Panama

Description

The notion “offshore” does not appear in the legislation of Panama. Although, as far as Panama uses territorial principle for taxation, the taxes are imposed only on income received locally and, correspondingly, the person conducting business activity or owning property out of the territory of Panama is exempt from taxes. Over 120 thousand companies are registered in Panama, most of which are offshore.

General information about Sociedad Anonima (Private Company) in Panama

  • Minimum number of shareholders is two, and the shares may be transferred to one shareholder after company registration
  • Minimum number of directors is three, private individuals of legal entities
  • Appointment of a President, a Secretary and a Treasurer is obligatory.
  • Registered share capital is divided into 100 regular shares 100 dollars each or 500 voting shares without nominal value
  • No requirements for minimum amount and terms of payment of registered share capital (except for cases with bearer shares or shares with no nominal value)
  • S.A. companies are of general legal capacity and are entitled to conduct any legal business activity (according to its Memorandum), including business activity abroad. Performing specific kinds of business activity requires special licensing (banking, insurance services, financial and fiduciary services, etc.). In order to obtain offshore (tax-free) status and be exempt from local taxation, the company should not conduct business in Panama, with residents of Panama or purchase a property in Panama.
  • Meetings of the Board of directors may be held in any country, directors may attend the meeting in person, by power of attorney or by electronic communication means.

UniverseLAW offers full range of professional services, associated with business organization in Panama:

  • preparation and submission of the documents, required for business registration in Panama
  • legal address
  • preparation and submission of documents to register the company as a VAT payer (VAT number)
  • arrangement of visits and accompanying clients for the notary office visits
  • assistance in opening a bank account

Advantages

  • issuing registered shares and bearer shares is allowed;
  • shares may be paid in any currency;
  • no requirements for minimum amount of registered share capital;
  • meeting of the shareholders and board of directors may be held in any country;
  • no need to hold annual meetings of the board of directors and shareholders;
  • territorial principle of taxation;
  • corporate information confidentiality is protected by law;
  • no seal required;
  • no strict requirements for keeping the accounts: accounting books may be kept in any country, in any relevant way for the company owners and in any language;
  • Panamanian corporation may open any number of offices around the world;
  • if the company does not conduct business in Panama, no financial or other reports to government are required, except for cases of company liquidation.

Taxation

The companies which do not conduct business in Panama are not subject to taxation.

Taxes in Panama:

  • Income of resident legal entities is subject to income taxes if such income is made in Panama;
  • Company income from any business activity is subject to taxes. Expenses may only be exempt from taxes if they are made in the course of business activity from which taxable income was made;
  • Capital gains taxes are fixed at general rate of 10%. The income from the sales of property is considered to be taxable capital gains.

Accounting

Corporate and financial documents of the company must be kept in Panama, if the company performs taxable operations on the territory of Panama. Such information must be up to date and available for inspection to local tax offices. If the company conducts only offshore operations, such documentation may be kept in any place even abroad.

Companies which do not perform business activity in Panama are not obliged to submit annual reports, tax declaration and audit.

List of required documents for registration and time frames

Legalized documents (copies of documents certified with apostille):

  • Original of Memorandum and Articles of Association in Spanish
  • Certified English translation of Memorandum and Articles of Association
  • General Power of attorney
  • Excerpt from Public registry as a Certificate of registration
  • Tax certificate (additionally)

Time required for registration:

2-3 working days are required to register an offshore company in Panama. Additionally, some time required for notary certification, apostille and delivery of the documents. If necessary, a ready-made company may be purchased in 1 working day.

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