Panama Offshore Company

A Panama Offshore Company formation is one of the longest-standing offshore formation jurisdictions in the world. A Panama Offshore Company can be used for many purposes including as a holding company, to open an investment account or offshore bank account, or to hold real estate or non-physical products. 

Established in 1927 the General Corporations Law gave form to the Panamanian Corporation and has since registered some 400,000 corporations and remains one of the premier destinations for offshore business formation. A Panama Offshore Company, also called a International Business Companies (IBC) in other jurisdictions is also referred to as a non-resident corporate structure for tax purposes.

The Panamanian offshore model has since become the world standard due to its flexible formation structure, methods to ensure customer privacy and supportive legal framework. If you are looking to open a Panama corporate bank account, they generally accept American and non-resident individuals and corporate entities but you must have a Panama Company entity and provide the necessary documentation and satisfy the KYC requirements.

Overview

Panama is strategically located as a bridge between the Americas, known for its Panama Canal and has become an international center for trade, finance, and baking services. It offers a range of financial and immigration services that are very popular amongst entrepreneurs and investors.

Panama offers a Financial Company that is one of the most competitive non-bank financial entity out there with some generous Panama citizenship programs and visas that allow permanent residency and citizenship within as little as 5 years, with minimal requirements.

Thanks to a stable political environment, the Panamanian economy has achieved rapid growth over the last two decades due to its open business environment, free trade zones, and low tariffs that have encouraged investors and business enterprises in the country.

Panama City remains one of the best places to do business due to its financial opportunities, low-risk investments, and thriving banking center. Panama Companies give individuals and corporations the ability to incorporate in a country that has a long reputation for financial and offshore excellence.

An Offshore company formation in Panama offers complete confidentiality, attractive tax-free opportunities, a favorable legal environment, and a supportive banking infrastructure all of which account for why Panama is one of the premier destinations for offshore corporations.

For more information on the Advantages of Panama as an Offshore Financial Center, click here or if you are looking to retire in Panama go here.

Table of Contents:

• Advantages 
• Tax Advantages
• Top Uses
• Key Corporate Features
• Incorporation Packages
• Registration Requirements
• Corporation Taxation
• Company Corporate Details

Advantages of Panama

Anonymous Ownership

Panama corporations share certificates can be issued in Nominative or Bearer form (Bearer Shares are an anonymous form of ownership), with or without par value.

No Reporting Requirements or Taxes

Panama does not impose any reporting requirements or taxes for non-resident Panamanian corporations.

No Piercing the Corporate Veil

Panama does not allow "piercing the corporate veil", so your corporate books are maintained 100% private and confidential by law.

Nominee Directors

We offer our clients the optional service of using our "Nominee Directors" for their corporation(s). For purposes of confidentiality, most of our clients prefer that we provide nominee directors/officers for their corporations, since unlike IBC's set up under Belize, Nevis or other British Commonwealth tax haven corporate laws, directors have to be in the public registry.

When we appoint nominee directors for the entities that we establish for our clients, we always provide our clients with pre-signed, undated letters of resignation from the directors so that our client can replace those directors at any time, without in any way being dependent on our law firm.

Favorable Incorporation Laws

Panama offers the most favorable and most flexible incorporation laws available in the world.

Strict Privacy Laws

Panama continues to maintain what we consider to be the most solid banking and corporate book secrecy laws in the world, which are engraved in its constitution.

With Britain's proposed regulation for removal of bank and corporate book secrecy in the UK offshore territories, plus considerable dilution of privacy laws in jurisdictions, such as Bahamas, Antigua, St. Vincent etc., it is clear that Panama remains the most secure offshore financial center

In Panama, privacy and confidentiality are not only respected but also vigorously protected by constitutional law. Panama offers the best bank secrecy and corporate book secrecy laws in the world.

No Sharing of Information Treaties

Panama has no mutual legal assistance treaties (MLATs) for sharing of banking information with any other nation and does not recognize court rulings from other countries.

Stable Government

Panama has what is considered by government analysts to be the most stable government in all of Central or South America.

Tax Benefits

Panama stands out with its favorable tax laws which are designed to promote investment and trade. Companies in Panama benefit from tax incentives such as no tax on foreign income, making it an attractive jurisdiction for tax planning. The taxation system in Panama allows exemption from capital gains tax on certain investments and no taxation on offshore bank account interest.

• Taxation: Only local income is taxed.
• Tax Planning: Facilities for efficient tax structuring.
• Tax Incentives: Various incentives to promote business and investment.

Confidentiality and Privacy

The regulatory framework in Panama ensures high levels of privacy and confidentiality for offshore company owners. With stringent banking secrecy laws, Panama facilitates secure asset protection and maintains the confidentiality of company registry information.

• Privacy: Robust legal structures to safeguard personal data.
• Confidentiality: Measures in place to protect business information.
• Banking Secrecy: Strong banking secrecy laws secure personal and corporate financial information.

Business and Investment Opportunities

Panama is a hub for entrepreneurs and investors looking for low-risk investments, including real estate and trade. The strategic location connects markets, while the business environment in Panama is welcoming and supportive of foreign investment.

• Business in Panama: Supportive environment for local and international business.
• Investment: Access to a variety of investment channels.
• Trade: Excellent location for logistics and international trade relations.

Entities considering a Panama offshore company will find these advantages align well with long-term asset protection, business, and investment goals. 

Financial Infrastructure

Within Panama's jurisdiction, the financial infrastructure stands as a pivotal element, underpinning its status as a prime destination for offshore incorporation. Strong banking regulations, currency stability, and advanced financial services coalesce to provide a robust environment for international businesses.

Banking Sector

Panama's banking sector is renowned for its stability and sophistication, largely due to comprehensive oversight by the Superintendency of Banks of Panama. There are numerous banks, both local and international, offering a range of services including corporate bank accounts aimed at global businesses. The banking infrastructure is aligned with international standards, offering high levels of privacy and reliability.

• Stability: Backed by prudent regulation, Panama's banking sector is viewed as one of the most stable in Central America.
• Diversity of Services: Banks in Panama offer services such as multi-currency accounts, online banking, and wealth management services, tailored for both individual and corporate needs.

Currency and Exchange

In Panama, the US Dollar is the official currency, serving as the basis for its monetary stability and eliminating the risk of foreign exchange volatility for businesses. This aspect is crucial as it eliminates the need for exchange controls, facilitating easier international transactions and financial operations.

• Currency: The use of the US Dollar (USD) simplifies banking and eliminates the complexities associated with currency fluctuations for offshore companies.
• Foreign Exchange: With no exchange controls, companies benefit from the free movement of capital, enabling them to operate across borders without the constraints that can be found in other economies.

Top Uses

Panama has a supportive legislative and banking environment making incorporation procedures both easy and flexible for many different business activities. An offshore company in Panama can be made for any legal purpose and for any legal activity, including but not limited to:

• Offshore savings and investments
• Private Interest Foundations
• Forex and stock trading
• E-commerce
• Professional service company
• Holding Company
• Licensing company
• Internet services
• Asset protection Company

Key Corporate Features

Incorporation Packages

Includes:

1. Government Registration Fee (First year)
2. Registered Office Address (First year)
3. Registered Agent Services (First year)
4. Company Secretarial Maintenance
5. Certificate of Incorporation
6. Memo & Articles of Association
7. Appointment of 1st Directors
8. Consent Actions of the BOD
9. Share Certificates
10. Register of Directors
11. Register of Officers
12. Register of Shareholders
13. FREE Phone and/or email consultations

Setting Up Your Panama Offshore Company

Incorporating an offshore company in Panama involves strategic steps. Initially, one must validate company statutes and draft the articles of incorporation, which serve as the company's operating manual. The incorporation process requires the identity disclosure of at least three directors, and it is advised to obtain the services of a resident agent.

Documents necessary for the incorporation include:

• • Name of the corporation
  • Name and domicile of the subscribers of the corporation
  • Corporate objectifies
  • Corporate Capital
  • Duration of corporation
  • Name and address of Directors and dignitaries
  • Name and address of the registered agent

Upon successful incorporation, companies are registered with the Public Registry of Panama, and they receive their Certificate of Incorporation. Companies limited by shares must issue Share Certificates to their shareholders. This satisfies the legal requirement and delineates the ownership structure.

Opening a bank account is a critical step. It necessitates providing detailed business information and personal identification for compliance purposes. Banks in Panama are known for their robust due diligence processes, ensuring the integrity of their financial system.

To summarize the key steps:

1. Validate company statutes
2. Draft and sign Articles of Incorporation
3. Register with the Public Registry of Panama
4. Obtain a Taxpayer Identification Number
5. Open a bank account

Panama corporations must have two subscribers present at the public registry in order to be incorporated. The subscribers are the individuals from our law firm that appear at the Public Registry with the articles of incorporation to incorporate the corporation. 

By law, the subscribers have a right to own one (1) share of the corporation. As soon as the corporation is established, the subscribers sign a document whereby they resign their rights to one (1) share of the corporation. This document is provided to our client along with the other corporate documentation.

Strategic Considerations

When establishing an offshore company in Panama, strategic considerations must be at the forefront of the decision-making process. The jurisdiction's favorable business climate and robust protections for assets and wealth management make it a relevant and strategic choice for international operations.

Choosing a Jurisdiction

Panama stands out in the Americas for its strategic positioning and business-friendly environment. Companies must weigh government fees and the ease of communication with local authorities when selecting Panama. The jurisdiction offers a compelling mix of trade opportunities facilitated by the Panama Canal, making it a trade hub for international business.

Operating Internationally

Operating out of Panama allows businesses to leverage the country's extensive trade networks. Recognized internationally, the jurisdiction provides a platform for accessing both North American and Latin American markets, which is vital for entities aiming to position themselves strategically on a global stage.

Asset and Wealth Management

In terms of asset protection and wealth management, Panama offers significant advantages. The country has privacy laws that help in maintaining confidentiality for investment accounts. Additionally, Panama's legal framework is designed to protect assets from undue external influences, underpinning its reputation as a secure location for asset management.

Company Management and Administration

Effective company management and administration are critical for the successful operation of an offshore company in Panama. This includes a clear definition of roles and responsibilities, adherence to corporate governance standards, and maintenance of the company’s name and identity.

Roles and Responsibilities

In the context of a Panama offshore company, specific roles are designated to individuals to ensure efficient management. Subscribers are often the initial members who set up the company and may also contribute to the share capital. The Registered Agent or Resident Agent is a key player, mandated by Panamanian law to handle official correspondence and compliance. Directors, typically at least three, hold the responsibility for overseeing company affairs, while officers such as the President, Secretary, and Treasurer manage day-to-day operations. It is also customary for the company to maintain a Corporate Book, which records all essential corporate documents.

Corporate Governance

Panama offshore companies must follow a set of rules and practices known as corporate governance to ensure accountability and transparency. This includes holding regular meetings, keeping detailed minutes within the Corporate Book, and aligning with both internal bylaws and Panama's regulations. A Nominative share structure, where shareholders' names are public, often aids in transparency, contrasting with bearer shares where ownership is anonymous.

Company Name and Identity

The Company Name is a fundamental aspect of an offshore entity’s identity, requiring careful selection and compliance with the Public Registry of Panama's regulations. The complete name and address of the Directors, Resident Agent, and registered office must be provided during the incorporation process and displayed on all official documents. The name chosen must be unique and not misleadingly similar to existing companies.

Corporation Taxation

A Panama Offshore Company enjoys a variety of tax exemptions and tax incentives that offer individuals and corporations a number of savings, including:

• No tax reporting requirements
• No income tax
• No capital gains tax
• No sales tax
• No tax on the issuance of corporate shares
• No tax to shareholders
• No stock sale or transfer tax
• No capital stock tax
• No property tax
• No estate tax
• No gift tax
• No stamp tax
• No succession tax
• No inventory tax

Corporate Details

Required Capital

No minimums

Financial Statements Required

A Panama Company is not required to file audited financial statements annually with the Financial Services Commission.

Company Secretary

The appointment of a company secretary is mandatory.

Directors

A Panama Offshore Company must have a minimum of (3) three Directors (President, Secretary and Treasurer).

Powers of the Company

Companies incorporated in Panama have equal power to that of a natural person.

Registered Office Required

Every Panamanian corporation must have a registered office

Local Presence

There are no mandatory local presence requirements

Language of Name

The name of the company may be in any language

Annual Government Fee

There is an annual fee of US$350 with a one-time registration payment of US$250.

Name Restrictions

The name of a Panama Company must include one of the following legal endings: Incorporated, Corporation, Sociedad Anonima, Inc., Corp., S.A.

Shareholders

There must be one (1) shareholder, either an individual or a corporate body, issued one share valued at US$100.

Corporate Meetings

Meetings can take place anywhere in the world.

Exchange Controls

There are no exchange controls of any kind

Double Taxation Agreements

Panama has signed twelve (12) Double Taxation Agreements with Barbados, South Korea, Spain, France, Italy, Luxembourg, Mexico, The Netherlands, Portugal, Qatar, Singapore and the United States of America.

Frequently Asked Questions

In this section, readers will find answers to common inquiries about the establishment and operation of offshore companies in Panama.

How can one form an offshore company in Panama?

To form an offshore company in Panama, one must select a company name, appoint a minimum of three directors, and submit the necessary legal documents to the Public Registry Office. Services like SFM's Panama company formation assist with registering a company in Panama in just a few days.

What are the main advantages of registering a company in Panama?

Registering an offshore company in Panama provides benefits including tax advantages, asset protection, and financial privacy. Additionally, Panama is recognized for its ease of doing business and stable jurisdiction.

What are the legal requirements for incorporating a company in Panama?

Incorporating a company in Panama requires the preparation and filing of the Articles of Incorporation, obtaining a fiscal number, and registering with the appropriate government agencies. Legal representation is often necessary to navigate the prerequisites for incorporation.

Can foreign nationals own a Panama offshore company, and are there any restrictions?

Foreign nationals can indeed own a Panama offshore company; there are no citizenship or residency requirements. However, for banking and certain business activities, there may be regulatory checks to ensure compliance with international standards.

What is the typical process and timeline for establishing a company in Panama?

The typical process for establishing a company in Panama involves company name reservation, preparing and signing the Articles of Incorporation, and registering with the Public Registry. The process usually takes between 3 to 4 days, provided all documents are in order and correctly filed.

What financial and reporting obligations does a Panama offshore company have?

A Panama offshore company is obligated to maintain financial records reflecting its financial status and transactions. While these companies are not subject to stringent reporting requirements, they must adhere to annual franchise tax payments and any relevant international reporting standards, such as investment holding regulations.

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