Why Do I Need a Company in Panama?

Advantages of Panama as a Jurisdiction

Setting up a company in Panama offers a multitude of benefits:

• Stable Economy and Transparent Legislation: Panama’s stable economy and clear legal framework attract entrepreneurs globally.
• Simple and Cost-Effective Registration: Forming a company in Panama is straightforward, affordable, and doesn’t require personal presence.
• Tax Efficiency: Panama’s territorial tax system means offshore companies earning income abroad do not pay local taxes.
• Confidentiality: The law protects the privacy of founders, with no requirements to disclose personal data. Nominee services are also allowed.
• Capital Security: Political stability and advanced infrastructure support capitalization and investment.
• No Asset Export Restrictions: Companies can freely move assets out of Panama.
• Investment Incentives: Numerous incentives are available for investors across various industries.
• Exemption from Reporting: Non-residents are exempt from preparing financial reports.

Major Forms of Legal and Business Presence

To start business activities in Panama, you can choose from the following major forms:

• Limited Liability Company (LLC): An LLC is formed by a minimum of two members who are only liable up to their contributions. Members can be individuals or legal entities from any country.
• International Business Company (IBC): An IBC allows global business operations with members’ liability limited to their investment. Typically, an authorized capital of USD 10,000 is required. IBC registration needs at least one shareholder and three directors.

Registration Requirements and Steps

Registering a company in Panama involves these steps:

1. Define Commercial Goals: Outline the business objectives to be achieved through the Panamanian entity.
2. Choose a Commercial Name: Select and verify the availability of the business name.
3. Arrange a Registered Office: Set up a registered office in Panama.
4. Gather Founder Information: Collect necessary information about the founders, beneficiaries, and managers.
5. Prepare Statutory Documents: Draft and execute the required legal documents.
6. Submit to the Public Registry: File the complete set of registration documents with the Public Registry.
7. Register for Taxes and Social Security: Complete tax and social security registrations.
8. Obtain a Commercial License: Apply for and receive the necessary commercial license.
9. Open a Corporate Bank Account: Establish a bank account for the new company.
10. Secure Additional Permits: Obtain any additional permits or licenses for regulated business activities.

Legal and Regulatory Framework

Panama’s favorable legal environment supports a variety of business activities. The local legislation allows for different types of shares and imposes minimal residency requirements. Key regulatory bodies include the Ministry of Economy and Finance, the Directorate General of Revenue, and the National Securities Commission. Company Express specialists can assist with office setup and provide nominee services.

Tax System of Panama

Panama’s tax system offers significant benefits for registered companies:

• Personal Income Tax: A progressive rate applies, with a maximum of 25% for residents and 15% for non-residents.
• Value-Added Tax: A 7% VAT applies to goods and services.
• Withholding Tax Rates: Dividends are taxed at 5%, 10%, or 20%, while interest and royalties are taxed at 12.5%.
• Capital Gains Tax: Varies based on the transaction type and value.

Crucially, revenues from international sources are exempt from local taxation, making corporate tax non-applicable in such cases.

For comprehensive guidance on Panama’s tax system, contact Company Express lawyers.

Embark on your business journey with a Panamanian company and leverage the advantageous conditions this jurisdiction offers.