The incorporation of an offshore company in Panama by a non-resident allows the owner to implement tax-free business practices and ensure personal data security. The legal entity can be registered promptly, and it is easy to manage.
Company registration in Panama
Company registration in Panama involves the appointment of at least three directors who may be non-residents, nationals of any country or represent any ethnicity. According to the Corporation Law 32 of 1927, the names of directors of a corporation must be registered in the official Public Registry.
The names of owners do not have to be registered. Due to the corporate governance structure, the owners may enjoy personal data security.
In 2020, the Law on Ultimate Beneficial Owner Registry came into force, requiring registered agents of legal entities to register the personal details of the beneficial owners.
It should be emphasized that only a limited number of persons have access to the beneficial owners information (registered agent, state authorities), and the register is not available to the public.
Offshore companies are not required to conduct audits, report to the Panamanian Government presenting financial statements and tax returns, but they must keep accounting records. Records must be kept at the registered agent’s office for five years. The corporate books of the company may be kept in any state, a location chosen by the company’s owner.
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Requirements for the name of a Panamanian company
It is prohibited to use words such as Ltd, Bank, Limited, Financial, Trust, Finance, Trustee, Foundation, Insurance in the offshore company name.
Owners of a corporation when thinking about its name must take into account the fact that it must end with the words: Corporation, Incorporated, Sociedad Anonima, or with the abbreviations: Corp., SA.
Capital requirements for a corporation in Panama
The company registration in Panama gives the rights to issue the following categories of shares: par value, no par value, and bearer shares. The latter type of shares has strictly prescribed keeping rules.
If a company has bearer shares, they must get them registered with the Public Registry, remove the securities from circulation and place them with an authorized custodian. Such powers may be exercised by trusts, banks in Panama or a registered solicitor (law firm).
- There are no mandatory requirements for having or proving share capital when setting up a legal entity.
- The standard share capital of a corporation is considered to be 10,000 USD. This amount is divided into shares of various denominations, often looking like 100 shares of 100 USD each. The amount of 10,000 USD allows the company owner to pay for the annual company maintenance at minimum rates.
- There are no requirements for the payment of share capital or temporary restrictive terms for its payment.
- The country has no currency control and restrictions affecting the flow of capital, both for making investments and for withdrawing finances out of the country. The official currency of Panama is the US dollar.
Purpose of establishing a corporation in Panama
Offshore company registration in Panama opens up the possibility of running international business. The classic offshore concept prohibits a company from operating domestically.
But the country’s laws allow organizations with foreign capital to become tax residents and operate as a local entity, subject to national tax regulations.
- Panama’s strong financial sector offers a modern level of service and has a positive global reputation. A corporate bank account can be Panamanian or foreign.
- Panamanian entities are an ideal instrument to protect your business assets. For example, it can be a holding company which has the right to own various asset classes.
- Corporations are free to conduct various commercial transactions and to operate internationally. Corporations may also receive tax incentives having registered in a Free Economic Zone.
- It is acceptable to provide consulting and advisory services.
- In order to engage in banking, insurance, fund management, trusteeship or fiduciary services, the organization must obtain a government license.
If you are interested in providing financial services, you may find the relevant articles in section 1 here. You can learn how to register a company in Panama as well as the details and principles of running a financial business from the articles of section 2, 3, 4.
Taxation of offshore company in Panama
- The territorial principle of Panamanian taxation involves payment of all state taxes from business revenues generated within the state.
- If the business is of foreign origin and the company makes a profit abroad, the company is exempt from tax.
- There are no licensing requirements to run an offshore business.
- If a legal entity operates within the country’s territory, it must pay all taxes of Panama, as required by law.
- There are no taxes levied on non-resident companies with respect to income from bank dividends, royalties, interest.
- Offshore companies pay an annual franchise fee of 300 USD.
- There are payment deadlines: 30 June for organizations registered in the first half of the year (January to June); 31 December for those registered in the second half of the year (July to December).
- Failure to pay the franchise fee on time may result in an administrative fine; the initial fine is 50 USD, a fine of 300 USD will be imposed on repeat cases. Further delays in payment of the franchise fee will affect the business image of the legal entity.
Full-fledged company registration in Panama
Our company, the Offshore Pro Group, is qualified to handle all the work related to registering a company. It will take five to seven business days and you do not need to travel to Panama.
We take a very scrupulous approach to all stages of company registration since we are responsible for the quality of the product we provide. We would like to warn you against trusting those who promise to provide you with a complete set of corporate documents in just a few days. Choose a responsible service provider.
There is a specific paperwork procedure that we can make you aware of. Our email address is firstname.lastname@example.org. We will contact you once we have received your email, and we will resolve any current issues. If you need to obtain a number of documents that require an apostille, it will take around 14 days to deliver the service.