Business entities in Panama in 2023

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

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 Glance	Corporation	LLC	Branch	Representative office
How long to set the company up?	2 weeks	2 weeks	4 weeks	4 weeks
How long to open company bank account?	3 weeks	3 weeks	4 weeks	4 weeks
Issued share capital required	US$1	US$1	US$0	US$0
Is doing business in Panama permitted?	Yes	Yes	Yes	No
Allowed to sign sales contracts with Panamanian Clients	Yes	Yes	Yes	No
Allowed to invoice Panamanian Clients	Yes	Yes	Yes	No
Corporate tax payable in Panama	25%	25%	25%	0%
Corporate bank account	HSBC	Citibank	Citibank	HSBC
Can rent office in Panama	Yes	Yes	Yes	Yes
Tenancy agreement required before incorporation?	No	No	No	Yes
Allowed to import raw materials?	Yes	No	Yes	No
Allowed to export goods?	Yes	Yes	Yes	No
Can the entity hire expatriate staff in Panama?	Yes	Yes	Yes	Yes
Do you visit Panama for company incorporation?	No	No	No	No
Resident director required?	No	No	No	No
Resident shareholder required?	No	No	No	No
Minimum number of directors	3	3	0	0
Minimum number of shareholders	1	1	0	0
Panama resident company secretary	No	No	No	No
Individual shareholders allowed	Yes	Yes	No	No
Corporate shareholders allowed	Yes	Yes	Yes	Yes
Corporate director(s) allowed	No	No	No	No
Public register of shareholders and directors	No	Yes	No	No
Panama employment visa fees	US$3,950	US$3,950	US$3,950	US$3,950
Statutory audit required	Yes	Yes	Yes	Yes
Annual tax return to be submitted	Yes	Yes	Yes	Yes
Total business setup costs in Year 1	US$7,970	US$8,320	US$7,220	US$9,440
Subsequent annual costs (incl. accounting & tax)	US$3,700	US$3,800	US$3,700	US$1,400
Draft invoice	View invoice PDF	View invoice PDF	View invoice PDF	View invoice PDF