Panama company registration

DOING BUSINESS IN PANAMA IN 2022

pay fee by instalmentsbusiness setup without travelGuaranteed solutions

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.

Compare different Panama entities Corporation Shelf company Tax exempt LLC LLC Free zone LLC Representative office Branch office
Also known as S.A S.A/SRL Offshore company SRL S.A/SRL Oficina de Representación Sucursales
Best use of company? All products and services Close a customer deal now International business All products and services Manufacturing and export trading Marketing & research Specific projects
How soon can you invoice Clients/sign sales contracts? 3 weeks 1 week 3 weeks 3 weeks 2 months 1 month 1 month
How soon can you hire staff? 3 weeks 1 week 3 weeks 3 weeks 2 months 1 month 1 month
How soon can you sign a lease agreement? 1 week 2 days 1 week 1 week 2 weeks 1 week 1 week
How long to supply corporate bank account numbers? 1 month 1 week 1 month 1 month 2 months 1 month 1 month
How long to supply company registration / tax numbers? 3 weeks 1 week 3 weeks 3 weeks 2 months 1 month 1 month
Corporate tax rate on annual net profits? 25% 25% 0% 25% 25% 0% 25%
Limited liability entity? Yes Yes Yes Yes Yes No No
Government grants available? Yes Yes No Yes Yes Yes Yes
Government approval required for foreign owners? No No No No No No No
Resident director/partner/manager/ legal representative required? No No No No No Yes Yes
Minimum paid up share capital? US$ 1 US$ 1 US$ 1 US$ 1 US$ 1 none none
Can bid for Government contracts? Yes Yes No Yes Yes No Yes
Corporate bank account location? Banco Nacional Banco General Singapore Canal Bank BHD Banco Panama Scotia Bank
Can secure trade finance? Yes Yes Yes Yes Yes No Yes
VAT payable on sales to local customers? 7% 7% 7% 7% 7% None 7%
Average total business set up engagement costs? US$ 7,970 US$ 16,065 US$ 7,220 US$ 8,320 US$ 7,970 US$ 9,440 US$ 7,220
Average total engagement period? 3 months 3 months 3 months 3 months 4 months 3 months 3 months

See full table

Accounting and tax considerations Corporation Shelf company Tax exempt LLC LLC Free zone LLC Representative office Branch office
Statutory corporate tax payable on local sales? 25% 25% 25% 25% 25% 0% 25%
Legally tax exempt if properly structured? Yes Yes Yes Yes Yes No No
Group HQ tax incentives? Yes Yes Yes Yes Yes No No
Must file an annual tax return? Yes Yes Yes Yes Yes No Yes
Must file annual financial statements? No No No No No No No
Must appoint an auditor? No No No No No No No
Access to double taxation treaties? Yes Yes No Yes Yes No Yes
Withholding tax on payments to foreign shareholders? 10% 10% 10% 10% 10% None 10%
Company Registration Corporation Shelf company Tax exempt LLC LLC Free zone LLC Representative office Branch office
Resident director/partner/manager/ legal representative required? No No No No No No No
Minimum number of shareholders/partners? 1 1 1 1 1 Parent company Parent company
Maximum shareholding for foreigners? 100% 100% 100% 100% 100% 100% 100%
Minimum statutory paid up share capital? US$ 1 US$ 1 US$ 1 US$ 1 US$ 1 none none
Security deposit to be kept with Government? No No No No No No No
Shelf companies available? Yes Yes Yes Yes No No No
Time to incorporate a new entity? 3 weeks 1 week 3 weeks 3 weeks 2 months 1 month 1 month
Can easily convert to a PLC/Corporation? Yes Yes Yes Yes Yes No No
Public register of shareholders and directors? No No No Yes No Yes Yes
Can have preference shareholders? Yes Yes Yes Yes Yes No No
Business Considerations Corporation Shelf company Tax exempt LLC LLC Free zone LLC Representative office Branch office
Good entity for trademark registration? Yes Yes Yes Yes Yes No No
Can secure an import and export license? Yes Yes No Yes Yes No Yes
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? between 3% and 40%
Government foreign investment approval required? No
Average monthly office rental? (US$ per sq m) 25
Minimum statutory monthly salary? US$345
Average monthly US$ salary for local skilled employees? 2768
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

Panama business setup summary

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

    • Setting up a company in Panama is easy because:
      • 100% foreign ownership of Panama companies is allowed;
      • A company can be registered in two weeks;
      • Only one shareholder is required, who can be of any nationality;
      • Multinational Clients do not need to travel to set up a Panama company;
      • The minimum paid up share capital is just US$1;
      • There is no public register of shareholders and directors;
      • Foreign entrepreneurs can hold their company’s capital in US dollars.
    • A Panamanian LLC is tax-efficient because:
      • Overseas income is exempt from Panama corporation tax;
      • Tax-resident companies can write off 10% of accounts receivable at the end of the year as bad debt under local accounting standards;
      • Panama has access to Free Trade Agreements with 17 countries and Double Taxation Agreements with 10 countries to reduce withholding taxes on foreign payments;
      • Panama’s Colon Free Trade Zone (FTZ) is the world’s second-largest FTZ after Hong Kong. Companies in Colon FTZ enjoy 100% exemption from all taxes.
    • There are no foreign exchange controls in Panama. The Panamanian currency (Balboa) is pegged to the US dollar and so is protected from currency volatility.
    • Panamanian companies enjoy certain business incentives. These include:
      • Tourism companies investing US$50,000 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;
      • Real estate companies enjoy i) 10-year corporate tax exemption on income from sale/rental of property ii) 100% deduction of renovation costs from income tax and iii) 100% exemption from import duties to be paid on renovation material.
    • Panama is a good geographical location for export-focused companies trading with North America, South America and the Caribbean.
    • Our multi-national Clients can secure a Panama permanent residence visa by:
      • Applying for a fast track Friendly Nations Visa, which offers a path to permanent residence;
      • Applying for a Self Economic Solvency Visa, valid for two years, which requires investment in Panama of at least US$300,000; or
      • Applying for a Panama Business Investor Visa by investing in a Panama business with at least $160,000 in capital stock. After two years, the visa holder can apply for PR.
    • Panama is one of the world’s top retirement havens because of:
      • low cost of living;
      • low healthcare costs;
      • low levels of street crime;
      • low or no taxes.

    Disadvantages of Panama company registration

    • Panama companies require a minimum of three directors to be appointed. Usually, our multi-national Clients ask Healy Consultants Group PLC to supply professional passive nominee directors.
    • A Panamanian LLC portrays a poor tax haven image for global business. In February 2020, Panama was added to the European Union’s (EU) tax havens blacklist for its failure to implement ‘economic substance’ requirements on local companies, in order to crack down on tax evasion.
    • Panamanian banks are not secure to hold our multi-national Clients’ funds because:
      • The country’s credit rating is i) BBB+ with a negative outlook (S&P) and ii) BBB with a negative outlook (Fitch);
      • In June 2020, Fitch affirmed Banco General at BBB+ rating with a negative outlook.
      • The health and security of Panama’s banking sector is dependent on the health of South American economies and inter-bank lending with overseas banks;
      • Reduced economic activity, and therefore earnings, of Panama banks will likely weigh on profitability and asset quality. This, in turn, could affect the ability of banks to lend to Panamanian companies;
      • Banks in Panama share information on beneficial owners’ accounts with 74 jurisdictions as part of its commitment to Common Reporting Standards protocols.
      • In 2015, Panama implemented an agreement with the US allowing the US Government a transparent view of the Panamanian bank accounts of US citizens.
    • Doing business in Panama is challenging because:
      • Panama banks are i) slow in onboarding new businesses and ii) have onerous Know Your Customer due diligence processes;
      • Clients spend a lot of time and money dealing with corrupt and inefficient bureaucracy;
      • The judicial system in Panama is inefficient. A favourable decision in a court hearing depends on your political connections, rather than case facts;
      • Only 8% of the local population speaks English, with the majority of the population speaking only Spanish.
    • Our Clients are likely to face labour issues in Panama because:
      • Despite high unemployment, it is hard to find qualified labour in the country;
      • Resident companies cannot hire more than 10% foreign employees;
      • It is difficult to get terminate the contracts of non-performing employees under Panamanian law;
      • Although union activity in Panama has historically been peaceful, in recent years there is greater unrest. This is likely to intensify as unemployment soars.
  • Best uses for a Panama company

    1. Panama is an excellent distribution base to the Americas because:
      • Panama’s location in Central America offers resident businesses to access both North American and South American countries at ease;
      • 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;
      • 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$345.

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Contact us

For additional information on our business registration services in Panama, please contact our in-house country expert, Mr. Petar Chakarov, directly:
client relationship officer - Petar
  • Mr. Petar Chakarov
  • Client Engagements Manager
  • Contact me!
ministry of foreign affairs ministry of economy and finance panama tourism sumarse - corporate social responsibility tourism authority of Panama ministry of commerce and industry