Panama | Interstatus - Group of Companies Panama – Interstatus – Group of Companies

General jurisdiction information:

Panama (officially known as The Republic of Panama) is a state in Central America that extends over the Isthmus of Panama and connects two American continents. Panama also includes 1,500 islands. The population is around 3,500,000  and the capital city is Panama City.

The Panama Canal is the backbone of the Panamanian economy and was fully transferred to Panama by the USA in 1999. Significant income is generated by ship registration under the Panamanian flag. Panama also boasts a “Colon Free Zone” which is the second largest free economic zone (after Hong Kong) and one of the most successful international trade centres.

Flexible corporate legislation, an advanced banking sector and legal and insurance services promote the reputation of Panama as the main regional financial centre. It is one of the world’s most prominent international offshore zones with hundreds of thousands of registered companies.

The official language is Spanish but English is also widely used, especially in the business community.

The official currency is the Balboa (PAB) and the US Dollar (US$).

Panama provides a variety of corporate legal forms and organisational structures, but the most popular is the company limited by shares (the corporation) known as Sociedad Anónima, S.A., regulated by Law No. 32 of 1927 and the Commercial Code. Legislation also provides for the formation of partnerships, limited and unlimited companies (S de RL), foreign corporations, branches and private funds.

Companies limited by shares (S.A.) are entitled to engage in any legal business around the world.

Foreign corporations (registered abroad) may maintain an office and conduct business in Panama but it must be registered in the Commercial Register.

Panama offers a hi-tech telecommunications system and an advanced transportation network.

Advantages of incorporation of companies in Panama:

  • Advanced legislation in line with contemporary international financial business.
  • The personal presence of beneficiaries is not required for the incorporation of a company as the procedure can be completed remotely.
  • High confidentiality standards exist with Panamanian laws defining any internal documentation as confidential and it cannot be requested by third parties, including government authorities of Panama or other countries.
  • There are no requirements for minimum or maximum share capital and the capital may be denominated in any currency.
  • Companies may be set up with only one shareholder resident in any country who is either a natural person or a corporation.
  • A nominee (director, shareholder or secretary) may be used within the corporate structure.
  • The opening of a bank account does not require a personal visit to the bank by the company representative.
  • There are no exchange controls.
  • Bearer shares and shares without par value are permitted.
  • Company administration is straightforward and with minimum staff.
  • Companies with no business activities in Panama are exempt from taxation. There is no wealth or inheritance tax.
  • There is no requirement for the submission of financial statements by companies with no business activities in Panama and there are no annual auditing requirements.
  • Non-resident companies are not required to hold annual meetings of the directors and shareholders, but if meetings are wanted they may be held in any country.
  • There is a perfect infrastructure with highly professional banking, accounting and legal services.
  • The jurisdiction enjoys economic, political and social stability.

Panama company incorporation process:

Directors:

S.A. companies must have at least 3 directors. The board of directors appoints the President, the Secretary and the Treasurer (any one of the three can take one or more positions if this is provided for in the Articles of Association and this person is a director).

Directors are required to submit their full personal information such as name and address, to the National Company Registrar  and this information is open to the public.

There are no requirements for residency of the directors who may be corporate entities. If required we can provide local (nominee) directors to ensure total confidentiality in full compliance with Panamanian Law.

Shareholder:

Companies limited by shares should have at least 1 shareholder. Shareholders may be natural persons or corporations and there are no requirements for residency. If the potential owner of the company wishes to achieve total anonymity, we can provide nominee shareholders.

Secretary:

A secretary is mandatory.

No residency qualifications apply and the secretary may be either a physical or a legal person. The full name and address of the secretary is registered with the National Company Registrar.

The same person is prohibited by Law from taking the office of Secretary or President at the same time.

A nominee secretary is permitted.

Registered office:

The Law requires companies incorporated in Panama to have a registered office.

Share capital:

Standard authorised capital is $10,000 divided into 10,000 shares with the par value of $1. There is no requirement for payment of the capital. The Law does not regulate the amount of capital required to issue shares. Shares without par value are allowed.

The company is deemed operational upon the issue of at least one share with or without nominal value.

The shares may be issued as registered or bearer shares and they should be fully paid. Following the latest legislative amendments the bearer shares must be deposited with the registered agent of the company.

Incorporation period:

7 days but the delivery of the full set of documents may take additional time. Shelf companies are available.

Accounting and auditing:

Companies with no business activities in Panama are not required to prepare, maintain or submit financial statements and accounts.

Submission of financial statements is mandatory only if a company carries out business activity in Panama. If this is the case, the company must submit a tax declaration within 3 months after the end of the financial year.

A change of directors must be recorded in the corporate certificates of the company.

Every company must record details of shareholders, the number of shares subscribed, dates of allocation and payments made on the shares in the Shares Registration Ledger. Bearer shares must also be recorded in this Ledger.

Companies must keep the minutes of all meetings of directors and shareholders plus copies of all resolutions. The documents need not necessarily be kept in Panama.

Information in the registers:

In Panama information on shareholders, directors and the secretary of a company is kept in the National Company Register and is freely accessible to the public. To preserve confidentiality we recommend that nominee services are used.

If a nominee director is appointed, the beneficiary cannot be determined even if the register is open for inspection.

Beneficiary information is strictly confidential and can only be provided to the registration agent. However, in practise the functions of the registered agent in Panama are undertaken by law firms.

Panama taxation provisions:

Panama applies territorial taxation rules and if the company has no business within the country it is exempt from taxation:

  • tax on profit, dividends, interest and royalties – 0%;
  • capital gains tax – 0%;
  • tax withholding at source on the above income – 0%;
  • value added tax – 0%;
  • wealth and inheritance tax – 0%.

Companies incorporated in Panama are exempt of any stamp duty.

Non-resident companies are eligible for just one tax – the fixed annual Corporate Franchise Tax:

  • upon registration in the National Company Register – $250;
  • in subsequent years – $300.

Failure to pay annual Corporate Franchise Tax incurs penalties and the company will be unable to receive operational documents from the National Company Register.

Taxation of resident companies

Companies operating within Panama must obtain a special permit (Aviso-de-Operation) at a cost equivalent to 2% of the total value of the company (maximum $60,000). If the company is domiciled in the special economic zone, the levy will reduce to 1% (maximum $50,000).

Generally the business of resident companies is subject to the following taxes:

  • income tax – 25%;
  • tax on dividends 10% or 5%;
  • tax on dividends at source:
    • for companies in the free economic zones – 5%;
    • on registered shares – 10%;
    • on bearer shares – 20%;
    • on interest and royalties – 6%;
    • income tax on branches of foreign companies – 10%.
    • capital gains tax – 10%;
    • sales tax (VAT) – 7%.

Double Tax Treaties:

The Republic of Panama maintains a number of Double Tax Treaties with Costa Rica, Columbia, Canada, the USA, Singapore, Spain, Portugal, Ireland, Luxembourg, Qatar and others.

1st year

BASIC
$1450
  • Company Incorporation
  • Government Fees
  • Corporate Document Set with Apostille
  • Registered Office
  • Agent Fees
  • Company Stamp
  • Courier
STANDARD
$2650
  • Company Incorporation
  • Government Fees
  • Corporate Document Set with Apostille
  • Registered Office
  • Agent Fees
  • Company Stamp
  • Courier
  • Nominee Director
  • Power Of Attorney with Apostille
  • Nominee Shareholder
PREMIUM
$3150
  • Company Incorporation
  • Government Fees
  • Corporate Document Set with Apostille
  • Registered Office
  • Agent Fees
  • Company Stamp
  • Courier
  • Nominee Director
  • Power Of Attorney with Apostille
  • Nominee Shareholder
  • Cyprus Bank Account Opening

2nd year

BASIC
$950
  • Registered Office Fees
  • Registered Agents Fees
  • Annual Government Tax
  • Administrative and Compliance Fees
STANDARD/PREMIUM
$2150
  • Registered Office Fees
  • Registered Agents Fees
  • Annual Government Tax
  • Administrative and Compliance Fees
  • Nominee Director
  • Power Of Attorney with Apostille
  • Nominee Shareholder

*Please contact us for a detailed price list and additional information.