Panama has long been recognized as a leading jurisdiction for international business, offering a strategic location, a robust legal framework, and numerous incentives that attract entrepreneurs and investors worldwide. Its status as a global financial and logistics hub, along with favorable tax regulations, makes Panama an ideal destination for company formation, asset protection, and international trade.
This FAQ section provides detailed answers to common questions about forming a company in Panama. Whether you are looking to establish a Panama Corporation, a Limited Liability Company (LLC), or explore trusts and foundations, this guide offers comprehensive insights into the incorporation process, legal requirements, and compliance standards.
Panama’s most popular corporate vehicle, the Panama Corporation, benefits from no taxation on income earned outside the country, strong privacy protections, and a flexible corporate structure. The jurisdiction’s straightforward incorporation procedures and efficient company registry enable businesses to be set up quickly, often within a week.
Key topics covered in this FAQ include the minimum capital requirements, documentation needed, nominee director and shareholder options, registered agent obligations, and local compliance requirements such as beneficial ownership disclosure and anti-money laundering (AML) regulations. Additionally, we address common concerns about banking and the process of opening corporate bank accounts in Panama.
Whether you are a first-time offshore entrepreneur or an experienced international investor, this FAQ page is designed to provide clear and practical information to support your Panama company formation journey. BRIS Group offers expert guidance and full-service solutions to ensure your Panama company setup complies with local laws and international standards, helping you take full advantage of Panama’s business-friendly environment.
Frequently Asked Questions About Panama Company Formation
Panama is a leading jurisdiction for international business and offshore company formation, prized for its strategic location, business-friendly regulations, and favorable tax regime. This FAQ section provides essential information about incorporating companies in Panama, covering topics such as legal requirements, incorporation procedures, nominee services, and compliance obligations. Whether you are new to Panama company formation or seeking to expand your global presence, these FAQs offer practical guidance to help you navigate the process smoothly and make informed decisions.
🇵🇦 Panama Company Formation FAQs
1. What is a Panama company?
A Panama company is a legal entity incorporated under the Panama Corporations Law (Law 32 of 1927), widely used for offshore investment, international trade, and asset protection. Learn more on our Panama company formation page.
2. What types of companies can be formed in Panama?
Panama Common structures include:
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International Business Company (IBC) – most popular for offshore operations
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Limited Liability Company (LLC) – flexible for joint ventures or investment holding
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Foundations and Trusts – for asset protection and estate planning
3. Who can incorporate a company in Panama?
Both residents and non-residents can form a Panama company. There are no nationality restrictions for directors or shareholders.
4. How long does Panama company registration take?
Registration usually takes 1–5 business days, depending on document verification by the Panama Public Registry.
5. What documents are required for incorporation?
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Passport copies of shareholders and directors
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Proof of residential address
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Articles of Incorporation (bylaws)
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Appointment of a registered agent in Panama
6. What is the minimum share capital?
Panama IBCs have a minimum capital of USD 10,000, though it is usually divided into authorized shares. Higher capital may be required for specific licenses.
7. Do I need a local director or shareholder?
No. Panama companies do not require resident directors or shareholders, but a registered agent and registered office in Panama are mandatory.
8. Can a Panama company hold international assets?
Yes. Panama companies are commonly used to hold foreign subsidiaries, intellectual property, real estate, and investment portfolios, offering legal protection and flexibility.
9. Is physical presence required?
No. Companies can be incorporated remotely through a licensed Panamanian registered agent, making it ideal for non-resident investors.
10. How private is ownership in Panama?
Panama offers high confidentiality. Shareholder and director information is maintained by the registered agent and is not publicly disclosed.
11. Can a Panama company open a corporate bank account?
Yes. Companies can open accounts with Panamanian and international banks, supporting multi-currency operations and offshore transactions.
12. What are the annual compliance requirements?
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Maintaining corporate records at the registered office
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Filing annual franchise tax with the Panama Tax Authority
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Payment of annual registered agent fees
13. Can a company be owned by another company?
Yes. Panama law allows corporate shareholders, enabling holding structures, investment vehicles, and subsidiaries.
14. How can a Panama company be dissolved?
Voluntary dissolution requires:
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Shareholder resolution
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Settling debts and obligations
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Filing dissolution documents via the registered agent
15. Why choose Panama for company formation?
Panama offers zero local taxation on foreign-source income, strong privacy, minimal reporting requirements, and strategic geographic location, making it a top choice for offshore company formation. More details are on our Panama company formation page.
💰 Panama Company Taxation FAQs
1. Do Panama companies pay local taxes?
No. Panama IBCs are exempt from local income tax on income earned outside Panama, making them ideal for offshore operations.
2. Are dividends taxed in Panama?
Dividends paid by Panama IBCs to non-residents are not subject to withholding tax, supporting efficient profit distribution.
3. Are capital gains taxed?
No. Capital gains earned outside Panama are not taxed, making Panama an attractive jurisdiction for investment holding companies.
4. Does Panama have VAT or sales tax?
Yes. Panama applies a 7% VAT (ITBMS) on goods and services originating in Panama, but offshore companies with foreign income are generally exempt.
5. Are there double taxation agreements (DTAs)?
Panama has limited DTAs, but its territorial tax system ensures foreign-source income is not taxed locally, reducing double taxation concerns.
6. Are retained earnings taxed?
No. Retained profits from foreign-source activities are not subject to local taxation, allowing companies to reinvest profits globally.
7. Can a Panama company employ staff locally?
Yes. For operations in Panama, local labor and social security laws apply. Offshore companies with no local employees have no payroll obligations in Panama.
8. Are holding companies treated differently?
Yes. Panama IBCs are commonly used as holding companies due to tax exemptions, confidentiality, and flexible corporate structures.
9. How are transfer pricing rules applied?
Panama has no transfer pricing rules for offshore companies, providing flexibility for related-party transactions.
10. Are there stamp duties or capital taxes?
No. Panama does not levy stamp duties on share transfers or corporate transactions, keeping operational costs low.
11. Can losses be carried forward?
Not applicable for offshore IBCs since foreign-source income is exempt from local taxation.
12. Are trusts and foundations taxed differently?
Offshore trusts and foundations in Panama are generally exempt from taxation, offering wealth protection and succession planning advantages.
13. Can a Panama company be redomiciled from another jurisdiction?
Yes. Companies may redomicile to Panama, subject to compliance with foreign laws, providing flexibility for corporate restructuring and offshore planning.
14. Are annual reporting requirements burdensome?
No. Panama IBCs have minimal reporting obligations, usually limited to annual franchise tax payments and registered agent filings.
15. Why is Panama ideal for international tax planning?
Panama provides zero taxation on foreign income, strong privacy, minimal compliance, flexible corporate structures, and strategic global location, making it one of the most effective jurisdictions for offshore companies and international investment. More details are on our Panama company formation page.
Interested in setting up an offshore company in Panama?
Visit our Panama Company Formation page for detailed guidance, packages, and expert support tailored to your needs.