Panama company registration

DOING BUSINESS IN PANAMA IN 2017

For over a decade, Healy Consultants Group PLC has efficiently and effectively assisted our Clients with i) business registration ii) business licensing iii) Panama business banking solutions iv) visa options and v) staff recruitment strategies. If properly structured, Panama business registration allows global entrepreneurs to legitimately conduct international business exempt from taxation.

SummaryCorporationShelf companyTax exempt LLCLLCFree zone LLCRepresentative officeBranch office
Also known asS.AS.A/SRLOffshore companySRLS.A/SRLOficina de RepresentaciónSucursales
Best use of company?All products and servicesClose a customer deal nowInternational businessAll products and servicesManufacturing and export tradingMarketing & researchSpecific projects
How soon can you invoice Clients/sign sales contracts?3 weeks1 week3 weeks3 weeks2 months1 month1 month
How soon can you hire staff?3 weeks1 week3 weeks3 weeks2 months1 month1 month
How soon can you sign a lease agreement?1 week2 days1 week1 week2 weeks1 week1 week
How long to supply corporate bank account numbers?1 month1 week1 month1 month2 months1 month1 month
How long to supply company registration / tax numbers?3 weeks1 week3 weeks3 weeks2 months1 month1 month
Corporate tax rate on annual net profits?25%25%0%25%25%0%25%
Limited liability entity?YesYesYesYesYesNoNo
Government grants available?YesYesNoYesYesYesYes
Government approval required for foreign owners?NoNoNoNoNoNoNo
Resident director/partner/manager/ legal representative required?NoNoNoNoNoYesYes
Minimum paid up share capital?US$ 1US$ 1US$ 1US$ 1US$ 1nonenone
Can bid for Government contracts?YesYesNoYesYesNoYes
Corporate bank account location?Banco NacionalBanco GeneralSingaporeCanal BankBHDBanco PanamaScotia Bank
Can secure trade finance?YesYesYesYesYesNoYes
VAT payable on sales to local customers?7%7%7%7%7%None7%
Average total business set up engagement costs?US$ 7,970US$ 16,065US$ 7,220US$ 6,220US$ 7,970US$ 9,440US$ 7,220
Average total engagement period?3 months3 months3 months3 months4 months3 months3 months


See full table

Accounting and tax considerationsCorporationShelf companyTax exempt LLCLLCFree zone LLCRepresentative officeBranch office
Statutory corporate tax payable on local sales?25%25%25%25%25%0%25%
Legally tax exempt if properly structured?YesYesYesYesYesNoNo
Group HQ tax incentives?YesYesYesYesYesNoNo
Must file an annual tax return?YesYesYesYesYesNoYes
Must file annual financial statements?NoNoNoNoNoNoNo
Must appoint an auditor?NoNoNoNoNoNoNo
Access to double taxation treaties?YesYesNoYesYesNoYes
Withholding tax on payments to foreign shareholders?10%10%10%10%10%None10%
Company RegistrationCorporationShelf companyTax exempt LLCLLCFree zone LLCRepresentative officeBranch office
Resident director/partner/manager/ legal representative required?NoNoNoNoNoNoNo
Minimum number of shareholders/partners?11111Parent companyParent company
Maximum shareholding for foreigners?100%100%100%100%100%100%100%
Minimum statutory paid up share capital?US$ 1US$ 1US$ 1US$ 1US$ 1nonenone
Security deposit to be kept with Government?NoNoNoNoNoNoNo
Shelf companies available?YesYesYesYesNoNoNo
Time to incorporate a new entity?3 weeks1 week3 weeks3 weeks2 months1 month1 month
Can easily convert to a PLC/Corporation?YesYesYesYesYesNoNo
Public register of shareholders and directors?NoNoNoYesNoYesYes
Can have preference shareholders?YesYesYesYesYesNoNo
Business ConsiderationsCorporationShelf companyTax exempt LLCLLCFree zone LLCRepresentative officeBranch office
Good entity for trademark registration?YesYesYesYesYesNoNo
Can secure an import and export license?YesYesNoYesYesNoYes

Sponsorship by a local citizen required?No
Our Client needs to travel to Panama for business set up?No
Temporary physical office solutions available?Yes
You need a local resident as bank signatory?No
Can be wholly foreign owned?Yes
The entity will likely be regulated by?Ministry of Commerce
Minimum number of directors/managers?3
Monthly VAT reporting to the Government?Yes
Must sign an office lease agreement during incorporation?No
Shareholders & directors documents to be attested/translated?Yes
Each foreign director needs a personal income tax number?No
Foreign director needs a residence visa?No
Maximum number of staff allowed?No maximum number for any entity
Expatriate to local staff ratio?None
Can secure residence visa for business owner?Yes
Other useful information
What will be included in my customer sales invoice?Click link
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?Yes
Average custom duties suffered?6.1%
Government foreign investment approval required?No
Average monthly office rental? (US$ per sq m)25
Minimum statutory monthly salary?US$ 600
Average monthly US$ salary for local skilled employees?2000
US$ deposit interest rate? (1 year average)2.5%
Overseas remittance currency controls?None
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Good
Crowd funding available in this country?Yes

Press the link headings below to read detailed, relevant, up to date information.

  • Advantages and disadvantages

    Advantages of Panama company registration

    business registration in Panama

    1. Setting up a company in Panama is easy because:
      • A Panamanian corporation can be registered in 2 weeks, with a minimum of 1 shareholder and 3 directors, who can be of any nationality. So, these companies can be 100% foreign owned;
      • The minimum paid up share capital required will be only US$1 and our Clients will not be required to travel to complete the engagement;
      • Panama’s company law does not require a resident corporation to publicly disclose details of its shareholders and directors, thereby allowing the investors greater privacy;
      • Foreign entrepreneurs can hold their company’s capital in US dollars. Consequently, they face no exchange rate risk when transferring capital to Panama.
    2. Panama company incorporation is managed by the local companies registry, an arm of the Panama Public Register;
    3. Panamanian companies will enjoy certain business incentives in the country including:
      • Companies investing US$50,000 in the tourism industry will receive benefits including i) 20-year exemption from import taxes payable on materials, equipment and vehicles ii) 20-year exemption from all real estate taxes and iii) annual accelerated depreciation of 10% for all real estate;
      • Investment in real estate enjoys certain incentives including i) 10-year corporate tax exemption on income from the sale/rental of the property ii) 100% deduction of renovation costs from the income tax and iii) 100% exemption from import duties to be paid on the renovation material;
      • Income from the forestry business will be totally exempt of corporate taxes up to 2018, if the business property has been registered with the National Environmental Authority;
      • Panamanian law only levies tax on income earned within the territorial boundaries of the country. Consequently, resident companies will pay no corporate tax on foreign investments and operations;
      • Companies registered in Panama can write off 10% of accounts receivable at the end of the year as bad debt under local accounting standards, thereby lowering the amount of corporate income tax payable;
      • Panama consistently ranks as the world’s best retirement destination. As a result, local businesses will have access to wealthy expats relocating to Panama on an annual basis;
      • The Latin Business Chronicle ranks Panama as the country with the 2nd highest internet penetration rate in Latin America. Consequently, businesses will find it easier to connect with consumers locally and around the world;
      • There are no foreign exchange controls in Panama to hinder the transfer of funds to and from the country;
      • The Panamanian currency (Balboa) is pegged to the US dollar. As a result, foreign entrepreneurs are protected from the problems of a volatile currency that usually plague developing countries;
      • Panama has signed Free Trade Agreements with 11 countries and Double Taxation Agreements with 10 countries to reduce withholding taxes on foreign payments. This makes Panamanian companies a more effective holding vehicle than many offshore companies.

    Disadvantages of Panama company registration

    1. While setting up a Panamanian company is easy, doing business in the country can be cumbersome for foreign entrepreneurs because:
      • Corruption and inefficient bureaucracy plague the Panamanian government. As a result, working with the authorities can cost a lot of time and money when dealing with bureaucracy and requests for bribes;
      • The judicial system in Panama is highly inefficient. A favourable decision in a court hearing depends on your political connections, rather than the facts of the case. Consequently, our Clients will not be able to depend on the law to resolve disputes;
      • Professionalism is lacking among local businesspeople. Our Clients will find it difficult to work with local individuals, be it Clients, partners or suppliers;
      • Only 8% of the local population speaks English, with the majority of the population speaking only Spanish.
    2. Our Clients are likely to face labour issues because:
      • It will be hard for Panamanian companies to find qualified labour in the country;
      • Panamanian law makes it harder to fire employees. Consequently, employers will find it difficult to get rid of non-performing employees;
      • Although union activity has historically been peaceful, in the recent years there has been an uptick in the number of strikes in the country;
      • Resident companies cannot hire more than 10% foreign employees.
    3. In 2015, Panama implemented an agreement with the US allowing the US Government a transparent view of the Panamanian bank accounts of its citizens. As a result, US citizens will lose any semblance of privacy in regards to their Panamanian accounts.
  • Best uses for a Panama company

    1. Panama is an excellent distribution base to the Americas because:
      • The World Economic Forum ranks Panama as the 2nd most competitive economy in Latin America. Furthermore, its location in Central America offers resident businesses easy access to both North American and South American countries;
      • Panama’s Colon Free Trade Zone is the 2nd largest FTZ in the world, after Hong Kong. Also, companies working here will enjoy 100% exemption from all taxes. This will optimize business costs for our Clients;
      • According to World Economic Forum’s 2014 Global Competitiveness Report, Panamanian infrastructure is the best in Latin America. The country boasts excellent airport and sea port infrastructure by virtue of the Panama Canal, thus offering cheap connectivity with the rest the Americas;
      • Panama has an abundance of unskilled labour who are available for work at a monthly salary of US$830.

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Company registration

  • Time to incorporate: Two weeks
  • Cost to set up: US$6,220
  • Minimum capital: US$1
  • Physical office required: No

Required appointments

  • Shareholders: 1
  • Directors: 3
  • Company secretary: No
  • Resident director: No

Key facts

  • Corporate tax rate: 25%
  • Corporate tax base: Territorial
  • Shelf companies: No
  • Main company type: SA

Contact us

For additional information on our business registration services in Panama, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Petar Chakarov, directly:
client relationship officer - Petar
ministry of foreign affairs ministry of economy and finance panama tourism sumarse - corporate social responsibility tourism authority of Panama ministry of commerce and industry