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Incorporations

Incorporating in Panama

Panama has some of the best laws in the world in regards to the creation of companies. One of the biggest draws to forming a Panamanian company is the fact that, unlike companies incorporated in other offshore havens like Belize, companies in Panama are perpetually tax-exempt. This tax-exemption applies as long as the income or profits are derived outside of the country. Another added benefit is that interest derived from a bank account opened in Panama for a Panama Company is also tax-free. The following is a breakdown of what is required to establish a corporation in Panama.

How to Form a Panamanian Corporation

Panama has become home to a booming business of offshore corporations. Forming them is straightforward and relatively inexpensive. Panama law requires that two people, acting as organizers and subscribers, appear before a Notary to create a corporation. However, this does not mean that you need to travel to Panama to create a corporation. It is common for foreigners to hire a Panamanian lawyer and give him or her power of attorney to form the corporation. Things that are needed to create a Panamanian company:

Company Name: You will need to choose a name for your company. It can be in any language and the only requirement is that it end with a corporate ending, to differentiate it. These include Anonymous Society (S.A.), Corp., Incorporated, Corporation, Inc. Limited, and Ltd.

Articles of Incorporation: The purpose of the corporation must be stated and submitted to the proper authorities. This description must be fairly accurate but it can be very broad. If the company will be used for multiple activities, this too, needs to be indicated.

Authorized Capital: There is no minimum capital to form a Panamanian corporation. However, when forming a corporation, the taxes and fees are factored against the capital of the company. Up to US$10,000, the registration fee is $250. This fee is the annual minimum tax for the remainder of the company’s lifetime.

Shares: Shares can be issued in any number of forms. The most common is a Bearer share. This information is included in the Articles of Incorporation and is public record.

Directors: Panamanian law requires a minimum of three directors for each corporation. There is no maximum number of directors. There are no requirements for who can be a director, and it is possible to have fictional persons (corporations) act as directors. This method is used when the owners of the corporation wish to remain anonymous. It is common for lawyers to place themselves on the board of directors when forming corporations for clients.

Officers: Every corporation is required to have a President, a Treasurer and a Secretary. Like the directors they may be real or fictitious persons. It is common for the officers and directors to be the same people, but it is recommended that the person acting as the President is not the same person as the Secretary. There can also be as many Vice-Presidents as possible.  

Domicile: While Panamanian law allows for the company to be domiciled anywhere in the world, it is strongly recommended that it is domiciled in Panama. The domicile requirements necessitate that the corporation has a domiciled agent in Panama and that person is a practicing lawyer or law firm. One of the most important things to understand for tax reasons is that the domicile of registry does not have to be the domicile of business.

Duration: Panama law allows for corporations to be renewed perpetually. This is the most common form of duration. However, it is possible to set a time limit for the company in years.

Timeframe: The length of time to register a corporation in Panama depends a lot on who you are using as an attorney. The usual time frame is a week to 10 days. The quickest way to form a corporation is to be present in Panama, mail is slow and the necessary documentation can take a while to arrive.

Expenses: Please see our billing section for more information.

 

 

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