Company formation in Panama
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Registering a company in Panama is a straightforward process, designed to attract both local and foreign investors. Registering a company in Panama offers numerous advantages, particularly for international entrepreneurs and businesses seeking a strategic base in Latin America.
WHAT ARE THE MAIN REQUIREMENTS TO REGISTER A COMPANY IN PANAMA?
Selection of Legal Entity Type
The most common type of company in Panama is the Corporation (Sociedad Anónima or S.A.), which offers flexibility and limited liability. Other options include: Limited Liability Company (S.R.L.). Branch of a Foreign Company. Private Interest Foundation (for asset protection).
Company Name
The company name must be unique and approved by the Public Registry. It must end with “S.A.”, “Corp.”, or similar designations depending on the entity type.
Shareholders and Directors
Shareholders: A minimum of one shareholder (individual or legal entity, local or foreign). Directors: A minimum of three directors is required (can be local or foreign). Directors’ names are publicly registered. Resident Agent: A local lawyer or law firm must be appointed as the resident agent to handle compliance matters.
Articles of Incorporation
The company’s constitution, known as the Articles of Incorporation, must be drafted by a licensed Panamanian lawyer. Key details include: Name and purpose of the company. Shareholder and director details. Authorized share capital and structure.
Authorized Share Capital
While there is no mandatory minimum, most companies have an authorized share capital of USD 10,000, divided into shares. Shares can be nominative or bearer shares (though bearer shares are subject to strict custody rules for transparency).
Registration with the Public Registry
Submit the Articles of Incorporation to the Public Registry of Panama to formalize the company. Once registered, the company becomes a legal entity.
Tax and Business Registration
Obtain a Taxpayer Identification Number (RUC) from the General Directorate of Revenue (DGI). Register for a Commercial License (Aviso de Operaciones) if conducting local business activities. Register for ITBMS (VAT) if applicable.
Corporate Bank Account
Open a corporate bank account in a Panamanian bank. Required documents include: Articles of Incorporation. Proof of shareholder and director identity. Company’s business plan.
Annual Compliance Requirements
Resident Agent: Must be retained for ongoing compliance. Franchise Tax: Pay an annual franchise tax of USD 300 to maintain company registration. Accounting and Tax Filing: Maintain proper accounting records. Submit annual tax returns and any applicable monthly VAT returns.
Special Considerations for Foreigner
Foreign ownership is allowed for most business activities. Certain regulated sectors (e.g., retail, media) are restricted to Panamanian nationals.
5 STEPS TO START A COMPANY
Choose a Company Name and Legal Entity Type
Select a unique company name that complies with Panamanian regulations. Decide on the legal entity type, with the Corporation (S.A.) being the most common for flexibility and limited liability. Verify and reserve the company name with the Public Registry of Panama.
Draft and Submit the Articles of Incorporation
You need to draft the Articles of Incorporation, which must include:
- Company name and purpose.
- Details of shareholders, directors, and the resident agent.
- Share capital and structure (e.g., nominative or bearer shares).
Submit the Articles of Incorporation to the Public Registry of Panama for formal registration.
Appoint Directors, Shareholders, and a Resident Agent
Appoint at least three directors and one resident agent (a local lawyer or law firm). The shareholder(s) can be individuals or legal entities (local or foreign).
Register with Tax Authorities and Obtain Licenses
- Obtain a Taxpayer Identification Number (RUC) from the General Directorate of Revenue (DGI).
- Apply for a Commercial License (Aviso de Operaciones) if the company will conduct business in Panama.
- Register for ITBMS (VAT) if the company engages in taxable activities.
Open a Corporate Bank Account
Open a corporate bank account in Panama by providing:
- Articles of Incorporation.
- Identification of directors and shareholders.
- A brief business plan or proof of business activities.
Frequently Asked Questions
Still have a questions?
Do I need to be a resident of Panama to register a company?
No, foreign nationals can fully own and manage a company in Panama. However, a local resident agent (a Panamanian lawyer or law firm) is mandatory for all companies.
How long does it take to set up a company in Panama?
The incorporation process typically takes 1–2 weeks, depending on how quickly all required documents are submitted.
What are the ongoing requirements for a Panamanian company?
Annual franchise tax: USD 300. Resident agent: Retain a local lawyer or law firm. Tax compliance: Maintain proper accounting records and file annual tax returns. Commercial license renewal: If conducting local business.
Are there tax advantages to registering a company in Panama?
Yes, Panama has a territorial tax system, meaning income earned outside Panama is tax-exempt. Additionally, companies operating in special economic zones like Panama Pacifico may enjoy significant tax incentives.
OUR SERVICES INCLUDE
Tax and Business Registration
Obtain a Taxpayer Identification Number (RUC) from the General Directorate of Revenue (DGI). Register for a Commercial License (Aviso de Operaciones) if conducting local business activities. Register for ITBMS (VAT) if applicable.
Corporate Bank Account
Open a corporate bank account in a Panamanian bank. Required documents include:
- Articles of Incorporation.
- Proof of shareholder and director identity.
- Company’s business plan.
Selection of Legal Entity Type
The most common type of company in Panama is the Corporation (Sociedad Anónima or S.A.), which offers flexibility and limited liability. Other options include:
- Limited Liability Company (S.R.L.).
- Branch of a Foreign Company.
- Private Interest Foundation (for asset protection).
Authorized Share Capital
While there is no mandatory minimum, most companies have an authorized share capital of USD 10,000, divided into shares. Shares can be nominative or bearer shares (though bearer shares are subject to strict custody rules for transparency).
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