Panama is a state in Central America. Full name – Republic of Panama. In the west, it borders Costa Rica, and in the east – with Colombia. In the south, the country is washed by the Pacific Ocean, and in the North – by the Caribbean Sea. The total area of the country is about 77 thousand square kilometers. About half of the country’s territory is occupied by mountains, dissected by mountain plains. Population – about 2.8 million people. The state language is Spanish, and English is also common. The state structure is a presidential republic. The capital is Panama. Panama’s independence was proclaimed in 1903 (formerly part of Colombia). The head of state and government is the president.
Company in Panama – your first offshore
Panama is currently one of the most attractive low-tax jurisdictions due to its advantageous geographic location, political stability, and economic characteristics. Panamanian legislation regarding the regulation of corporate confidentiality plays an important role in attracting foreign investors.
Registration of offshore companies in Panama is in great demand in the United States and other countries of this region as a convenient way to optimize taxes. However, anyone from anywhere in the world can register an offshore campaign in Panama.
Besides, Panama is one of the oldest offshore jurisdictions in the world. The corresponding legislation in the field of commercial activities has been in force here for over 80 years – the first law on commercial companies was passed in mid-1927.
Benefits of registering a company in Panama:
- it is allowed to issue registered and bearer shares;
- shares can be paid in any currency;
- there are no requirements for the minimum amount of the authorized capital;
- shareholders’ meetings and boards of directors can be held anywhere in the world;
- there is no need to hold annual meetings of the Board of Directors and meetings of shareholders;
- territorial principle of taxation;
- there is a law on maintaining the confidentiality of corporate information;
- no printing required;
- there are no strict requirements for accounting: an accounting book can be stored in any country in the world, kept in any form acceptable to its owners and any language;
- a Panama corporation can open any number of offices in any country in the world;
- if the company does not conduct business in Panama, it must not submit any financial or other reports to the Panamanian authorities, except in the event of the liquidation of the company.
Taxation of companies in Panama
One of the significant advantages of Panamanian legislation for offshore companies is the territorial tax regime. An offshore corporation can open local and foreign bank accounts.
The attractiveness of the territorial taxation system lies in the absence of requirements for the payment of taxes on corporate income received as a result of foreign operations.
This means that the structure does not have an obligation to pay income tax to the state when receiving income from a source outside the country. Overseas business operations may be conducted by a company from its registered Panamanian office. The only exception is the payment of the annual franchise tax, which is described below.
Panamanian tax law will not collect corporation tax on the following activities:
- The so-called “double invoicing” (invoicing) when re-exporting goods and services through a representative office (from the office) of a corporation in Panama, taking into account the surplus-value exceeding the initial price. The main condition is that the specified goods and services provided are not (not provided) within the state.
- Managing international trade transactions through a Panamanian corporation that takes place overseas and generates profits outside the country.
- Distribution of dividends and capital participation shares of corporations or other legal entities when generating income abroad.
Types of companies in Panama
- In Panama, you can register:
- a corporation limited by shares;
- private foundation;
- foreign corporation;
- limited liability partnership;
- unlimited partnership;
- individual partnership;
- limited company;
Despite the wide variety of organizational and legal forms, most often foreign investors are attracted by corporations and private foundations.