Panama is one of the world’s most established and respected offshore jurisdictions, known for its territorial tax system, political stability, and strategic location controlling the Panama Canal. Below you’ll find the most up-to-date guide for setting up a Panama company in 2025.
Key Advantages of Panama as an Offshore Jurisdiction
- Zero tax on foreign-sourced income (territorial taxation)
- No withholding tax on dividends, interest, or royalties paid to non-residents
- No audit requirement (books must be kept but not filed)
- No foreign exchange controls, official currency is USD
- Maximum privacy protection – beneficial owner register is confidential
- Availability of Panama Private Foundations for asset protection and estate planning
Legal Framework & Regulation
- Main Laws:
- Corporations Law (Law 32 of 1927)
- Law 47 of 2013 (Bearer Shares Regulation)
- Accounting Records Maintenance Law (amended 2022)
- Regulatory Authority: Public Registry & Ministry of Economy and Finance
- Beneficial Ownership Registry: Exists, not public
Types of Legal Structures in Panama
| Entity Type | Main Purpose | Tax | Audit | Public Register |
|---|---|---|---|---|
| Panama Corporation (S.A.) | Trading, Holding, IP | 0% (foreign income) | No | Yes (basic info) |
| Private Interest Foundation | Asset Protection, Estate | 0% | No | No |
| LLC | Alternative for Trading | 0% | No | Yes |
Panama Tax Regime
| Tax Type | Rate / Status |
|---|---|
| Corporate income tax (foreign income) | 0% |
| Corporate tax (Panama-source income) | 25% |
| Withholding tax on dividends/interest | 0% |
| Capital gains tax | 0% |
| VAT (local transactions) | 7% |
| Inheritance tax | None |
Compliance & Reporting Requirements
| Requirement | Status |
|---|---|
| Tax return filing (offshore income) | Not required |
| Accounting records | Required (keep 5 years) |
| Annual audit | No (except regulated entities) |
| Beneficial Ownership Disclosure | Required (confidential) |
| Economic Substance | Not applicable for most offshore business |
How to Set Up a Company in Panama
Step-by-Step Incorporation Process
- Choose entity type – typically Panama Corporation (S.A.)
- Reserve company name (must be unique and end with S.A., Inc., or Corp.)
- Appoint at least 3 directors (nominee allowed)
- Appoint shareholder(s) (can be 1 person, non-resident)
- Appoint a Registered Agent and office in Panama
- File incorporation documents with Public Registry
- Ensure proper accounting record storage
Estimated incorporation time: 5–7 business days
Bank Account Opening for a Panama Company
- Easiest in Panama (USD accounts)
- Alternatives: Switzerland, Singapore, Dubai
- KYC and source of funds required
Bearer Shares in Panama
- Permitted only under custodian control
- Holder must be registered under Law 47 of 2013
Nominee Services in Panama
- Fully legal under Panamanian law
- Enhance privacy for directors and shareholders
Who Uses Panama?
- Investors seeking asset protection
- International trading companies (import/export)
- Real estate investors (holding via S.A.)
- Wealth and estate planning via Private Foundations
Frequently Asked Questions (FAQ)
- Does Panama comply with CRS and FATCA?
- Panama is not part of CRS, but has FATCA agreements with the U.S.
- Is the Beneficial Ownership Register public?
- No, it is confidential and accessible only to regulators.
- Is an audit mandatory?
- No, unless you operate a regulated financial entity.
- Can I incorporate without traveling to Panama?
- Yes, the process can be completed remotely through a Registered Agent.
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