The Panama Company

A Panama Company is an ideal vehicle for various activities, from property ownership to investment management and financial services. Corporate ownership provides flexibility for estate planning, tax efficiency, asset protection, and representation. Properly structured share ownership can simplify inheritance, reduce taxation, and avoid probate procedures. Shareholders can also delegate powers of attorney or authorize actions without needing local presence.

Incorporating a company in Panama is straightforward and typically takes about a week. Although Panama’s legal framework is based on civil law, its administrative and fiscal systems are influenced by the U.S. model. This dual approach allows Panama to bridge the gap between European and Anglo-American legal traditions, making it a highly efficient jurisdiction for company formation.

Key Features of a Panama Company

• No restrictions on nationality or foreign ownership
• No requirements to disclose ownership
• No restrictions on foreign investments (with few exceptions)
• No residence requirements for directors or officers
• No minimum paid-in capital requirements
• No income tax on foreign-sourced income
• Full tax exemption for activities conducted outside Panama
• No exchange controls
• No restrictions on mergers, acquisitions, or joint ventures
• No requirement to file annual financial statements
• No mandatory annual meetings for shareholders or directors
• Confidentiality and full anonymity guaranteed
• Low annual registration tax and agent fees
• Articles of Incorporation can be drafted in any language and location
• Corporate accounting books may be kept anywhere in any language
• Legal representatives may act under power of attorney on behalf of the company
• Political stability under a constitutionally elected government

Corporate Names

• Names must not be identical or confusingly similar to existing ones
• Prohibited: offensive or undesirable names
• Accepted endings: SA, Inc., Corp., or Incorporated (Ltd. not accepted)
• Name verification takes less than 24 hours
• Reservation of names is permitted
• Names can be in any language using the Latin alphabet

Capital and Shareholders

• Minimum number of shareholders: 1
• Corporate shareholders allowed
• No local shareholder requirement
• No obligation to disclose shareholders
• Minimum authorized capital: US$10,000 or 500 no-par-value shares
• Bearer shares permitted (under licensed custodian control)
• Registered shares permitted

Directors and Company Secretary

• Minimum number of directors: 3
• Corporate directors and secretaries permitted
• No local residency requirement for directors or secretaries
• Disclosure of directors and secretary required
• Subsequent appointments of officers allowed

Meetings

• Annual General Meeting of Shareholders required (notice to all members)
• Annual meeting of directors not required
• No specific location required for meetings
• Adoption by written consent permitted
• Quorum: at least 2 members unless otherwise stated in company bylaws

Local Requirements

• Registered office required in Panama
• Register of directors and officers must be kept at the registered office
• Company seal not mandatory
• Copies of minutes and share register to be maintained locally or at designated locations

Annual Requirements

• Minimum annual franchise tax: US$350
• No obligation to file annual returns or audited accounts
• Financial statements not required
• Tax return required only if income is from Panamanian sources

Taxation

Panama’s territorial tax system imposes income tax only on income generated within its borders. Income derived from operations outside Panama is exempt from local taxation. This makes Panama an advantageous jurisdiction for international business structures seeking legitimate tax efficiency and operational flexibility.