Company Registration in Panama in 2023-24
The region of Panama City is called the “door to seas and the key to the universe’’. The labor-intensive workforce is something that contributes to half of the country’s GDP. Panama has seen an average increase of 5.9% from 2015 to 2019. Its economy is built on services and a few of them are tourism, finance, and logistics which make up 75% of the country’s GDP.
Panama is home to a multilingual population that includes many who speak Spanish, English, and other languages. This could help companies to connect with their clients and partners from other countries.
One major reason for the growth in the economy is because of its geographical location and well-developed services sector. This country is attracting a lot of investors to register a company in Panama to earn profits.
In this article, we will be going to discuss more briefly the process of company registration in Panama and the various documents that are required to register a company in Panama.
Procedure for Panama Company Registration
The procedure for company registration in Panama generally involves the following steps:
Choose a name for the company
It is important to choose a unique name for the company that is not already in use by another business. You can search for the feasibility of a character by browsing the public registry.
Obtain necessary documents
Obtain a copy of the company’s articles of incorporation, which must be signed by the company’s incorporator(s) and notarized. Also, you will be required to give proof of identification for all incorporators, such as a passport or ID card.
Register the company with the Public Registry
Submit the articles of incorporation, along with any other required documents, to the Public Registry. The registration process typically takes around 2 to 3 days to complete.
Obtain a Tax Identification Number (TIN)
Once the firm is enrolled, you will be required to get a TIN from the Panamanian tax authorities.
Obtain a Business License
Once the firm is listed, you will be required to get a business license from the government of Panama. The process and cost for this will vary relying on the kind of company and the location.
Open a bank account
Finally, you will need to open a bank account for the company, which you can do through a local bank in Panama.
It’s important to note that the process of registering a company in Panama can take several weeks to complete.
Documents Required for Company Registration in Panama
The following documents are typically required for a company registering in Panama:
- Certificate of Articles of Incorporation
- A copy of the passport or ID card of each incorporator and director, for identification purposes.
- A utility bill or lease agreement as proof of the registered address of the company.
- A list of the shareholders & Director and the amount of stake carried by each.
- A power of attorney, if the company will be affiliated with an agency or attorney.
- A copy of the TIN and Business License.
- A bank reference letter, if the company will open a bank account in Panama.
It’s important to note that the documents required for company registration in Panama may vary depending on the type of company and the location of the company.
Types of Business Entities for Company Registration in Panama
Several types of business entities can be registered when you think of Panama company registration, including:
Corporations (Sociedad Anónima)
This is the most common type of business entity in Panama, and it is similar to a US corporation or a UK limited company. It possesses a legal personality distinct from its stakeholders, and its shareholders have limited liability.
Limited Liability Company (Sociedad de Responsabilidad Limitada)
This is a hybrid entity that incorporates the characteristics of a company and cooperation. It has a legitimate personality distinct from its shareholders, but the shareholders have limited liability.
Partnership (Sociedad en Comandita)
A Partnership firm can either be limited partnership or a general partnership:
- General Partnership: In General Partnership, two or more people work together to operate a company. Each partner splits the rewards, costs, and obligations. In this type of partnership, all of the partners are collectively and individually responsible for all of the business decisions.
- Limited Partnership: In a limited partnership, there are general partners who oversee operations and are liable for all debts and obligations, and limited partners who provide capital but have less accountability.
Sole Proprietorship
A Sole Proprietorship is one of the most easiest form of business entity which is owned and operated by a sole person. The owner has foll control over the business and enjoys all the earnings of the organization. However, the proprietor has endless liability for the obligations of the company.
Branch office
This is a business entity in which a foreign company establishes a presence in Panama. It is considered a separate legal entity and it is governed by the same laws as a domestic company.
Representative Office
An overseas corporation can choose to establish a representative office in Panama. However, such a corporation is not allowed to engage in any revenue-generating activities. Such an office will only engage in activities like market research and marketing the parent organization’s operations.
Eligibility for Panama Company Registration
To register a company in Panama, the following requirements must be met:
- Incorporator: The firm should possess a minimum of one incorporator, who can be an individual or a legal entity.
- Shareholder: The firm should possess a minimum of one shareholder, who can be an individual or a legal entity.
- Director: The firm should possess a minimum of one director.
- Registered address: The firm should possess a registered address in Panama. This could be a manual address or a virtual office.
- Minimum share capital: The firm should possess at least a share capital of $10,000.00, but there is no maximum limit.
- TIN: The firm should maintain a Tax Identification Number (TIN).
- Legal representative: The firm should possess a legal representative in Panama.
It’s important to note that some types of business activities may require additional licenses or permits for company registration in Panama.
Distinct Taxes for Panama Company Registration
When you think of doing a Panama company registration, the following taxes will typically apply:
- Corporate Income Tax: This tax is imposed on the company’s net income at a rate of 25%.
- Capital Gains Tax: The percentage of capital gains tax is 10% of the sale’s realised gain.
- Sales Tax: This tax is imposed on the sale of goods and services at a percentage of 7%.
- Property Tax: This tax is imposed on the value of the company’s property at a percentage of 1%.
- Municipal Tax: This tax is levied on the company’s commercial activities at a rate that varies depending on the municipality.
- Social security tax: Social security tax is levied at 9.75% on salaries and other reimbursement, such as in-kind benefits for employees and 12.25% for employers.
Cost to Register a Company in Panama
The cost to register a company in Panama can vary depending on many factors, such as the type of business entity, the location of the company, and the services that are required.
The Legal and notary fees will vary depending on the complexity of the registration process and the services required. Along with that, the Government fees will vary depending on the type of company and the location of the company, but they may include fees for registering the company with the Public Registry, obtaining a Tax Identification Number (TIN), and obtaining a business license.
Why register a company in Panama?
There are several reasons why someone might choose to register a company in Panama, some of these include:
- Panama has a relatively low corporate tax rate of 25%, which can make it an attractive location for businesses looking to minimize their tax liabilities.
- Panama has a well-developed and relatively stable financial system, which can provide a high degree of security for businesses and investors.
- Panama has a relatively straightforward process for registering a company, which can make it relatively easy for entrepreneurs and business owners to get their operations up and running.
- Panama has some free trade zones and other special economic zones, which can provide businesses with several benefits such as reduced tariffs, streamlined customs procedures, and other incentives.
- Panama is well known for its strong banking secrecy laws, which can provide a high degree of privacy and security for business owners and investors.
Advantages of Panama Company Registration
There are several benefits that an entrepreneur can get if they register a company in Panama, including:
- Panama has a relatively low corporate tax rate of 25%, which can make it an attractive location for businesses looking to minimize their tax liabilities.
- Panama has a well-developed and relatively stable financial system, which can provide a high degree of security for businesses and investors.
- Panama has many free trade zones and other special economic zones, which can provide businesses with many benefits such as reduced tariffs, streamlined customs procedures, and other incentives.
- Panama is well known for its strong banking secrecy laws, which can provide a high degree of privacy and security for business owners and investors.
- Panama has a multilingual workforce, with many people speaking Spanish, English, and other languages, which can make it easier for businesses to communicate and conduct business with clients and partners in other countries.
Conclusion
Panama has a relatively straightforward process for registering a company, making it easy for entrepreneurs and business owners to set up and operate their businesses in the nation. Along with the ease of company registration in Panama, the nation’s strategic location, its well developed transportation, and logistics, makes the nation and appealing choice for investment.
Eventually, registering a company in Panama can be a time-consuming and costly process. It’s recommended to hire a professional from Odint Consultancy to guide you through the process of company registration in Panama. Our experts will assist you with gathering the required documentation, fulfilling the criteria as well as registering the business with the relevant authorities. Contact us today.
FAQ’s
Panama can be a good investment for foreign investors. It does not have any discrimination against foreign investment, even where there are limitations for the operation of retail businesses.
The cost of incorporation of your company in Panama begins at US 1’085 dollars.
Panama does not impose taxes on corporate income capital gains, or estate taxes on entities located offshore that only do activities outside of the jurisdiction.
It isn’t required for directors or shareholders to travel to Panama to participate in the Company establishment.
This is contingent upon the plan selected by the client. The estimated period is 4 and 6 business days.
Non-residents pay tax only on income derived from Panamanian sources and the taxpayer must deduct the tax from any earnings received by non-residents.
