Company Formation in Panama
Service Name
Start
Pro
Elite
Company Name Check and Reservation
Company Formation including Government Fees
Company Secretarial Services for the First Year
Incorporation Documents Package
Registered Office Address for 1 Year
Nominee Services for 1 Year
–
Corporate Bank Account Opening
–
–
Total Cost
€1950
€2850
€3450
A Comprehensive Guide to Company Formation in Panama
Panama has long been recognized as a premier jurisdiction for international business, a reputation built on its strategic location, a robust financial services sector, and a highly flexible legal framework. For entrepreneurs, investors, and global corporations, forming a company in Panama offers a powerful combination of tax advantages, confidentiality, and operational simplicity.
This detailed guide will explore the key benefits of Panama company formation, the most popular type of entity, the step-by-step process of incorporation, and the ongoing requirements for maintaining a business in good standing.
The Enduring Appeal of Panama
Panama’s corporate law, based on the Delaware model, has been a pillar of its success since 1927. This long-standing legal framework, combined with the nation’s political and economic stability, makes it a trusted choice for international investors.
Territorial Tax System: The cornerstone of Panama’s corporate appeal is its territorial tax system. This means that companies are only taxed on income generated from sources within Panama. All income derived from business activities conducted outside of the country—such as international trading, holding assets, or e-commerce—is completely exempt from local income tax, corporate tax, and capital gains tax.
Confidentiality and Privacy: Panama offers a high degree of privacy for company owners. While the names of the directors and officers are required to be filed with the Public Registry, the identities of the shareholders are not publicly disclosed. This information is held confidentially by the company’s Resident Agent.
Flexibility and Simplicity: The process of forming a company is remarkably straightforward and efficient. There are no requirements for a minimum share capital, and the corporate structure is highly adaptable. A single individual can serve as the sole director, officer, and shareholder.
No Local Presence Requirement: For companies that conduct business internationally, there is no need for a physical office, local staff, or operational presence within Panama itself. The only mandatory local presence is the appointed Resident Agent.
Stable and Dollarized Economy: Panama’s economy is stable and business-friendly. The U.S. dollar has been the official currency for over a century, eliminating currency exchange risks and providing a secure environment for international transactions.
The Panamanian Corporation: A Deeper Look
The Panamanian Corporation, or Sociedad Anónima, is the most popular and widely used business entity for international operations. Its enduring popularity is due to a unique blend of flexibility, privacy, and legal robustness.
Key Structural Components:
Directors and Officers: A Panamanian corporation must have a minimum of three directors and three officers (President, Secretary, and Treasurer). While these roles must be distinct in the official filings, they can be held by the same three individuals. The directors’ names are a matter of public record, providing a degree of transparency, while the beneficial owner remains confidential.
Shareholders: The identity of the shareholders is kept confidential. Their names are not filed with the Public Registry. This is a significant privacy advantage. The Register of Shareholders is maintained by the Resident Agent at the Registered Office.
Authorized Capital: While a nominal authorized capital of $10,000 is common for registration purposes, it does not have to be paid up or deposited. This makes it easy to issue shares to new partners or investors without needing to change the Articles of Incorporation.
Legal Flexibility: The Panamanian corporate law allows for a wide range of corporate actions without requiring a public filing. Changes to share structure, capital, or internal bylaws can often be handled internally, simplifying administrative processes.
The Company Formation Process: A Step-by-Step Guide
Forming a corporation in Panama is a streamlined process that must be conducted through a licensed Panamanian lawyer or a professional corporate service provider. This professional acts as the company’s Resident Agent.
Select a Resident Agent: The first and most critical step is to engage a reputable Resident Agent. They will be responsible for filing all the necessary documents and ensuring the company’s ongoing compliance.
Choose a Company Name: The proposed name must be unique. It can be in any language but must include a suffix like “Inc.,” “Corp.,” “S.A.,” or “Société Anonyme.”
Provide Due Diligence Information: To comply with international anti-money laundering (AML) regulations, the Resident Agent will require a certified copy of the passport and a proof of address for all individuals involved as directors, officers, or shareholders.
Draft and File the Articles of Incorporation: The Resident Agent will prepare the Articles of Incorporation (Pacto Social). This document, which outlines the company’s structure and purpose, must be notarized and then filed with the Panama Public Registry (Registro Público).
Receive Your Corporate Documents: Once the corporation is officially registered, the Resident Agent will provide you with the Certificate of Incorporation and a complete corporate kit containing all essential documents.
Request more information
The Critical Role of the Resident Agent
The Resident Agent is a legally required and critical component of your company’s structure. By law, every Panamanian corporation must appoint a resident agent who is a licensed attorney in Panama.
Legal Liaison: The Resident Agent acts as the official legal representative of the company, receiving all official government correspondence and legal notifications on its behalf.
Record Keeper: The Resident Agent is responsible for maintaining the company’s statutory records, including the Register of Shareholders, the Register of Directors, and the Minutes Book.
Due Diligence and Compliance: They play a key role in ensuring the company complies with international anti-money laundering (AML) and know-your-customer (KYC) regulations by conducting due diligence on the beneficial owners and maintaining these confidential records.
Understanding Due Diligence and Confidentiality
While Panama is known for its confidentiality, it’s important to differentiate this from anonymity. The jurisdiction is committed to combating money laundering. The key to Panama’s confidentiality is the separation between the public record and the private records. The Public Registry contains the names of the directors and officers, while the Resident Agent holds the confidential information about the beneficial owner and the shareholders.
Banking for Your Panamanian Corporation
After formation, opening a corporate bank account is the next logical step. A Panamanian corporation can open a bank account in Panama or in any other jurisdiction in the world. However, due to stringent KYC regulations, the process can be demanding. Banks will typically require certified corporate documents, full due diligence information for all key individuals, and a detailed business plan. Your Resident Agent can often assist with this process.
The Panamanian Foundation: An Alternative Structure
While the corporation is the most common entity, Panama also offers a valuable tool for estate planning and asset protection: the Private Interest Foundation (Fundación de Interés Privado). This is a separate legal entity with no owners or shareholders. Assets placed in a foundation are legally separated from the founder’s personal estate, protecting them from creditors and legal claims.
International Reputation and Compliance
Panama has made significant strides to enhance its international reputation and compliance with global financial standards. It has entered into numerous Tax Information Exchange Agreements (TIEAs) and has implemented legislation to comply with standards set by the OECD (Organisation for Economic Co-operation and Development) and the Financial Action Task Force (FATF). These measures ensure that Panama is a responsible and transparent jurisdiction, providing a credible and secure platform for international business.
In conclusion, Panama offers a sophisticated and flexible corporate environment. Its territorial tax system, combined with a streamlined formation process and a stable legal environment, makes it a top-tier choice for entrepreneurs seeking to establish a global presence.
FAQ
The primary benefit is Panama's territorial tax system. Income generated from business activities conducted outside of Panama is completely exempt from local income tax, corporate tax, and capital gains tax. This makes it highly attractive for international trade, holding assets, and e-commerce.
The most popular entity is the Panamanian Corporation, or Sociedad Anónima. It is widely used for international operations due to its robust legal framework, flexibility, and limited liability protection for shareholders.
The names of the company's directors and officers are a matter of public record and are filed with the Panama Public Registry. However, the identity of the shareholders and beneficial owners is kept confidential and is not publicly disclosed. This information is held securely by the company's Resident Agent.
A Panamanian corporation must have a minimum of three directors and three officers (President, Secretary, and Treasurer). These roles can be held by the same three individuals, and there are no residency or nationality requirements.
The process is generally very efficient. With a professional corporate service provider, a company can be incorporated and registered within a few business days after all the required due diligence documents have been received and verified.
No. For companies that conduct business internationally, there is no requirement for a physical office, local staff, or operational presence in Panama. The only mandatory local presence is the appointed Resident Agent.
Yes. A Panamanian corporation can open a corporate bank account in Panama or in any other jurisdiction. Be aware that banks have strict KYC (Know-Your-Customer) and due diligence procedures, and they will require certified corporate documents and detailed information on all key individuals.
To keep the company in good standing, you must:
Pay an annual government fee (known as the Tasa Única).
Maintain a Resident Agent and a registered office in Panama.
Ensure the company's statutory records are kept up-to-date by the Resident Agent.
Yes. Panama has made significant efforts to enhance its international reputation and compliance with global standards. It has entered into numerous tax information exchange agreements and is a member of the OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes. It is recognized as a responsible and credible jurisdiction.
A Private Interest Foundation is a separate legal entity primarily used for asset protection and estate planning. It is an excellent alternative to a corporation for those who wish to separate assets from their personal estate for reasons of privacy or legal protection.
Free consultation
Send Request
Submit your request now — we’ll respond within 2 minutes!