The 5 W’s of Panamanian Companies and Their Benefits
03/10/2024
Defense Technology Portfolio
05/11/2024
A Panamanian company, compared to other jurisdictions, offers multiple advantages. Here are the key benefits
Purchasing a Panamanian company provides numerous tax advantages, including the ability to avoid foreign income and capital taxes. This means greater flexibility in managing your affairs and enhanced privacy for your investments. Additionally, owning a Panamanian company grants exclusive access to international markets.
Secondly, Panamanian companies benefit from a well-defined and stable legal framework, with a reliable and highly robust legal system. Moreover, Panama offers significant flexibility in the incorporation and management of companies, resulting in reduced bureaucracy for business owners.
Finally, purchasing a Panamanian company allows you to diversify your investments, enhancing protection against economic and political risks in your home country.
In conclusion, acquiring a Panamanian company offers numerous fiscal, legal, and commercial benefits that can help diversify investments, mitigate risks, and increase potential returns.
Top 10 Advantages of a Panamanian Company
- Exemption from foreign income taxes, even small business owners benefit from tax exemptions on foreign income, whereas jurisdictions like Dubai tax income exceeding $100,000.
- No requirement for tax returns or public financial statements, unlike in the U.S. or Belize, there’s no need to file tax returns or publish financial statements in a public registry.
- Lower costs, Incorporating and maintaining a Panamanian company is more affordable compared to jurisdictions like the Bahamas, Cayman Islands, or Dubai.
- Foreign founders and directors are allowed. Panamanian companies can be established with foreign founders and directors. For privacy, many clients opt for nominee founders and directors, and beneficiaries of a Panamanian corporation can also remain confidential.
- You can establish a Panamanian company entirely online without traveling to Panama. The registration process is swift and straightforward.
Additional Benefits of a Panamanian Company
- Bearer Shares Option: Although bearer shares are available, they may create challenges with banks and financial institutions and are primarily used for holding companies.
- Flexible Corporate Purpose: Panamanian companies allow for multiple business activities to be included in their corporate purpose, offering flexibility. By contrast, Common Law jurisdictions often require specifying a single activity or using a “general purpose” clause, which can be limiting for contractors, public institutions, or banks.
- Portable Phone Numbers: Many banks and clients prefer a phone number from the country where the company is registered and may distrust companies using numbers from other countries. In Panama, you can get VoIP or mobile numbers—something unavailable in Belize, Cayman, Nevis, or Saint Lucia. With this service, you can answer calls and receive texts from PayPal, banks, WhatsApp, or social media anywhere in the world.
- Nominal Share Capital Requirement: Forming a Panamanian company does not require depositing the nominal share capital in a Panamanian bank account, simplifying the incorporation process.
What Are the Costs of Incorporating a Company in Panama?
1. Incorporation Fees
- Incorporation Fee: This is a one-time fee paid to the Attorney, Registred Agent, Notary and Public Registry to register the company, typically ranging from 1530 USD to 2000 USD.
- Annual Franchise Tax: A fixed annual tax for maintaining the corporation, usually 300 USD.
2. Registered Agent and Office
- Panamanian law requires every company to have a registered agent, and a registered office within Panama. Fees for these services usually range from 370 USD to 1000 USD annually.
3. Legal and Professional Fees
- Attorney Fees: A lawyer drafts the Articles of Incorporation and handles registration. This cost is included in the incorporation fees.
- Notarization Fees: This cost is included in the incorporation fees.
4. Nominee Services (Optional)
- Many international business owners use nominee directors for privacy. The annual cost for nominee services can range from 110 USD for one to 330 for 3 directors.
5. Bank Account Opening Assistance (Optional)
- Assistance in opening a corporate bank account in Panama may cost an additional 1200 USD to 2200 USD including documents, KYC consulting and Accountant fees.
6. Additional Costs
- Corporate Books and Seal: These are required for legal record-keeping and normally are electronic. Paper books can cost around 150 each.
- Power of Attorney: If applicable, granting power of attorney for business representation may cost 300 USD to 380 with Apostille.
- Tax Compliance and Reporting: While Panama does not tax foreign-sourced income, if the company conducts business locally, tax registration and filings will incur additional fees.
Estimated Total Initial Costs
- The total initial costs for incorporating a Panamanian company typically range from 1,530 to 2,000 USD, depending on the optional services selected.
Estimated Ongoing Costs (Annually)
- Annual maintenance fees (government fees, registered agent, and office): 670 USD to 1,000 USD.
If you have any questions, feel free to reach out to us via WhatsApp, email, or to schedule a short consultation with attorney Giovanni Caporaso Gottlieb.
We recommend that you start by downloading our free booklet, Frequently Asked Questions About Panamanian Companies.
