• Tax advantages. Suppose you invoice with a company incorporated in Panama, but your income is generated in another jurisdiction. In that case, everything invoiced abroad will not be taxed with the income tax of the country of incorporation, which in Panama corresponds to 25%. Therefore, you will not have to pay tax on the income of said company since, in Panama, the Principle of territoriality governs tax matters.
• Accounting administrative advantages. Although it is unnecessary to submit annual income statements, Panamanian regulations admit that the accounting records for companies or entities that do not carry out operations that are perfected, consummated, or take effect in the Republic of Panama can be kept outside the Republic of Panama. However, suppose the accounting records of these companies must be notified to the Resident Agents of the Company in Panama. In that case, they must know the general data and contact information of the person responsible for these records, the supporting documentation, and their physical location.
• Reduced annual expenses. The offshore company in Panama only has annual expenses of 701,25 US dollars (USD). You should add the bank transaction cost.

The requirements that are needed for the constitution of an offshore company in Panama will be the following:

• Copy of the passports of the shareholders and directors of the company (Minimum 1 shareholder and 3 directors). The passport must be valid, and the directors must be of legal age.
• Address of the shareholders and directors.
• Complete the Know Your Customer Form.
• Complete the Company Creation Form.
• Complete the Due Diligence Form.
• Different cases depending on:
  • If the shareholder is a company or legal person, the applicant must present the current Public Registry Certificate (maximum three months from its issuance) if the company was incorporated in Panama. 
  • o If the company has been incorporated abroad, the applicant must present a Certificate of Public or Commercial Registry of its country (maximum three months from issuance) duly apostilled.

The price of setting up an offshore company company is made up of registration fees and signing fees.

• The expenses are US$ 605:
  • Company registration US$ 115
  • Single fee US$ 300
  • Registration expenses US$ 60
  • Public Registry Certification US$ 30
  • Transaction fees US$ 90
• The Firms´ Fees are US$ 1,112.80:
  • US$ 1,040.00 + ITBMS

An offshore company can operate anywhere in the world. The only limitation of offshore companies is that to operate in Panamanian territory, they must request an operations notice and comply with the due registration in the corresponding Municipality.

An offshore company can provide all kinds of services as long as they are legitimate, there are two parties in agreement, and the activity or business it develops is legal; that is, it is not forbidden to corporations.

The benefit of an offshore company is focused on the ability to bill commercial activities carried out in international markets without having to file an income tax return in Panama or anywhere in the world and with an annual maintenance cost for the company of 701,25 American dollars (USD).

Yes, an offshore company can retain title to trademarks, patents, or any type of physical or intellectual property.

LThe taxes that must be paid annually by offshore companies in Panamá are the following:

• 300 US dollars (USD) corresponding to the Single Rate, a Tax that every Panamanian company must pay to maintain its validity.
• 300 US dollars (USD) plus ITBMS (7%) , for services as Resident Agent of your company. The law defines the resident agent as the attorney or law firm that registers the Articles of Incorporation and is the point of contact between the shareholders and the Panamanian Government. In addition, Panamanian law requires that every company have a resident agent. In case of not maintaining it, the company loses its validity and cannot operate.
• 75 US dollars (USD) plus ITBMS (7%), ,due diligence of the Company, with the approval of Law 254 of November 11, 2021, the Resident Agents of the incorporated Company must present, once a year, a Sworn Declaration to the General Directorate of Revenue of Panama, providing the accounting records of the company and supporting documentation, as well as the general data of the public accountant who keeps them in custody, as well as completing the risk matrix that will guarantee due diligence of the company.

La compañía operativa en Panamá debe abonar los siguientes impuestos:

• Impuesto sobre la renta (ISR). Este impuesto se abona de forma anual y se presenta por medio de una Declaración de ISR ante la Dirección General de Ingresos (DGI) por medio de Contador Público Autorizado panameño. La empresa deberá pagar el 25% en concepto de este impuesto sobre las utilidades.
• Abono de Tasa Única ante la Dirección General de Ingresos. La empresa debe abonar anualmente una tasa única que es una especie de impuesto para mantener la vigencia de la sociedad. El total a abonar son de 300 dólares americanos (USD). Tomar en consideración que si se retrasa el pago se deberá abonar 50 dólares americanos (USD) adicionales como tasa de recargo.
• Abono de Licencia Comercial (Aviso de Operaciones). Anualmente también se debe abonar una tasa al Ministerio de Comercio (MICI) de Panamá que corresponde al 2% del capital social de la empresa.
• Declaraciones de ITBMS. Mensualmente y siempre que la empresa emita facturación en concepto de su actividad comercial debe hacer las correspondientes declaraciones de ITBMS. Es un impuesto que en otros países se conoce como el IVA (Impuesto al valor agregado).
• Impuestos Municipales. Si una empresa tiene licencia comercial o aviso de operaciones está obligado a inscribirse en el Municipio que le corresponda según donde tenga su sede, en dicho caso debe abonar los impuestos municipales correspondientes a dicho Municipio.

The creation of an operating company in Panama begins with its registration in the Public Registry of Panama through a public deed, for which we will need:

• The names, passports, and physical addresses of 3 natural persons (who will be the company directors). These persons must be of legal age and have a valid passport. 
• In addition, the corporate purpose, social capital, and its name.
• Once registered, we must request the operations notice and carry out the registration in the Municipality of Panama, where the economic activities to be carried out in the national territory will be established. 

The cost of establishing a company that will have operations in Panama is divided into expenses and legal fees

The expenses include notary, registration and transaction expenses, the payment of the first single rate fee, the first year of the Resident Agent, the Operations Notice, the Public Registry Certification, and the registration in the Municipality of Panama, with a value of US$ 715.00 (seven hundred fifteen americans dollars).  

On the other hand, the professional fees for the constitution, notarization, and registration before the Public Registry of Panama of the Articles of Incorporation of a Panamanian Public Limited Company, the registration in the Single Taxpayer Registry (RUC) before the General Directorate of Revenue (DGI) of the Ministry of Economy and Finance (MEF) of Panama, the issuance of the Operations Notice and the registration in the Municipality of Panama, has a value of B/. 1,353.55 with ITBMS. The sum of expenses and fees makes a total of B/. 2,068.55 .

Yes, although you will have to face all tax liabilities in Panama, reporting the profits from your operation as foreign source income. We also recommend that you consult with an attorney from your country if the legislation there has any other requirements.

A company operating in Panama can offer any type of service outside and within the national territory as long as these services do not contravene any legal or constitutional provision that protects their national professionals.

Any person, national or foreigner, can establish an operating company in Panama if they have a valid passport and are of legal age—no need to travel or to live in Panama.

The main objective of an operating company is to carry out its economic activity in the national territory and generate its income in Panama.

• The tax burden is competitive and sometimes lower than that of countries in the region and Europe.

• The dollarized economy of Panama , and the fact that more than 50% of the Panamanian population lives in Panama City create a market with many possibilities and opportunities to offer an infinite number of services.
• In addition constituting an operating company allows its owners to request a Residence Permit in Panama if their nationality is among those listed in the category of Friendly Nations.

Yes, a company operating in Panama can own trademark titles, patents, or any type of physical or intellectual property.

Companies established in Panama must pay income tax at a rate of 25% on profit; they must also pay municipal taxes depending on the economic activities they carry out and the categories reported in their Operations Notice, the minimum being B/. 12.00 per month. 

They must also assume the annual payment of the Single Rate (US$ 300.00) and the Resident Agent fee (US$ 300.00 plus ITBMS), and the Due Diligence fee (US$ 75.00 plus ITMBS).

Operating companies in Panama, like non-operating ones, will pay at the time of their registration and in subsequent years a single annual fee of three hundred US dollars (US$ 300.00) to maintain full validity. 

The second and subsequent single annual fees will be paid as follows:

1. Until July 15 of each year,by the legal person whose date of registration of the articles of incorporation or constitutive document in the Public Registry of Panama corresponds to the months from January to June.
2. Until January 15 of each year, by the legal person whose date of registration of the articles of incorporation or constitutive document in the Public Registry of Panama corresponds to the months from July to December.

In addition, they will make an annual payment of three hundred American dollars US$ 300.00 plus ITBMS (7%) to the law firm or attorney that constitutes their company for their services as their company Resident Agent and for fulfilling their function as the point of contact between the Panamanian State and the shareholders of the company. The law defines the resident agent as the attorney or law firm that provides their services and must keep the records required by Law for legal entities constituted in accordance with the laws of the Republic of Panama. In addition, Panamanian Law requires that every company must maintain a resident agent to guarantee its validity.

Finally, with the approval of Law 254 of November 11, 2021, the Resident Agents of the incorporated Company must submit, once a year, an Affidavit to the General Directorate of Revenue of Panama providing the company’s accounting records and supporting documentation as well as the public accountant general data who keeps them in custody, as well as annually completing the risk matrix that will guarantee the Company’s due diligence.

For this management, the fee of US$ 75.00 (seventy-five US dollars) plus ITBMS (7%) must be paid annually.

The requirements to incorporate or create an operating company with a virtual office are the same as those requested for the client who wishes to establish an operating company in Panama (that is, it generates its income within the Panamanian jurisdiction) or an offshore company (income outside of Panama).

For this, we need:

• Copy of the current passport of the company’s directors (only from the general page of the passport). The directors must be three Panamanian or foreign persons of legal age. If they are foreigners, they do not need to reside, live in Panama, or have a residence permit.
• General information on the directors of the company and its final beneficiaries or shareholders. .
• Information about the person or entity responsible for keeping the accounting records and supporting documents of the company’s transactions or company to be established.

If the shareholder or final beneficiary is a legal entity (that is, a Panamanian or foreign company), it would be necessary to have a commercial registration certificate stating the validity of the said company. The certificate must be sent with an apostille if the company is foreign.

Regarding the cost of establishing an operating company in Panama (the company that will maintain commercial activity in Panama), we break it down as follows:

PROFESSIONAL ATTORNEYS’ FEES: 1.265,00 USD + ITBMS (7%)

Total fixed price: US$ 2,218.55.

The cost of the virtual office will depend on each client's needs, starting with a cost of 50,00 US dollars (USD) plus ITBMs (7%), per month. The set up is 150,00 US plus ITBM (just one time and first month included).

A Panamanian company can operate anywhere in the world. You can have an operating company in Panama with commercial activities in your country. However, we recommend that you consult the regulations of your country if you wish to open an office of that company in your country,as they will surely ask you for a series of requirements to be able to have your headquarters and carry out trade from your country. 

Any natural or legal person, Panamanian or foreign, can establish a company or operating company in Panama, provided they are of legal age and have a valid passport.

In the case of Panamanian or foreign legal persons, they must present a valid Public Registry certificate with a maximum of three months old. In the case of legal entities or foreign companies or corporations, said certificate from the Public or Mercantile Registry of the country of incorporation must be sent to Panama with an apostille.

The operating companies with a virtual office are established with the main objective of doing business in Panama, saving establishment costs. Mainly, these companies or companies have a commercial activity that will be carried out in Panama and need, in some way, to maintain an address in Panama, be it commercial or correspondence. For this reason, contracting the virtual office service for your company will save you on rent, personnel, and maintenance costs.

It is correct; operating companies with a virtual office can be holders of trademarks, patents, or any intangible asset anywhere in the world.

The difference between a company operating in Panama and an offshore company lies mainly in the tax issue. The operating company in Panama with a virtual or physical office must pay the following taxes:

• Income tax (ISR). . This tax is paid annually and is submitted through an Income Tax Declaration before the General Directorate of Revenue (DGI) through a Panamanian-authorized public accountant. The company must pay 25% of its profits in tax.
• Payment of the Single Rate before the General Directorate of Revenues. The company must pay a single rate annually, which is a kind of tax, to maintain the validity of the company. The total to be paid is 300 American dollars (USD). Consider that an additional 50 US dollars (USD) must be paid as a surcharge fee if the payment is delayed.
• Payment of Commercial License (Operations Notice) . A fee must also be paid annually to Panama’s Ministry of Commerce (MICI), corresponding to 2% of the company's capital stock.
• ITBMS declarations. Monthly and whenever the company issues billing for its commercial activity, it must make the corresponding ITBMS declarations. It is a tax in other countries known as VAT (Value Added Tax).
• Municipal taxes . Suppose a company has a business license or operations notice. In that case, it must be registered in the Municipality that corresponds according to where it is based, in which case it must pay the municipal taxes corresponding to said Municipality.

It is important to mention that any company incorporated in Panama, whether operational or offshore, must pay the annual Resident Agent fee to the law firm or attorneys that registered the articles of incorporation in the Registry; this annual fee is US$ 300.00 + ITMBS. 

As of January 2022 and in order to comply with the compliance measures required of Resident Agents by the Panamanian government, our company and collaborators have established an annual due diligence fee of US$ 75.00 + ITBMS.

The annual payments of the operating company in Panama (that is, the one whose economic activity generates income within the Republic of Panama) are the following:

• Payment of the Single Rate before the General Directorate of Revenues. The company must pay a single rate annually, which is a kind of tax, to maintain the validity of the company. The total to be paid is 300 American dollars (USD). Consider that an additional 50 US dollars (USD) must be paid as a surcharge fee if the payment is delayed.
• Payment of Resident Agent fee. Every company incorporated in Panama, whether operational or offshore, must pay the annual Resident Agent fee to the law firm or attorneys who registered the articles of incorporation in the Public Registry of Panama; this annual fee is USD 300.00 + ITMBS. As of January 2022, and to comply with the compliance measures demanded, Resident Agents, the Panamanian government, our company, and collaborators have established an annual due diligence fee of USD$ 75.00+ ITMBS.

In the case of the company that operates in Panama there are taxes that the company must pay annually, such as municipal taxes, the tax related to the possession of the operations notice or business license, the payment of income tax that is calculated for legal entities based on 25%.