The republic of Panama is located in the South Central America, between Columbia and Costa Rica. Total area (including Canal Zone) is 29,761 sq mi (77,082 sq km) and consists of nine provinces - Panama, Colon, Chiriqui, Bocas del Toro, Veraguas, Herrera, Cocle, Los Santos, Darien and the San Blas Region (Comarca de San Blas). The population of Panama is approximately 2.4 million, about 52% of which are in urban areas. Panama City (on Gulf of Panama) is the capital of the republic. Panama ship canal connects the Atlantic Ocean (Caribbean Sea) and the Pacific Ocean (Gulf of Panama). It has excellent telecommunications and postal facilities, and courier services are well established in the country. Panama City is linked by major scheduled airlines, through regular daily flights, with the principle cities of North, Central and South America, Europe and the Far East. Cristobal and Balboa are modern oceanic ports accommodating heavy cargo and passenger traffic.

Official currency ? Balboa (symbol B or B/) with 100 centesimos. Does not exist in paper banknote form and is at par with the U.S. Dollar, as per the monetary agreement of 1904. U.S. Dollar is a legal tender; it circulates without restrictions and is freely convertible to and from Balboa.

Spanish is the official and spoken language. English is also spoken widely in urban areas and is used daily in commerce and international trade. Documents in a foreign language, which require to be filed at Companies Registry must be accompanied by a Spanish translation. Equally company documents in Spanish are accompanied by an English translation.


Panama gained independence from Columbia in 1903. The Constitution of Panama provides for a Republican form of Government. The President, as Chief Executive, is elected by direct vote for a five-year term, concurrently with the members of the National Assembly, a unicameral parliament. Citizens over 18 have the right and obligation to vote directly for a President and two Vice Presidents, and to vote for appointment of Legislators to the Legislative Assembly. For the purpose of the election of Legislators, the country is divided into Electoral Circuits with an average of 30,000 voters in each. The Constitution of Panama establishes a strict separation of powers between the Executive, Legislative and Judicial spheres. These separate spheres act limited and separate but in armonic collaboration.


Panamanian law is based upon the Spanish Civil Code with many Common Law influences; the company law however has been taken partially from the corporate law of Delaware, U.S. There are three basic statutes: The Constitution (1972), the Civil Code and the Commercial Code.


Corporate profits derived from outside of Panama are tax-free. No income tax, no corporate tax, no sales tax, no value added tax, etc.

Good quality, solid legal infrastructure that has been developing throughout years.

  • Very low registration and maintenance fees.
  • No reporting requirements.
  • It is possible to keep a business under direct control while maintaining complete confidentiality. Names of beneficial owners are not publicly available.
  • It is not required to file any changes to ownership schedule, after the registration is complete.
  • It is not required to maintain a legal address.
  • No citizenship or residency requirements or restrictions with respect to owners, directors and officers as with most other tax havens.
  • Stockholders' and directors' meetings may be held anywhere in the world.
  • Capital shares may be issued in a nominative form, or to "bearer" - the ideal protection of the corporation owner's identity and total privacy.
  • Funds and accumulated offshore profits can be deposited or invested in any country in the world without becoming subject to taxation in Panama.
  • One person might hold all three positions of a President, a Corporate Secretary and a Treasurer.


The most common form of business entity adopted by Panamanians and foreign investors in Panama is the corporation (sociedad an?nima) because of the ease in incorporation and flexibility in operation that it grants to merchants and investors.

In Panama Corporations (sociedades an?nimas) are regulated by General Corporation Law N? 32 of 1927 (thereafter Corporation Law). Panama's corporation law is among the most liberal in the world and have remained practically unchanged since 1927, modelled after the Delaware Corporation Law.

Corporations represent the ideal corporate form for wholly owned subsidiaries and any corporate forms where shareholders want to exercise direct influence on management.

The Corporation Law provides that two or more persons of lawful age, of any nationality even though not domiciled in the Republic of Panama, may, in accordance with the formalities hereinafter provided, form a corporation for any lawful purpose or purposes (Article 1).


Such persons desiring to form such a corporation shall sign articles of incorporation which shall set forth (Article 2):

1. The names and domiciles of each of the subscribers of the articles;

2. The name of the proposed corporation which shall not be the same as, nor so similar as to cause confusion with, the name of any other existing corporation. The name shall include a word, phrase or abbreviation which indicates that it is a corporation to distinguish it from a natural person or company of any other nature. The name of the corporation may be expressed in any language.

3. The general purpose or purposes of the corporation;

4. The amount of the capital stock and the number and par value of the shares of which it is to consist; and if the corporation is to issue shares without par value, the statements required by Article 22 of this law. The capital stock and par value of shares of any corporation may be expressed in terms of the legal currency of the Republic or of gold units of the legal currency of any other country, or of both;

5. If the shares are to be classified, the number of shares to be included in each class and the designations, preferences, privileges and voting powers or restrictions or qualifications of the shares of each class; or that such designations, preferences, privileges and voting powers or restrictions or qualifications shall be determined by resolution of the majority in interest of the Stockholders or of the majority of the Directors;

6. The number of shares of stock, which each subscriber of the articles of incorporation agrees to take;

7. The domicile of the corporation and the name and domicile of its resident agent in the Republic, who may be a juridical person;

8. Its duration;

9. The number, names and addresses of its Directors, not less than three;

10. Any other lawful provisions which the subscribers of the articles of incorporation may desire to include.

The articles of incorporation may be executed in any place, within or outside the Republic, and in any language (Article 3).

Any corporation may from time to time amend its articles of incorporation in any respect (Article 7).


Every corporation shall have power to create and issue one or more classes of shares of stock with such designations, preferences, privileges, voting powers or restrictions or qualifications thereof and other rights as its articles of incorporation provide and subject to such rights of redemption as shall have been reserved to the corporation in such articles of incorporation (Article 20).

The articles of incorporation may provide that shares of stock of any class shall be convertible into shares of one or more other classes (Article 20).

Shares of stock may have a nominal or par value. Such shares may be issued as fully paid and non-assessable or as partly paid or without any payment having been made thereon. Unless the articles of incorporation otherwise provide, full paid and non-assessable shares having a par value, or securities or shares convertible into such shares, shall not be issued for a consideration which, in the judgment of the Board of Directors, is less in value than the par value of such shares or of the shares into which such securities or shares are convertible, nor shall certificates for partly paid shares state that there has been paid thereon an amount greater than the value, in the judgment of the Board of Directors, of the consideration actually paid thereon. Such consideration may be money, labor, services or property of any kind (Article 21).

Shares of stock may be created and issued without par value provided there be included in the articles of incorporation the following statements (Article 22):

1. The total number of shares that may be issued by the corporation.

2. The number of shares, if any, which are to have a par value and the par value of each.

3. The number of shares which are to be without par value.

4. Either one of the following statements:

  • The stated capital of the corporation shall be at least equal to the sum of the aggregate par value of all issued shares having par value plus a certain amount in respect to every issued share without par value plus such amounts as from time to time by resolution of the Board of Directors may be transferred thereto; or
  • The stated capital of the corporation shall be at least equal to the whole of the aggregate par value of all issued shares having par value plus the aggregate amount of consideration received by the corporation for the issuance of shares without par value, plus such amounts as from time to time by resolution or resolutions of the Board of Directors may be transferred thereto.

There may also be included in such articles of incorporation an additional statement that the stated capital shall not be less than the amount therein specified.

Shares may be issued to bearer only if fully paid and non-assessable (Article 28). The transfer of shares issued to bearer requires only delivery of the certificate (Article 30). If so provided in the articles of incorporation, any holder of a certificate of shares issued to bearer may exchange such certificate for a certificate for a like number of shares issued in his name; and the holder of a certificate of shares issued in the name of the owner may exchange it for a certificate for a like number of shares issued to bearer (Article 31).

Every corporation shall keep at its office in the Republic, or at such other place or places as the articles of incorporation or the by-laws provide, a book to be known as the stock register, containing (except in the case of shares issued to bearer) the names alphabetically arranged of all persons who are stockholders of the corporation, showing their places of residence, the number of shares held by them respectively, the time when they respectively became the owners thereof and the amount paid thereon or that they are fully paid and non-assessable (Article 36).

In the case of shares issued to bearer such stock register shall state the number of shares so issued, and the date of issue and that such shares are fully paid and non-assessable (Article 36).

Dividends may be paid to the stockholders from the net earnings or profits of a corporation or from the surplus of its assets over its liabilities, but not otherwise. The corporation may declare and may pay dividends upon the basis of the amount actually paid upon partly paid shares of stock (article 38).


Whenever under the provisions of this law the approval or authorisation of the stockholders is required, the notice of the meeting shall be in writing and in the name of the President or a Vice-President or the Secretary or an Assistant-Secretary or of such other person or persons as the by-laws or articles of incorporation may prescribe or permit (Article 40).

Such notice shall state the purpose or purposes for which the meeting is called and the time and place at which it is to be held (Article 40).

All meetings of stockholders shall be held within the Republic, unless otherwise provided in the articles of incorporation or by-laws (Article 41).


The business of every corporation shall be managed by a board of not less than three directors, all of whom shall be male or female persons of full age (article 49).

Subject to the provisions of this law and of the articles of incorporation, the board of directors of every corporation shall have full control over the affairs of the corporation (Article 50).

The Board of Directors may exercise all of the powers of the corporation except those that the law or the articles of incorporation or the by-laws confer upon or reserve to the stockholders (Article 51).


Every corporation shall have a President, a Secretary and a Treasurer, who shall be chosen by the Board of Directors, and may also have such other officers, agents and representatives as the Board of Directors or the by-laws or the articles of incorporation may determine and who shall be chosen in the manner provided thereby (Article 65).

Any person may hold two or more offices, if so provided by the articles of incorporation or the by-laws (Article 66).

No officer need be a director of the corporation unless the articles of incorporation or by-laws so provide (Article 67).


Corporate Income.

Panama income tax is levied only upon net income obtained from operations carried on within Panama. Income obtained from offshore operations is not considered as income obtained from "sources within Panama" and is, therefore, not taxable.

Even though a Panamanian corporation has an office, employees, and a license to engage in business, all in Panama, it still does not pay Panamanian income tax if the transactions to produce the income took place outside Panama. No tax liabilities arise even though payments of the merchandise is made from Panama, or payment is received in Panama, or if the sale or purchase operations are directed from an office situated in Panama, provided the merchandise involved in the transaction does not physically come to Panama.

If a Panamanian corporation engages in business within Panama and also offshore, it is subject to income tax only on that portion of its net income arising from business carried on within Panama.

Annual Franchise Tax

Panamian corporations must pay an annual franchise tax (tasa unica annual), which is $250.00 per year. This is initially payable within three months of incorporation un thereafter within three months of the annual anniversary date. Late payment is subject to a 20% surcharge. Corporations that are delinquent in payment of this tax are not duly registered and cannot obtain certificates of goodstanding.


Only dividends distributed from income arising from Panamanian sources are taxable at the rate of l0%, in the case of corporations that have issued registered shares and 20% in the case that they have issued bearer shares, whether received by corporations or individuals, residents or non-residents. Dividends distributed from income arising from offshore sources are not taxable. Panamanian law further provides that a Panamanian corporation which has as its only income dividends received from other corporations, Panamanian or foreign, is not subject to Panamanian income or dividend tax.

Distribution of Assets.

It is also true that a Panamanian corporation which has had only offshore income in Panama may distribute all or part of its assets upon dissolution or otherwise to its stockholders without any tax to the corporation or to the shareholders in spite of the fact that the assets may have a value at the time of distribution that is in excess of their value when originally acquired by the corporation.

Personal Income.

Individuals who receive salaries, wages, or any other compensation from corporations are subject to Panamanian income tax only if the services rendered are deemed to be performed within Panama. Thus, if a Panamanian corporation pays a salary for services rendered abroad, the recipient does not have to pay Panamanian income tax on the salary.

Corporations, which have only offshore source income, are not obligated to prepare or publish a balance sheet, nor are they required to file any tax returns.


Applicable Law - Civil Code of Panama, 1927.

Number of shareholders - Two shareholders or more

Number of directors - Three directors or more

Non-resident directors - Non-residents can be directors

Corporate directors - Not permitted

Corporate secretary - Required

Authorized capital - Optional Usually USD 10,000

Paid up capital - Not required

Bearer Shares - Available

Registered agent - Required

Registered office - Not required

Annual tax return - Not required

Audit - Not required

Board of directors meetings - No restrictions on location

Information on beneficial owners - Not publicly available (it is confidential)

Publicly available information - Registered agent and directors, deed of Incorporation


Upon registration you will receive the following papers, duly apostilised (legalized/certified) in accordance with "Convention de La Haye du 5 Octobre 1961":

  • Statutory document in Spanish with a copy in English.
  • "Certificate of Incorporation" in Spanish with a copy in English.
  • "General Power of Attorney", issued to a real beneficiary.
  • "Bearer Shares" certificate.
  • "Resignation Letters", from nominee directors.
  • Corporate seal.

Apply for Panama Corporation