Business Information Sources
Panamanian commerce is based in
one of the world’s few truly service-dominated economies.
Industries such as banking, insurance, shipping and transport,
"offshore" business and import/re-export account for
between 75% and 80% of the GNP and the dynamic of the sector requires
constant change. The number of companies registered in Panama
–the majority of which deal with the aforementioned services–
is approximately 350,000, a number exceeded only by those of Hong
Kong, which has close to 400,000.
The reason for the popularity of Panama-based corporations are
many. Panama welcomes foreigner investors and has given them the
same rights as nationals. The country’s tax structure is
favorable and generous incentives are available, especially to
operations devoted to export. Taxes are levied only on net income
derived from operations within Panama and there are no exchange
controls. There are no restrictions on transfer of profits, dividends,
interest, royalties and fees, repatriation of capital or repayment
of principal. Finally there is the foundation, Panama corporate
law, amended only once since 1927, that is extremely conducive
to organizing a company within the country for the purpose of
directing operations elsewhere.
In terms of the actual opening and maintaining of a business
in general, this equates to a relatively simple unrestricted process.
Law No. 25 of August 26, 1994 most recently modified licensing
stipulations and licenses are issued through the Ministry of Commerce
and Industry. Exempted from licensing are entities conducting
business exclusively in certain agroindustrial and handicraft
sectors, as are those companies with a startup capital base of
under $10,000. There are two standard types of licenses, which
must always be visible in the place of business.
The Class A Commercial License applies to commercial and mortgage
banks, financial companies, high-technology companies insurers
and reinsurers, international financial brokers and transportation
companies, mutual funds and public utilities. The Class B Commercial
License is mandatory for bars, drugstores, gas stations, real
estate agents, representation agencies, restaurant and other retail-oriented
businesses. Class B status is only granted to Panamanians or corporations
owned entirely by Panamanians since foreign companies are not
permitted to engage in retail trade or certain professional activities.
The National Securities Commission or the Superintendency of Insurance
and Reinsurance must grant special accreditation for specified
Corporate names are certified by the Official Register of National
Industry (Registro Oficial de la Industria Nacional). Names can
be in any language, but are required to be suffixed with S.A.,
Inc., Corp. or Corporation.
There are two types of corporations in Panama: resident and
non-resident. Two or more individuals or corporations may start
a corporation and articles of incorporation may be executed inside
or outside Panama in any language. Corporations may be owned by
a single individual or corporation and capital does not have to
be held by Panamanians. A foreign company is allowed to have branches
or subsiduaries in Panama and numerous entities offer the use
of shell companies to those requiring them.
The Board of Directors must be composed of at least three directors.
Directors can be individual or corporate, national or non-national.
A President, Treasurer and Secretary are required and one person
can hold more than one of these positions. Directors and officers
need not be shareholders and shareholder meetings need not be
held in Panama.
All corporations are required to have a Resident Agent (read
: Panamanian lawyer or law firm) and only agents can file incorporation
documents. Approval is normally granted within one week. Costs
vary, but usually fall within the $900 to $1,300 range.
Panamanian income tax is meant to be levied only on income derived
from sources "within the territory of the Republic",
and the 1964 law specifically states that the following activities
do not produce taxable income: (1) invoicing from an office in
Panama the sales of goods that do not enter the country; (2) handling
offshore transactions from an office in Panama; and, (3) distributing
dividends from income derived abroad, including income from (1)
Taxable income is defined as the balance of gross income less
deductible expenses. The resident corporate tax rate on income
of up to $500,000 is 30%. For over $500,000, the rate is $150,000
plus 34%. Non-resident corporate income is considered to be offshore,
but a yearly fee of $150 is levied. For non-resident banking corporations
in Panama, income from activities is also tax-free.
Organizational expenses may be excluded from taxable income
in the year incurred or amortized over five years, at the discretion
of the taxpayer. The total cost of research and development may
also be subtracted.
The fiscal year is calculated from January 1 to December 31.
Due to the existence of numerous back-to-back holidays, business
activity slows down dramatically during the months of November
Business information sources
Those wishing to obtain more information pertaining to establishing
a business in Panama may contact:
Chamber of Commerce, Industry and Agriculture of Panama
• Tel: (507) 227-1233 • Fax:
(507) 225-3653 • Mailing address: Apartado
74, Panama 1, Rep. of Panama • Physical
address: Avenidas Cuba and Ecuador • E-mail:
email@example.com • Website: www.panacamara.com
Ministry of Commerce and Industry • Tel:
(507) 227-4222, (507) 227-1222 • Fax: (507)
227-5604 • Mailing address: Apartado 9658,
Zona 4, Rep. of Panama • Physical address:
Edificio de La Lotería Nacional de Beneficencia, Calles
31 and 32, Avenidas Cuba y Perú, pisos del 14 al 21 •
E-mail: firstname.lastname@example.org • Website:
American Chamber of Commerce and Industry of Panama (AMCHAM)
• Tel: (507) 269-3881 • Fax:
(507) 223-3508 • Mailing address: Apartado
168, Balboa (Ancon), Panama, Rep. of Panama • Physical
address: Calles Uruguay and 47 • E-mail:
email@example.com • Website: www.panamcham.com.
Labor Law in Focus Panama
Zone in Focus Panama
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