Panama is a popular jurisdiction for opening a company formation because of its favorable business climate, the fact that maintains a large Free Zone and its developed infrastructure. All of these features have helped the region gain its status as one of the main banking centers in the works. investor confidentiality is protected in this location and the country maintains banking secrecy laws that can be attractive for some entrepreneurs.
The following guide on offshore company formation in Panama presents the main issues that investors need to pay attention to before commencing the actual incorporation procedure as well as the main requirements that apply for the most widely used business forms.
Investors who wish to open a company in Panama
can reach out to our team of incorporation experts for detailed answers to their questions as well as more information than the one currently included in this short guide.
What is the most widely used business form in Panama?
The Panama Corporation or Sociedad Anomima is the most widely used business form because of the fact that it is easily incorporated and can be fully foreign-owned. Its equivalent would be the International Business Company in other offshore jurisdictions. It is a non-resident company used by many of the investors interested in Panama offshore company formation.
Other types of companies
include the limited partnership, the limited liability company or the foundation. One of our agents can provide you with complete details on all of the available business forms.
What is the general incorporation procedure?
The steps can be summarized as follows:
• Prepare the documents: the company founders are required to draw up the company’s Articles of Association and Memorandum.
• Confirm name: the name of the company needs to be a unique one and its availability is to be confirmed before the incorporation starts.
• Notary deed: the company documents, once drafted in their final form, are signed in front of a notary public.
• Registration: the final stage is the actual registration of the Panama corporation with the Companies Registry.
The incorporation process is a fast one and the actual registration of the new business takes place in a single working day. Foreign investors can facilitate this process by sending in the required documents in advance so that our team of Panama company formation agents
can prepare the documents as efficiently as possible. It is advisable to schedule additional time for visiting a notary public office. We can provide more details as needed.
What are the mandatory requirements for Panama company formation?
Companies in Panama are subject to a beneficial business regime, however there are certain licensing requirements that apply to selected business fields like banking, insurance, and reinsurance, funs management and investment funds or trusts. One of our specialists can provide investors with information as required.
What are the applicable restrictions?
The Panama Corporation cannot engage in a number of activities: banking and insurance, trustee services and management, insurance and reinsurance, collective investment schemes, fund management, investment fund administration, fiduciary activities and other activities that generally fall into the banking or insurance sector.
Other business forms like the limited liability company can be used for this purpose, subject to licensing as mentioned above. One of our agents who specialize in Panama incorporation can provide investors with detailed information.
What are the taxation requirements?
A Panama Corporation is not subject to taxes on foreign income, only on the income sourced from Panama. There are no applicable double tax treaties and there is no requirement for annual auditing, or annual account reporting for foreign income (please note that these are required if the income is of Panamanian source).
Other requirements for Panama companies include having at least one shareholder and three company directors as well as company officers, such as secretaries. However, there are no nationality restrictions for the secretary and the person appointed for this position does not need to be a resident. The three appointed directors can also serve as the company officers (the president, secretary, and treasurer).
Companies are required to pay an annual government fee.
The Panama Public Registry provides us with the following data regarding company formation:
- the total number of limited liability companies registered in 2019: 100.
- the number of foreign companies registered this year: 56.
- private foundations registered in 2019: 1,213.