Law 32 of 1927 · Law 129 of 2020
How to start a company in Panama
A Panamanian corporation, the sociedad anónima, is formed by two or more adults of any nationality who sign its articles of incorporation, with at least three directors and a resident agent in Panama who must be a lawyer.
There is no minimum capital and no residency requirement. It pays a B/. 300 annual franchise tax, and within 15 business days of incorporation its resident agent files the beneficial owner in a private registry.
- 2subscribers to form it
- 3directors at least
- B/. 300annual franchise tax
- 15business days to file the beneficial owner
Starting a Panamanian company, from first call to first year
Who can form a company
A Panamanian corporation is formed by two or more adults who sign its articles of incorporation, the pacto social. They can be of any nationality and need not live in Panama. Each subscriber states how many shares they take.
After it is formed, the law does not require the corporation to keep two shareholders, and having a single shareholder is not listed among the causes of dissolution.
Source: Law 32 of 1927, articles 1, 2 and 80 to 89
Directors and officers
The board of directors has at least three members, who must be adults. The law asks for no nationality or residency, and directors need not be shareholders unless the articles say so.
The board elects a President, a Secretary and a Treasurer. Officers need not be directors, and one person can hold two or more offices if the articles or bylaws allow it.
Source: Law 32 of 1927, articles 49, 55 and 65 to 67
The resident agent
Every corporation names a resident agent in Panama in its articles, and the agent must be a lawyer. The agent keeps a copy of the share certificates and the share register at an office in Panama, and holds or knows where the accounting records are kept.
If the agent resigns, the resignation is recorded and the corporation has 90 calendar days to name a new one. After that, the Public Registry suspends the company. Older guides cite Law 2 of 2011 for resignations; that law was repealed in 2021.
Source: Law 32 of 1927, article 2; Law 47 of 2013, article 2; Law 52 of 2016, article 1; Tax Code, article 318-A; Law 254 of 2021, articles 44 and 46
Capital and shares
The law sets no minimum capital. The articles state the amount, the number of shares and their par value, or use shares without par value, and the capital can be expressed in any currency. Shares can be issued fully paid, partly paid or unpaid.
Bearer shares still exist only under a custodian. A corporation that wants them must approve the custodial regime, record it in the Public Registry, and deliver the certificates to an authorized custodian within 20 days. Bearer shares not held in custody lose their voting and economic rights by law.
Source: Law 32 of 1927, articles 2, 21 and 22; Law 47 of 2013, articles 5 to 7 and 21, as amended by Law 18 of 2015 and Law 52 of 2016
Signing from abroad
The articles can be signed anywhere, inside or outside Panama, and in any language, before a notary or any authorized officer of the place. If they are not a Panamanian public deed, they are recorded with a notary in Panama, and a document signed abroad must first be authorized by a Panamanian consul, or by the consul of a friendly nation. A document not in Spanish is filed with a translation by an official Panamanian interpreter. The corporation has effect against third parties only once its articles are recorded in the Public Registry.
Source: Law 32 of 1927, articles 3 to 6
The beneficial owner registry
Within 15 business days of incorporation, the resident agent files the company’s beneficial owner in a registry kept by the Superintendency of Non-Financial Regulated Entities. The beneficial owner is the natural person who ultimately holds 25 percent or more of the shares or votes, or who controls the company by other means.
The registry is free, private and of limited access. The agent validates the data every year, and the company must tell the agent of any change within 15 business days.
Source: Law 129 of 2020, articles 2, 8, 11 and 12; Executive Decree 13 of 2022, articles 10 and 13
Due diligence before we start
Before incorporating, the resident agent must know who you are. For each owner we ask for a passport copy, a proof of address and at least one bank or commercial reference, and for corporate shareholders, a certificate of good standing and the people who run it, up to the natural person at the top.
Source: Law 23 of 2015, article 28; Executive Decree 35 of 2022, articles 12, 13, 17 and 18
Taxes in one paragraph
Panama taxes only income produced inside its territory. Directing from Panama a deal that takes effect abroad is not Panamanian income. Even so, every corporation files an income tax return by March 31, and a company that needs a business license or earns taxable income in Panama withholds 10 percent on its dividends, or 5 percent when they come from foreign income.
Source: Tax Code, articles 694, 710 and 733
The annual franchise tax
Every corporation pays the tasa única, a B/. 300 annual franchise tax, when it is registered and every year after. It is due by July 15 if the company was registered between January and June, and by January 15 if it was registered between July and December. Paying late adds B/. 50 for each year, and two unpaid periods add a B/. 300 fine.
Three consecutive years unpaid lead to suspension. A suspended company has one year to reactivate, with a B/. 1,000 fine, or it is dissolved.
Source: Tax Code, article 318-A, as amended by Law 49 of 2009, Law 28 of 2012 and Law 254 of 2021
The bank account
A Panamanian bank asks for the articles, a Public Registry certificate, the identity of the officers and signatories, shareholders with 10 percent or more, the source of funds and a sworn tax-compliance statement. No rule we have read stops a bank from opening an account for a company with no operations in Panama and a foreign owner; each bank decides by its own risk policy.
Source: Superintendency of Banks Agreement 10 of 2015, articles 15 and 16
Accounting records
Every corporation keeps accounting records, even with no operations in Panama, and keeps them for five years. By April 30 each year it gives its resident agent the records for the year closed on December 31, or a copy, or the name and address of whoever holds them.
Source: Law 52 of 2016, articles 1 and 6, as amended by Law 254 of 2021
Closing the company
A corporation is dissolved by agreement of its shareholders, recorded and published. After dissolution it lives on for three years only to wind up its affairs, with the directors acting as liquidating trustees.
Source: Law 32 of 1927, articles 80 to 86
Key points
-
Subscribers can be of any nationality and need not live in Panama.
Source: Law 32 of 1927, article 1 -
Every corporation must name a resident agent in Panama, and the agent must be a lawyer.
Source: Law 32 of 1927, article 2; Law 47 of 2013, article 2 -
The law sets no minimum capital.
Source: Law 32 of 1927, article 2 -
The annual franchise tax is B/. 300, due by July 15 or January 15 according to the month of registration.
Source: Tax Code, article 318-A -
The beneficial owner registry is private: only the resident agent and two designated officials can see it.
Source: Law 129 of 2020, articles 8 and 14 -
Panama taxes only income produced in Panama, but every corporation still files a yearly return by March 31.
Source: Tax Code, articles 694 and 710
Guides
How a Panamanian company is taxed
Panama taxes only income produced in Panama. What counts as foreign income, the March 31 return, dividend tax, economic substance from 2027, and U.S. owners.
The annual franchise tax
The tasa única is B/. 300 a year for a corporation, due July 15 or January 15. Late surcharge, the B/. 300 fine, suspension after three years and reactivation.
The beneficial owner registry
Under Law 129 of 2020 the resident agent files the beneficial owner within 15 business days. Who counts, the data filed, who can see it and the fines.
Documents and due diligence to incorporate
What the resident agent asks before forming your company: a passport copy, proof of address, a reference, and good standing for corporate owners.
Opening a bank account for your company
What a Panamanian bank asks a company: articles, Public Registry certificate, signatories, owners with 10 percent or more, source of funds and a tax statement.
The Panama offshore company
A Panamanian corporation with only foreign income pays no tax on it, but files a yearly return, keeps records and names its beneficial owner.
How to dissolve a Panamanian company
Three ways to dissolve a Panamanian corporation under Law 32 of 1927, the publication, the three-year winding up, and the resident agent’s records statement.
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