laws as well as the disclosure principles and the licensing requirements. Our incorporation packages include comprehensive services along with the option to set up a virtual office in Panama, should this be the preferred manner of doing business.
Investors who wish to know more about Panama offshore company formation can contact us for complete details as well as specialized assistance for incorporation. We provide complete company formation packages.


Meet us in Panama

Call us now at +44 203 287 0408  to set up an appointment with our business consultants in Panama City, Panama. Alternatively you can incorporate your company without traveling to Panama.

As a BridgeWest client, you will benefit from the joint expertise of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Panama.

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