7 FUNDAMENTAL STEPS TO SET UP YOUR NGO IN PANAMA

By Legal Solutions • 5 minute read

Panama offers the appropriate legal, economic and fiscal conditions to establish a Non-Governmental Organization. Non-profit organizations must comply with a regulation that was modified a few years ago (2017) and in an effort to understand this legal figure, we detail below the 7 fundamental steps you must follow to incorporate your non-profit organization in Panama:

Steps to incorporate an NGO in Panama

Step 1. Definition of the objectives and specific goals of the association

The first thing that the individual or a group of people interested in creating an NGO in Panama must be clear about, are the objectives and goals that the Association will pursue. The first step to achieve the constitution of this entity is to know the aims of the NGO, as well as its administrative structure. We must not forget that both the NGO's specific objective and its structure must be included in the statutes to be drawn up by the Non-Governmental Association. Something fundamental that we cannot forget is that the NGO can be a public or private association but with the essential characteristic of being non-profit.

Step 2. Obtaining legal status as an NGO before the Panamanian Ministry of Justice.

Once we have drafted the bylaws of the NGO, the Articles of Incorporation of the Association, as well as the list of the members of the Board of Directors of the non-profit Association, we can submit to the Ministry of Government and Justice of Panama the aforementioned documents for their corresponding review and approval.

Step 3. About the members of the board of directors of an NGO

It is important to mention that the members of the NGO's Board of Directors must be a minimum of 3 people. They may be natural or legal persons and must be Panamanian nationals or have a domicile in Panama. With respect to foreign persons, the only requirement of the legislation is that the member or director be a personality from the philanthropic, artistic, sports, educational, scientific, religious or cultural world. Within this group we can also include diplomatic personnel and government agencies.

Step 4. Transcription of the resolution granting legal status to the NGO

Once the Ministry of Government and Justice reviews all the documentation submitted by the interested parties and finds that the information is complete and correct, it proceeds to issue a resolution granting the legal status of the NGO in Panama. At this point the Ministry returns all the documents that were provided at the time stamped to the interested parties. Here we have already exhausted the first phase, and from this point on, no entity must review the merits of the application again, since it has already been approved by the responsible entity.

Step 5. Authentication before a public notary and enrollment in the public registry of Panama.

All this documentation, as well as the Resolution that grants the legal personality must be taken before an authorized public notary in Panama to be transcribed and authenticated. Once the corresponding public deed is prepared, it can be registered in the Public Registry of Panama. The task at the Registry is to verify that the Public Deed issued by the notary is correct and that it has complied with all the requirements. What the Registry does not review is the NGO analysis as this has already been done and is the task of the Ministry of Government and Justice. Once the Registry accepts the deed, it issues a registration number, and it is with this number that the NGO is formally registered in Panama.

Step 6. Registration with the Ministry of Economy and Finance to be able to receive donations

In order to be eligible to receive tax-deductible donations, the NGO must register with the Ministry of Economy and Finance. The procedure to be followed involves filing an application through lawyers, by means of which the DGI is requested to be able to receive donations deductible from the donors' income tax.

Step 7. Obtaining the Single Taxpayer Registry (RUC)

Every NGO must register with the MEF (Ministry of Economy and Finance) to obtain its RUC, since such application is required by law, not only because the Association itself is a recipient of taxes on the salaries of its workers, but also to be able to receive donations free of income tax from its donors, as well as to be exempted from paying certain taxes.

If you have in mind to form an NGO in Panama do not hesitate to contact us.