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Company formation Panama
The Republic of Panama, between Colombia and Costa Rica, has a population of just over 3.5m and a land area of 76,000 sq km. The climate is tropical. Panama is a sovereign democracy with a presidential style of government. A pro-business government fell from power in 1999 and a new president, Mireya Moscoso made populist promises. However, in May, 2004, Martin Torrijos (son of Omar Torrijos, who ruled Panama between 1968 and 1981) was elected President. After losing the presidential battle in 1999, Torrijos assumed leadership of his father’s party, sought to reform it, and created a platform based on combating corruption, boosting employment, and reforming Panama’s fiscal system. The pro-business Ricardo Martinelli has been President since July 2009.
In terms of business and communications infrastructure, the long-term US influence on Panama has been very beneficial, Panama City in particular having the highest international standards. The well-established banking sector, however doubtful some of its antecedents, has also demanded high standards.
Corporation (Sociedad Anonima)
The corporation limited by shares is the most frequently used corporate form in Panama, and is the usual choice for an offshore operation.
Corporations are formed under the Law No. 32 of 1927 and the Commercial Code (Decree-Law No. 5 of 1997, Article 5). A corporation is formed by two subscribers (or nominees in the case of absent foreign subscribers) who execute the Articles of Incorporation (Statutes) before a notary and then record them at the Public Registry Office, paying a capital tax (minimum US$60.20 on the usual capital of US$10,000). There is an annual registration fee of US$300. All commercial and industrial businesses must have a Notice of Operations in order to engage in business unless they are specifically exempt. The cost of a Notice of Operations is 2% of a company’s net worth up to a maximum of US$60,000. Companies operating in any of the Free Zones are subject to an annual license tax of 1% of net worth up to a maximum of US$50,000.
Following incorporation, only one shareholder is necessary. Shares can be of various classes, can have par value or not, may be registered or bearer. There is no minimum capital, and no paying-up rules, except that no-par-value and bearer shares must be fully-paid when issued. Strict regulations now apply to bearer shares: the registered agent must keep the bearer share certificate in safe custody and must notify the Registrar about such shares.
Offshore Business Introduction
Panama probably means shipping and the canal to most people, and indeed it is the world’s largest shipping registry; but it is also home to a substantial number of banks, with strong North and South American connections, as might be expected. The canal, and Panama’s Colon Free Zone, have established the country as a pre-eminent trading base, and an unknown but presumably high proportion of Panama’s registered companies are involved in trade.
Panama has a captive insurance sector, and through its stock exchange is attempting to encourage mutual funds; but neither sector has reached a great size.
This section of the site describes the most important types of offshore business activity carried out from Panama.
Corporate Taxation Introduction
n February, 2005, Panama’s unicameral legislature approved a major fiscal reform package in order to raise revenues from new business taxes, and reduce the country’s level of debt. The legislature voted 46 to 28 in favor of the measures, which included a 1.4% tax on companies’ gross revenues, and a 1% levy on firms operating in the Colon Free Trade Zone – the largest free port in the Americas.
The key advantages of Panama are
- High level of asset protection
- Financial privacy
- No minimum capital requirements. A corporation may operate without any issued share capital requirements
- All Panamanian companies must appoint a registered agent, but there is no requirement for a local registered office. This function more often is carried out by a local attorney or a firm of attorneys
- No taxes on capital (stocks, bonds and other investments) held by Panamanian corporations
- No bureaucracy
- No annual tax return requirements
- No requirements as to the number of shareholders, and no nationality restrictions
We comply with the following code:
- Legally secure foundations
- No unexpected(hidden) costs
- No false promises
- Finding the right solution by focusing on your requirements
With this strategy, we have been on the market since 2013 and have not disappointed any customer so far. And we prioritize it in keeping that way. We strive to ensure that every client is satisfied and does not take risks with the solutions we provide for them, but only exploits legal opportunities. Starting a company that involves doing real business is more costly than a letterbox company, but it is the only way to save on taxes without risking legal action.
Company formation Panama - That's how it works
Establishing a company in Panama is easy and the founder does not have to travel extra. For the foundation only a certified ID or passport copy and a power bill is needed. Depending on the choice of bank also a short CV or bank reference.