The advantages of Panama incorporation
are generally related to tax benefits as well as a favorable business regime that allows ease incorporation and confidentiality.
Investors who open a company in Panama
can use their business structure for commercial and industrial activities, to acquire property and hold assets. The company can successfully be used for offshore operations and the jurisdiction has long been seen as one of the top locations for the formation of this type of company.
The five main advantages of Panama incorporation include the following:
Tax benefits: the tax system is based on whether or not the income is received from a Panamanian source; thus, there are no taxes on income derived from outside the country.
Confidentiality: companies incorporated in Panama benefit from confidentiality as per their operations and investors can also enjoy a number of bank secrecy laws.
Easy Panama incorporation: a company in Panama can be incorporated in a few steps, described below by our agents.
Accessible share capital requirements: there is no need for a paid-up capital for the company and there is no limit on the share capital.
No nationality constraints: there are no restrictions as per the nationality of the directors and shareholders; neither for their domicile.
Our team specializing in Panama company formation
details these advantages below. Investors who need complete information about the process of opening a company, apart from the advantages for doing business in this jurisdiction, can reach out to one of our agents for additional details.
Taxation in Panama
The jurisdiction has a territorial taxation system, meaning that only the Panama-sourced income is taxed. When a company obtains its income from outside of the country, it will not pay the income tax. There is a 25% rate on net taxable income or an alternative minimum tax system that has a general rate of 1.17% applied to the gross taxable income.
Panama incorporation is also an attractive option because of a series of investment incentives. We list some of these below:
• Exemptions via the Panama-Pacific Special Economic Area: tax exemptions for the gains from the transfer or sale of shares of companies located in the region as well as for the manufacture of high-tech products and other types of services.
• Exemptions for manufacturing companies: these can import equipment as well as raw materials under a duty-free regime.
• Exemptions for multinational companies: multinational headquarters companies are taxed at a 5% rate in the taxable net income that is derived from certain activities.
• Exemptions for call centers: call center activities can be exempt from income tax when they comply with a number of criteria.
• Investment: a number of tax incentives are in place for encouraging investments in tourist projects and facilities.
Panama company formation
Investors can choose to open a limited liability company, a corporation, a limited liability or a general partnership, a joint venture or a branch of a foreign company.
The registration of the company is a process that can last approximately two weeks, from the initial stages to the final receipt of the registration certificate. Investors are not required to be present in the country during the entire Panama incorporation process.
The company’s constitutive documents will include the name and the purpose of the capital, the amount of corporate capital as well as the domicile (which needs to be in Panama) and the names of the directors, officers, and shareholders.
Our team of agents can provide complete assistance for Panama offshore company formation and can also offer details about the management of companies in this jurisdiction.
According to the World Investment Report 2019, Panama had the following foreign direct investment values over the years:
- 2018: 5,549 million dollars for inward investment.
- 2017: 4,569 million dollars.
- 2016: 4,866 million dollars.
Panama is a location that offers multiple business and investment opportunities and where entrepreneurs enjoy competitive tax rates, a simple company formation process as well as the fact that they have access to a business regime that protects their confidentiality. Moreover, investors who are interested in Panama incorporation should know that the company does not need to submit special financial reports and international transactions are not subject to special reporting. The names of the directors and the shareholders do not need to be disclosed to the authorities.