Panama

Company Formation in Panama

Panama is located in North America and a perfect destination to set-up your company to cater to the entire North American market. YourGlobalPro can assist in Panama for Company Formation, Secretarial Compliance, Tax Registration, VAT Reclaim, Document Retrieval, Trademark Registration and Citizenship Services.

About the Country

The Republic of Panama, is a country usually considered to be entirely in North America or Central America and sharing border with Costa Rica to the west, Colombia (in South America) to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south. The below content will explain you in detail about the requirements for the company formation in Panama, know more about the trademark registration in Panama and understand the Panama Legal and Compliance requirements.

Panama

Doing Business Introduction

The Country is having most developing economic sector is services, however recently there is increase in the construction and real estate industry related to foreigners choosing to relocate to Panama.

As per Doing business report of The World Bank –Panama ranks 70 for 2017 survey. YourGlobalPro professionals are able to assist its client with any type of company formation in Panama, trademark registration in Panama and other recurring services for your business in Panama.

Incorporation - Types of Business Entities

There are several types of entities that can be incorporated in Panama are as mentioned below:

·       Corporations (“sociedades anónimas”)

·       Limited Liability Companies (“sociedades de responsabilidad limitada”)

·       Limited Partnerships (simple or by shares) (“sociedades en comandita”)

·       Multinational Companies Headquarters (“sede de empresa multinacional”)

·       Branch of a foreign corporation

Time Frame for Incorporation of Company in Panama varies from depending on the type of entity selected and sometimes unforeseen hurdles can arise. Each business type has its own advantages and disadvantages. YourGlobalPro estimates the time required for process of Company formation in Panama to be completed is 6-10 working days.

Benefits of Registration of a Company

Below are the advantages of company formation in Panama:

·       Under an open economic policy and with the explicit purpose the Government has set up various legal procedures and institutions

·       No registration requirements for capital

·       No tax on the transfer of funds to the country

·       No controls on the repatriation of capital or retained earnings

·       No price control authority in Panama

·       No restriction on mergers and acquisitions

Tax Registration and Filing

All Business entities which include Corporations, partnerships, branches of foreign corporations, limited liability companies and any other entity considered a legal entity by law are subject to income tax.

Corporate Income Tax Rate 25%
Capital Gains Tax Rate 10%
Branch Tax Rate 25%
Value-added tax 7%
Dividends On Nominative Shares 10% On Bearer Shares 20%
Interest 12.5%
Royalties from Patents, Know-how 12.5%
Payments on Leases 12.5%
Payments for Professional Services 12.5%
Branch Remittance Tax 10%
Fiscal Year Calendar Year
Filing Annual Income Tax Returns Due 90 days after the end of the fiscal year Filed in Electronic Form
Payment of Tax To be paid in three equal instalments by 30 June, 30 September and 31 December

Double Tax Treaty

Double Tax Agreements regulates the tax treatment of income or capital gains in situations where the same taxpayer is taxed twice in two countries for the same subject. Panama has double taxation treaties with countries as mentioned below: Barbados, Qatar, Luxembourg, Czech Republic, Singapore, Mexico, France, South Korea, Netherlands, Ireland, Spain, Portugal, Israel, United Arab Emirates, United Kingdom, Italy

Trademark registration

For trademark registration in Panama application needs to be made to the Register of Intellectual Property of Panama (DIGERPI). It takes approximately 14-16 months’ timeframe to complete the process of trademark registration in Panama. A Trademark Registration in Panama is valid for 10 years from the application date and can be renewed six months before the trademark right expires by payment of renewal fees for 10 years indefinitely.

YourGlobalPro professionals are fully equipped to assist you with the trade mark registration process for your business in Panama. For assistance or advise in the matter of the trade mark registration or intellectual property – please feel free to write or contact us.

Secretarial Compliance

Below are some of the important points in relation to Company Secretarial Compliance in Panama:

·       A corporation can be constituted by two or more persons or corporate entities, even if they are not domiciled in Panama

·       Directors may be represented and cast their votes in the meetings of the Board of Directors by proxies.

·       Any corporation, regardless of where it undertakes its business, must keep a record book for Minutes and another for Shares.

·       Accounting and other records may be kept using ledgers, electronic media, and other means as approved by law.

·       The Board is responsible for the management or supervision of the corporation.

·       The shareholders hold paramount power in the corporation.

·       In case the Corporation is not undertaking business within the country – is not under any obligation to submit tax declarations or its financial statements to any local authority and accounting ledgers, as well as any other information about its business, may be kept and stored in any part of the world.

·       Minimum corporate accounting books to be maintained are Book of Share Certificates, Share Record Book, Book of Acts, General Journal.

Accounting Services

In Panama, the International Financial Information Standards (NIIFs in Spanish) issued by the International Accounting Standards Board (IASB). The law requires maintenance of proper Accounting and other records using ledgers, electronic media, and other means as approved by law.

YourGlobalPro professionals can assist you with the entire bookkeeping and accounting services for your Panama Business Setup as per your business needs including implementation of financial accounting software, accounting records preparation and time to time preparation of budgets, forecasts.

Auditing service

The International Auditing Norms and Guidelines issued by the International Federation of Auditors are adopted. The Business entities operating in Panama, in free zones and qualified foreign companies, are subject to reporting obligations and preparation of audited financial statements, even though it did not generate Panamanian source income.

Based on the size of the business – the companies are required to prepare and file financial statements with the Authority. YourGlobalPro professionals provide you auditing services as required by your business.

Banking

Panama is having a well-developed banking system and also it is an important international banking hub for years. The documentation requirement differs from Bank to Bank and need to be complied for the Bank account opening.  The major banks in Panama are Banco Naccional de Panama, BAC International Bank, Banco Aliado, Banco General, Banesco, Caja De Ahorros, Credicorp Bank, Global Bank, HSBC. All banks are stable, reliable and offer the same level of services.

YourGlobalPro professionals can facilitate all the paper work in relation to banking need and can assist you in opening bank account for your business plan in Panama.

Legal and Compliance

In Panama, the responsibility of legal compliance is not a one-time affair, but a continuous process. Below is the various Panama legal and compliance requirement to be followed by incorporated entities:

·       The Ministries of Economy and Finance and the Ministry of Commerce and Industries are the main official institutions engaged in giving direction, regulating and monitoring commercial activities within the country.

·       All the business entities carrying on business in Panama are under the obligation to file an income tax declaration, as well as discharge any other lawful requirement related to the type of business they undertake.

·       Tax returns must be filed no later than 90 days after the end of the fiscal year.

·       Tax is paid via income tax return, and must be made no longer than 3 months after closing of the corresponding accounting period.

·       Panama does not impose foreign exchange controls.

·       An annual statement of transactions in Form 930 with related parties must be submitted to the tax authorities within six months after the end of the fiscal year

·       The taxpayers must prepare a transfer-pricing study and make it available to the tax authorities.

YourGlobalPro professionals can assist you on Panama Legal and compliance requirements.

HR and Employment Law and Immigration / VISA

Below are some of the important points in relation to HR & employment law in Panama:

·       Day shift involves a maximum 8 hours, and its workweek is defined as up to 48 hours.

·       Maximum night shift is 7 hours and its work- week covers up to 42 hours.

·       Workers are entitled to annual paid vacations determined at the rate of 30 days for every 11 months of continuous work

·       25% fixed overtime pay for overtime hours.

·       Fixed overtime pays of 50% for working on a weekly day off

·       Foreigners remaining in Panama for more than 30 days must register with the National Immigration Service (“Servicio Nacional de Migración”) of the Ministry of Government and Justice.

·       obligation to enter into Labor contract agreements in writing in 3 copies (one each for the worker, employer and Ministry of Labor and Labor Development).

·       employers must pay workers a special bonus styled “Thirteenth Month” consisting of a day’s salary for each eleven day work

·       Contracts can be entered into for specific or indefinite periods and for specific works – maximum term for a specific contract is one year.

·       The Panama law allows contracting foreign workers in a proportion of not more than 10% of the workforce, except for foreign technicians, whose percentage may increase up to 15%

·       The foreigner who wish to work in Panama – require a Work Permit issued by the Ministry of Labor and Labor Development and a Work Permit is valid for one year, renewable for similar periods up to a maximum of 5 years

Country Statistics

Capital Panama City
Largest City Panama City
Total Area 74,177.3 Sq. Km.
Population 4,058,374
Density 45.9 / Sq. Km.
Currency Balboa (PAB)
Government Unitary Presidential Constitutional Republic
Official Language Spanish
Religion Roman Catholic - 75% to 85%
Protestant - 15% to 25%
Government Offices Hours Monday to Friday - 07:30 to 4:30
Business Offices Hours Monday to Saturday 8:00 to 12:00 and 14:00 to 17:00 or 18:00
Banks and Exchange Houses Hours Monday to Friday from 08:30 to 16:00/17:00 Saturdays from 08:30-13:00

Get a FREE Quote for Company formation in this country

Download this Country Factsheet