Panama Company Formation

Panama company formation gives access to one of the world’s oldest and best-known offshore jurisdictions. Panama is valued for its territorial tax system, the absence of exchange controls, flexible corporate legislation, and its stable economy. These features make a Panamanian company a convenient tool for international trade, asset protection and holding overseas assets.

Panama: General Information

The Republic of Panama is an independent state in Central America located on the isthmus that links South and Central America.

Key facts about the jurisdiction include:

Parameter	Information
Capital	Panama City
Official language	Spanish (along with Spanish, English is widely used in business)
National currency	balboa and the US dollar (a legal tender, in free circulation in Panama)

Panama has a number of characteristics that make it attractive for international business, in particular for setting up an offshore company:

• combination of the civil law tradition (the Romano-Germanic legal family, Latin American subgroup) and the influence of Anglo-American law, which is reflected in the flexibility and predictability of its corporate legislation;
• strategic geographic location and sovereign control over the Panama Canal (since 2000), which give Panama a well-developed logistical, port, and financial infrastructure, as well as a steady inflow of foreign investment;
• stable political system;
• favourable tax regime;
• well-developed legal services sector;
• status as a recognised centre of international business;
• no exchange controls or restrictions on the movement of funds;
• the possibility of conducting transactions in any currency.

Types of Corporate Structures in Panama

Corporate regulation in Panama is governed by several pieces of legislation, in particular:

• Law No. 32 of 1927 on Corporations (Ley 32 de 1927 sobre Sociedades Anónimas), as currently in force;
• Commercial Code of 1917, as amended by subsequent legislation;
• Law No. 4 of 2009 on Limited Liability Companies (Ley 4 de 2009 sobre Sociedades de Responsabilidad Limitada); and
• Law No. 25 of 1995 on Private Interest Foundations (Ley 25 de 1995 sobre Fundaciones de Interés Privado).

Companies can be registered in Panama in the following legal forms:

• joint-stock companies (corporations, Sociedad Anonima, S.A.);
• limited liability companies (S de RL/ SRL);
• private foundations;
• partnerships; or
• branches of foreign companies.

Key Features of Panamanian Corporations

A corporation (or S.A.) is the most widely used vehicle, including for setting up offshore companies in Panama. To qualify for offshore (tax-free) status, S.A. must not carry on business within Panama, do business with Panamanian residents, or acquire real estate in Panama.

S.A. have the following key features:

Characteristic	Description
Legal capacity	S.A. have general legal capacity and may conduct any legal business activity in line with their articles of association. Some types of business activities require a special license, for instance: banking,  insurance,  financial and fiduciary services, etc.
Name requirements	The name of the corporation must be different from already existing names and must include one of the following legal endings: Sociedad Anónima,  S.A., Corporation,  Corp.,  Incorporated, Inc.
Directors	A distinctive feature of Panamanian companies is the mandatory requirement to appoint at least three directors, who hold the following key positions: president, treasurer, and secretary. Directors may be either individuals or legal entities, with no restrictions as to nationality, residence, or country of registration.
Shareholders	A Panamanian corporation may be formed (at the registration stage) by two or more individuals or legal entities, resident in any country. Following incorporation, S.A. may have a single shareholder, with no restrictions as to residence.
Place of meetings	The meetings of shareholders must be held in Panama if otherwise is not provided by the articles of association. Board meetings can be held in any country.
Shares	Shares of any class are allowed, either with or without a par value.  Panamanian legislation permits the issue of bearer shares; however, they are subject to a special custody regime (see below for details).
Share capital	As a general rule, there are no requirements as to the minimum amount or the due date of payment of the share capital. An exception applies to bearer shares and shares without par value, which must be fully paid up at the time of issue. In practice, the authorised capital is typically USD 10,000.
Registered agent	Companies must have a registered agent in Panama.
Registered office	Companies must have a registered office in Panama (which is usually provided by the company’s registered agent).
Accounting records	Companies may keep their accounting records anywhere, including outside Panama, subject to certain conditions (see below for details).
Financial reporting and audit	Financial statements must be submitted to the registered agent. The reporting requirements vary depending on the circumstances (see below for details).
Taxation	Income from business activities carried out outside Panama is not subject to taxation (see below for details).

Key Features of Panama Private Foundations

A Panama Private Foundation (private interest foundation) is a unique legal instrument that offers all the possibilities and advantages of a trust, while also being a legal entity. The foundation acquires legal personality from the moment its charter is registered in the Public Registry of Panama.

Panama private foundations have the following features:

Characteristic	Description
Legal capacity	As a general rule, foundations are established for the purpose of holding and managing assets in the interests of specific persons. Such foundations are not permitted to engage in commercial activities on an ongoing basis (only occasionally, where necessary to achieve their purposes).
Name requirements	The name must not be identical or similar to the name of another registered foundation. The name must include the word fundación (‘foundation’).
Founders	Founders may be either individuals or legal entities, of any nationality or residence.
Beneficiaries	The foundation charter must specify the method for determining the beneficiaries. The founder may also be a beneficiary.
Management of the foundation	The foundation’s assets are managed by the foundation council. The functions of the council may be performed by a legal entity. If the council consists of individuals, there must be at least three of them. Members of the foundation council may be citizens or residents of any country.
Foundation capital	Establishing a foundation requires the founder to actually contribute funds or assets to it. The value of the foundation’s assets must be at least 10,000 balboas or the equivalent in another currency.
Registered agent	Foundations must have a registered agent in Panama.
Registered office	Foundations must have a registered office in Panama (which is usually provided by the registered agent).
Accounting records	Foundations may keep their accounting records anywhere, including outside Panama, subject to certain conditions (see below for details).
Financial reporting and audit	Financial statements must be submitted to the registered agent. The reporting requirements vary depending on the circumstances (see below for details).
Taxation	Income from business activities and transactions carried out outside Panama is not subject to taxation (see below for details).

Company Registration in Panama: Key Points

Registering an offshore company in Panama involves several stages:

• selecting the legal form and structure of the company,
• choosing, checking, and reserving the company name,
• preparing and signing the constitutional documents,
• filing the documents with the Public Registry and paying the registration fees,
• receiving the registration documents from the Registry,
• preparing the internal corporate documents.

The timeframe required to register a company depends on the workload of the government authority, but it typically takes two to three weeks.

If required, a bank account for an offshore company in Panama may be opened after incorporation.

Spanish is the only official language in Panama, so all documents of Panamanian companies are drawn up in Spanish. For use abroad, such documents must be accompanied by a notarised translation.

Taxation and Mandatory Payments for Companies in Panama

The Panamanian tax system is characterised by a territorial principle of taxation which means that earnings of the Panamanian corporation from activities carried out outside Panama are not subject to tax. That said, for certain companies, retaining this benefit is conditional upon an additional requirement: demonstrating economic substance in Panama (see below for details).

As a general rule, withholding tax is levied at 10% on dividends paid by a Panamanian corporation. A reduced rate of 5% applies where the dividends are paid out of profits derived from a foreign source.

Income derived from activities carried on within Panama is subject to corporate tax at the standard rate of 25%.

At the same time, all companies, regardless of the place of business, are required to pay an annual fixed fee. The payment deadline depends on the date of the company’s incorporation:

Date of Incorporation	Payment Deadline
1 January to 30 June	by 15 July of the same year
1 July to 31 December	by 15 January of the following year

Failure to pay the annual fee results in penalties:

• a surcharge of 50 balboas for each year or part of a year of delay;
• non-payment over two consecutive or non-consecutive periods – in addition to the surcharge, a further penalty of 300 balboas, together with a notation on the register indicating that the company is not in good standing;
• non-payment over ten consecutive periods – the company is struck off the Public Registry.

International Cooperation of Panama on the Exchange of Financial Information

Panama is a party to the 1988 Convention on Mutual Administrative Assistance in Tax Matters, as amended by the 2010 Protocol (which entered into force for Panama on 1 July 2017).

Panama is also expanding its bilateral cooperation. Panama’s double tax treaties have been signed with a number of countries, including:

• UK,
• UAE,
• Singapore,
• Mexico,
• Vietnam,
• some EU member states, and others.

In addition, Panama has entered into several Tax Information Exchange Agreements (TIEAs), under which information is exchanged between the tax authorities on request. Panama is also a party to the Multilateral Competent Authority Agreement on the automatic exchange of financial account information under the CRS standard.

In December 2025, Panama joined the Crypto-Asset Reporting Framework (CARF) in order to begin exchanges in 2028. The exchanges will cover crypto-asset data for 2027.

Finally, Panama has entered into an intergovernmental agreement with the United States, which serves as the legal basis for applying the US Foreign Account Tax Compliance Act (FATCA) in Panama.

Panama’s efforts to strengthen its anti-money laundering and counter-terrorist financing (AML/CFT) framework has led to the country being removed from the FATF “grey list”. However, Panama remains on the EU “blacklist” of non-cooperative jurisdictions for tax purposes.

This means that, despite the improvement of Panama’s overall reputation, dealing specifically with European banks or counterparties may involve additional documentation requirements and more extensive due diligence reviews. There are tax implications as well: EU member states may, for example, apply additional withholding tax on payments made to Panamanian companies.

Financial Statements and Audit in Panama

Panamanian offshore companies are required to maintain and retain accounting records and supporting documentation at the office of their registered agent in Panama or at another location outside Panama for at least five years. If the records are kept outside the registered agent’s office, the company must provide the registered agent with:

• the physical address where the accounting records and supporting documents are kept; and
• the name and contact details of the person keeping them.

In addition, all Panamanian companies and private foundations that:

• do not carry on business in Panama; or
• merely hold assets in Panama or abroad,

are required to provide their registered agent annually with the relevant report in the prescribed form. The reporting requirements for Panamanian companies depend on the extent to which the company engages in economic activity and on the identity of its beneficial owner.

For example, if a company holds assets or generates income and at least one of its beneficial owners is a foreign national, it must provide its registered agent annually with either full financial statements or a summary of its financial position.

The registered agent is required to notify the Public Registry if the company fails to provide the required documents. Failure to comply may result in fines, the suspension of certain corporate rights, or restrictions on the issuance of documents by the Public Registry.

At the same time, companies that do not carry on business in Panama are not required to file tax returns with the state authorities or have their financial statements audited.

Economic Substance Requirements in Panama

The economic substance requirements in Panama apply to a company where both of the following conditions are met:

• the company is part of a multinational group; and
• the company receives passive income (such as dividends, interest or royalties) from foreign sources.

If either of these conditions is not met (for example, if the company has no related parties in other jurisdictions or receives passive income only from Panama) the economic substance requirements do not apply.

However, if a company meets these conditions, it must, among other things, ensure:

• maintaining a sufficient number of qualified employees in Panama who receive appropriate remuneration and work in adequate premises;
• making key strategic decisions in Panama;
• incurring appropriate operating expenses in Panama.

Companies are required to keep in Panama documents supporting their claimed economic substance.

The adequacy and proportionality of expenses, the number of employees and other relevant factors are assessed on a case-by-case basis, taking into account the nature and scale of the company’s activities, the type and amount of passive income, the number of assets and the level of risk assumed.

If a company falls within the scope of the law but does not maintain economic substance in Panama, its passive income is subject to tax at the rate of 15%.

Confidentiality of Information about Directors, Shareholders and Beneficial Owners

The names of directors of Panamanian companies are publicly available to third parties and are indicated in the Public Registry.

Details of shareholders and beneficiaries are not disclosed and kept only in records of the registered agent.

Bearer shares (i.e. shares issued without the owner’s name being specified) are formally permitted in Panama. However, in practice, such shares are “immobilised”, as they are subject to a special custody regime. Under this regime, bearer shares must be deposited with an authorised custodian together with an affidavit from the shareholder containing the shareholder’s identification details.

The following persons can act as custodians:

• banks with general licenses;
• regulated (supervised) trustees;
• brokerage firms;
• centralized securities depositary;
• lawyers meeting the requirements of the law, and
• similar foreign organizations registered in a special registry of Panama.

Thus, bearer shares have largely lost their practical purpose:

• ownership is effectively no longer anonymous due to the requirement to deposit the share certificate with a custodian; and
• the transfer of shares can no longer be effected by physically delivering the share certificate and instead must be implemented through the custodian.

Apart from maintaining the shareholders’ register, registered agents are required to collect information on the beneficial owners of Panamanian companies and submit it to the central beneficial ownership register. The information submitted includes:

• full name;
• passport number or number of another identity document;
• date of birth;
• nationality;
• address; and
• the date on which the person became a beneficial owner.

This information remains confidential and is not available to third parties. However, authorised government authorities in Panama have access to it.

The obligation to provide this information applies to all Panamanian legal entities, including private foundations.

Failure to provide the required information or to update beneficial ownership information in a timely manner may result in administrative fines for registered agents, as well as the possible suspension of corporate rights of the relevant legal entities.

Uses of Panamanian Companies

Panamanian offshore companies may carry on any lawful commercial activities worldwide. Below are the main areas in which Panamanian companies are most commonly used.

Asset Protection and Management

Panamanian companies may be established to hold various types of assets, including:

• real estate;
• investment assets;
• intellectual property; and
• other assets.

This function is generally better performed by a Panamanian private foundation.

At the same time, Panama appears to be a less convenient jurisdiction for establishing an international holding company, in particular due to:

• the relatively limited network of tax treaties; and
• the need to comply with economic substance requirements.

Shipping and International Transportation

Panama has historically played a prominent role in international shipping and operates one of the world’s largest ship registration systems. Accordingly, Panamanian companies may be used for:

• vessel registration;
• organising maritime freight and passenger transportation;
• providing vessel chartering services; or
• similar activities.

Crypto-Asset Activities

Panamanian companies are also suitable for carrying out crypto-asset activities, including:

• operating a cryptocurrency exchange;
• issuing and selling tokens;
• holding and managing crypto-assets;
• providing consultancy and other services related to crypto-assets.

Currently, crypto-asset companies in Panama are regulated by general corporate legislation as well as AML/CFT requirements. No specific license is required; however, a company must maintain robust internal compliance, customer due diligence and anti-money laundering procedures.

However, if such activities possess characteristics of a regulated financial activity, a license may be required. For example, holding crypto-assets on behalf of third parties may be classified as a trust or fiduciary service, while accepting fiat deposits from clients may be considered banking activity. Therefore, the need for a license should be assessed on a case-by-case basis depending on the particular business model.

It is also worth noting that no additional licenses are required as long as the company conducts its activities outside Panama and therefore retains an offshore status, in particular if it:

• has no physical presence or employees in the country; and
• does not solicit or serve clients in the Panamanian domestic market.

Company Formation in Panama with Uniwide

Panamanian offshore companies continue to meet the needs of international businesses thanks to the territorial tax system, straightforward corporate regulations, well-developed business infrastructure and the absence of exchange controls.

At the same time, using a Panamanian corporation requires careful attention to compliance issues. We help our clients navigate the current regulatory requirements at every stage of setting up and administering a company.

Our company registration services include:

• advising on the choice of a suitable corporate form and ownership structure;
• preparing the required corporate documents; and
• liaising with local registered agents.

After incorporation, our specialists help monitor annual fee payment deadlines and comply with other applicable requirements to keep the company in good standing.

Finally, we monitor changes in Panamanian legislation and inform our clients in advance about the practical implications of regulatory developments.