Panama is one of the first countries to create favorable conditions for the development of international activities. Its loyal legislation forms prerequisites for the registration of foreign firms that want to conduct a profitable business and minimize the tax burden. The Panama offshore zone is open to various funds, trust companies, corporations. The assets of entrepreneurs are reliably protected. The country has a favorable investment climate, developed economic infrastructure. If you preliminary evaluate this jurisdiction as a workable option for setting up your business presence in Panama City or any other location, it may be suitable taking into account following available benefits.
Advantages of Panama as a Jurisdiction
Company formation in Panama is associated with getting these benefits:
- A country with a stable economy and understandable legislation attracts businessmen from all over the world.
- The registration of a company in Panama is simple, inexpensive, and does not require a personal presence.
- Territorial differentiation in the calculation of taxes. Offshore Panama companies that receive income from external activities do not pay taxes from them.
- Confidentiality. There are no requirements for the publicity of the founders' personal data. In addition, the law permits nominal services.
- Capital safety. Political stability and the developed infrastructure of the zone create prerequisites for capitalization and attracting investments.
- No restrictions on the export of assets outside of Panama.
- Availability of numerous incentives for investors in different industries.
- Exemption of non-residents from the preparation of reports.
Major Forms of Legal and Business Presence
If you wish to start business activities in this jurisdiction and worldwide, this may be arranged in one of these major forms:
- Limited Liability Company – a body corporate that is formed by its members (from two) who bear the limited liability for the results of this entity's operation within their contributions only. Members of this firm can be legal entities or citizens (individuals) of any state.
- International Business Company (IBC) – a corporate entity that opens opportunities for doing business around the globe while its members bear restricted liability for the results of such operations exclusively within the values of their investments. The authorized capital of USD 10,000 is traditionally required in this case. The IBC registration in Panama requires a minimum of one shareholder and three directors.
Registration Requirements and Steps
Company registration in Panama needs completing these approximate stages:
- Defining commercial goals that are subject to realization through the entity in Panama.
- Choosing and checking a commercial name for the future legal entity.
- Arranging the future registered office for an enterprise.
- Collecting legally required data about founders (natural and legal persons), beneficiary owners, and future managers.
- Composing and executing statutory documents for a prospective enterprise.
- Submitting a complete set of registration documents to the Public Registry.
- Registration for tax and social security purposes.
- Applying and receiving a commercial license.
- Opening a corporate bank account for a newly opened enterprise.
- Getting extra permits and must-have licenses for regulated types of activities that an enterprise intends to perform.
Legal and Regulatory Framework
The local legislation is pretty much loyal and provides different options for entrepreneurs, including for the issue of shares with par value and without, simple and privileged, without the right to vote and to the bearer. The country also does not impose strict requirements on residency.
Entrepreneurs who decide to buy an offshore company in Panama need an office registered in the country. Prifinance specialists will take care of the problems associated with its opening. In addition, we provide a nominal service. Any activity not prohibited by law can be conducted in Panama. Major legal business acts in Panama are the Law on Corporations and the Law on Limited Liability Companies. Principal local business regulatory bodies are the Ministry of Economy and Finance, the Directorate General of Revenue, and the National Securities Commission.
Tax System of Panama
Company registration in Panama is associated with the subsequent highlights the local tax system of the jurisdiction offers:
- Personal income tax rate – progressive scale of rates is applied in this case depending on the amount of income with the highest rate (i) 25% - for residents, and (ii) 15% - for non-residents
- Value-added tax rate – 7% (of tax applied to movable goods and services transfers)
- Withholding tax rates – (i) dividends – 5/10/20% (ii) interests – 12.5% (iii) royalties – 12.5%
- Capital gains tax – rates vary in view of the type of transaction and its value.
The most important point for business is that its revenues obtained from the abroad sources are exempted from taxation. Corporate tax is not applicable in this case. Contact Prifinance lawyers to get full and detailed guidance on local taxation.
How Prifinance Specialists May Assist You
Specialists of Prifinance conduct company registration on your behalf and send documents to any part of the world by DHL mail. We offer company incorporation and bank account opening services in Panama and worldwide.