Company registration in panama

Company registration in Panama will enable you to establish an internationally recognized company with great tax benefits, asset protection and privacy.

Panama companies are usually used as holding companies due to their high personal asset protection laws and high confidentiality.

Panama limited liability company will ensure that you are not liable with you personal assets for your business decisions. You will be liable only with the amount of share capital you have deposited. 

Company formation in Panama is a simple process that can be accomplished in just a few days, depending on how fast the incorporation documents are prepared. Below, EU LAW FIRM lawyers answer a set of general questions regarding the jurisdiction, company registration in Panama and the requirements for businesses.

Panama Background:

Republic of Panama is a country situated in the middle of Central America.

The country is famous for its flexibility on company formation, high confidentiality and low tax rates.

Company in Panama is a perfect solution for foreign individuals and businesses seeking to do international business, with low tax rates and flexibility.

Capital city: Panama City

Population: 4,176,869

Local currency: Balboa (PAB) United States dollar (USD)

Corporate tax rate: 0% for assets generated outside Panama

 

Description of Panama Limited Liability Company:

  • Liability limited only to shares;
  • Unlimited business activities;
  • Not required to deposit share capital;
  • High privacy and confidentiality;
  • Great as holding companies for asset protection;
  • There is no need to be in the country during or after the process of company formation;
  • Foreigners can establish a company in Panama;
  • All foreign profits are exempt from tax.

Why start a business in Panama?

  • Tax rules

Panama’s attractive tax rules are undoubtedly the most powerful argument for the country’s excellent business climate. Non-resident corporations in Panama are exempt from tax payments under Panama’s “Companies Law.” Panama has a territorial tax system, which implies that money earned outside is not taxed. To put it another way, if you make money in Panama, you pay taxes, but if you make money outside of Panama, you don’t. Furthermore, businesses benefit from a vast network of double tax treaties. This, together with several additional benefits, makes conducting business in Panama very attractive.

  • Economic freedom and stable economy

Panama offers relatively low inflation and a stable currency due to the adoption of the US dollar as a legal currency. Panama’s economy is one of the best in Americas region.

  • Growing market and international trade

Panama offers various Free Trade Agreements (FTAs) and Free Trade Zones (FTZs). Panama’s transportation and logistics service industries are expanding, contributing to the country’s rapid economic expansion. And of course, great possibilities for international trade through Panama Canal – one of the world’s most important trade routes. 

  • Political stability

Panama is a democratic country that is peaceful and stable. Panama is organized in territorial units (provinces) by a democratically elected government. As a result, registering a company in Panama entails acquiring a license to conduct business in Panama.

  • Favorable company formation laws

The registration process is governed by the Commerce Code as well as the particular rules that apply to LLCs and Corporations in Panama. There are no restrictions on who can open a company in Panama: the board of directors and shareholders might be persons or companies, and they can be nationals or non-nationals. The incorporation process takes one day, while the incorporation of branches might take up to three days on average.

Tax system in Panama

  1. Corporate income tax: Panama taxes only income derived within the country. The sale of goods or services to Panamanian individuals, organizations, or businesses would be considered as “Panama sourced income” and taxed. Sales of goods or services to individuals, organizations, or businesses situated outside of Panama are not subject to tax.The tax rate generally is 25%. The tax rate is 30% for firms in which the government holds more than 40% of the stock.
  2. Dividend tax: Dividend tax in Panama is set at 10%. This tax is reduced to 5% in the cases of entities that operate in a Free Zone, if the income subject to dividends is considered an exempt income or from non-Panama sourced income.
  3. Withholding tax: 10% for dividend payments made from Panama-sourced income; 5% for dividend payments made from non-Panama-sourced income or income obtained from exports; and 20% for bearer shares.
  4. Other taxes: There is no capital gains tax, no offshore income tax. On most products and services, a 7% VAT charge applies to both entrepreneurs and enterprises.

HOW THE ORDER SYSTEM WORKS?

1. Choose the most suitable company type and make online order

 

Choose the most suitable company formation package from STORE EU LAW FIRM, and place an online order with the available payment methods. After successful order you will receive an email confirmation with your order details.

2. Collection of documents and KYC verification

 

After successful order and receipt of payment, our customer support will get in touch with you to acquire the required documentation for company formation in Panama.

3. Company formation in Panama

 

The company formation in Panama takes between 7-14 business days after all required documents have been received. After company has been incorporated, physical company formation documents with apostilles will be sent to your mailing address.

DOCUMENTS REQUIRED FOR COMPANY REGISTRATION IN PANAMA

For individuals:

  • Passport copy of all shareholders;
  • Passport copy of all directors;
  • Copy of a recent utility bill not older than three (3) months.

If shareholder is a legal person:

  • Copy of Certificate of Incorporation or other similar document; evidencing the entity’s existence; 
  • Copy of the Register of Directors;
  • Copy of the Register of Shareholders;
  • Copy of valid passport of the Directors;
  • Copy of a recent utility bill issued no more than three (3) months ago of the Directors;
  • Copy of valid passport of the Shareholders holding 25% or more shares;
  • Copy of a recent utility bill issued no more than three (3) months ago of the Shareholders holding 25% or more shares.

For each ultimate beneficial owner (owns at least 25% or more shares):

  • Copy of valid passport;
  • Copy of a recent utility bill issued no more than three (3) months ago;
  • Bank Reference Letter;
  • Professional Reference Letter. The professional letter can be issued by an independent professional, such as a lawyer or an accountant

DOCUMENTS REQUIRED FOR PANAMA COMPANY BANK ACCOUNT

  • Passport copy of all directors and shareholders.
  • Utillity bill not older than 3 months.
  • CV of the company management.
  • Business plan.

Banks may request additional documentation from case to case. Please note that due to the recent changes in AML regulations internationally it may be difficult to open a bank account for Panama company unless significant substance of business activities are presented.

Note: All documents in a foreign language must be translated into English and certified by a qualified translator.

Need more help to set up a business in Panama?

Just get in touch with us to get more information about company formation in Panama. We typically respond in 2 hours.