Business entities in Panama in 2023

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Healy Consultants assists our Clients with choosing the optimum corporate structure to suit their business needs. The commonly preferred business entities in Panama are the Panamanian Corporation and the LLC. Alternatively, our Clients may also choose to incorporate a Branch or a Representative Office. Panama’s company law system is based on civil law, with corporate structures similar to those in France and Spain.

The Panamanian Corporation

choosing the most optimal business entity in Panama

  • This type of company is commonly incorporated by foreign entrepreneurs in Panama. The Panamanian Corporation must appoint at least 3 directors and 1 shareholder, who can be of any nationality or place of residence. Furthermore, the minimum initial share capital required will be only US$1;
  • The directors and shareholders will not be required to register their personal details for public records. This is one of the key advantages of the Panamanian corporation, whose Spanish name is “Sociedad Anónima”.

Limited Liability Company (Panama LLC)

  • Like the Corporation, an LLC can be set up with only US$1 of capital. Also, 3 directors and 1 shareholder of any nationality must be appointed;
  • However, unlike a corporation, an LLC must publicly disclose the details of its directors and shareholders.

The Panama branch office

The Panamanian is by definition a 100% foreign-owned business entity, as it is simply a local establishment of a foreign company. While the scope of business for this entity will be defined by the parent company, it will still be allowed to invoice local customers, sign local sales contracts and receive income from customers while maintaining an office or other place of business in Panama.

The Panamanian representative office

  • A foreign company may seek to set up a representative office in Panama if it does not intend to carry out business in the country. Consequently, this entity will not be permitted to make direct sales within the country;
  • Such an office will only engage in activities such as i) promoting the business of the parent company and ii) market research.

Table of comparison between different Panama entities

Summary at a GlanceCorporationLLCBranchRepresentative office
How long to set the company up?2 weeks2 weeks4 weeks4 weeks
How long to open company bank account?3 weeks3 weeks4 weeks4 weeks
Issued share capital requiredUS$1US$1US$0US$0
Is doing business in Panama permitted?YesYesYesNo
Allowed to sign sales contracts with Panamanian ClientsYesYesYesNo
Allowed to invoice Panamanian ClientsYesYesYesNo
Corporate tax payable in Panama25%25%25%0%
Corporate bank accountHSBCCitibankCitibankHSBC
Can rent office in PanamaYesYesYesYes
Tenancy agreement required before incorporation?NoNoNoYes
Allowed to import raw materials?YesNoYesNo
Allowed to export goods?YesYesYesNo
Can the entity hire expatriate staff in Panama?YesYesYesYes
Do you visit Panama for company incorporation?NoNoNoNo
Resident director required?NoNoNoNo
Resident shareholder required?NoNoNoNo
Minimum number of directors3300
Minimum number of shareholders1100
Panama resident company secretaryNoNoNoNo
Individual shareholders allowedYesYesNoNo
Corporate shareholders allowedYesYesYesYes
Corporate director(s) allowedNoNoNoNo
Public register of shareholders and directorsNoYesNoNo
Panama employment visa feesUS$3,950US$3,950US$3,950US$3,950
Statutory audit requiredYesYesYesYes
Annual tax return to be submittedYesYesYesYes
Total business setup costs in Year 1US$7,970US$8,320US$7,220US$9,440
Subsequent annual costs (incl. accounting & tax)US$3,700US$3,800US$3,700US$1,400
Draft invoiceView invoice PDFView invoice PDFView invoice PDFView invoice PDF

External readings

Contact us

For additional information on our company setup services in Panama, please contact our in-house country expert, Mr. Petar Chakarov, directly:
client relationship officer - Petar
  • Mr. Petar Chakarov
  • Sales & Business Development 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