Entrepreneurs looking to expand globally will find that company incorporation in Panama offers a powerful combination of tax efficiency, flexible regulations, and strategic positioning. Its legal and financial framework is tailored to support international ventures across a wide range of industries.
Panama allows 100% foreign ownership, has no minimum capital requirement, and enforces zero tax on foreign-sourced income. Companies can be registered quickly, often within just a few days, and operated remotely with minimal local obligations.
With its territorial tax regime, strong confidentiality laws, and access to major global markets, Panama continues to attract founders seeking agility, protection, and long-term growth.In the guide that follows, you’ll find everything you need to understand the business incorporation process in Panama, from required documentation to entity types, compliance, banking, and tax benefits.
Fast facts about doing business in Panama
Panama stands out as one of Latin America's most attractive jurisdictions for foreign entrepreneurs.
With its stable economy, liberal corporate laws, and global connectivity, it offers a strong foundation for both onshore and offshore operations.
Key economic indicators
Panama has a population of over 4 million people, with nearly half living in the Panama City metropolitan area. The country enjoys one of the highest Gross Domestic Product (GDP) per capita figures in the region and is driven by finance, logistics, and services. Its economy is USD-based, ensuring currency stability and simplifying cross-border business transactions. The country also serves as a major logistics corridor through the Panama Canal, enhancing its global relevance.
Panama has a population of over 4 million people, with nearly half living in the Panama City metropolitan area. The country enjoys one of the highest Gross Domestic Product (GDP) per capita figures in the region and is driven by finance, logistics, and services. Its economy is USD-based, ensuring currency stability and simplifying cross-border business transactions. The country also serves as a major logistics corridor through the Panama Canal, enhancing its global relevance.
Tax and legal environment
Panama applies a territorial tax system, taxing only income sourced within the country. Foreign-sourced income is entirely tax-exempt, making Panama an ideal base for holding companies, consulting firms, and digital businesses. The legal system is based on civil law, with corporate governance governed under Law No. 32 of 1927. Businesses are allowed to maintain a high degree of privacy, especially when operating without a local commercial presence.
Panama applies a territorial tax system, taxing only income sourced within the country. Foreign-sourced income is entirely tax-exempt, making Panama an ideal base for holding companies, consulting firms, and digital businesses. The legal system is based on civil law, with corporate governance governed under Law No. 32 of 1927. Businesses are allowed to maintain a high degree of privacy, especially when operating without a local commercial presence.
Why Panama is a top destination for incorporation
Panama is known for fast incorporation timelines, no minimum paid-up capital, and a straightforward structure. Entrepreneurs can incorporate remotely, appoint nominee directors, and operate without disclosing shareholders publicly.The country also permits bearer shares (held in custody), offers flexible share classes, and supports multiple business purposes under a single entity.
Global financial hub with strategic canal access
Home to the largest banking center in Latin America, Panama offers deep financial infrastructure and access to over 70 international banks. The Panama Canal and modern ports make it a preferred location for logistics, maritime trade, and regional distribution.This geographic and financial positioning gives Panama a global footprint, making it an ideal jurisdiction for international commerce and investment.
In addition to its strengths in finance and logistics, Panama is also attracting a growing number of tech startups, thanks to its digital infrastructure, remote-friendly setup, and reputation as a gateway to Latin American markets.
Pro-business environment and territorial tax system
Panama ranks highly for its pro-business policies, with no foreign exchange controls, low bureaucracy, and an active focus on foreign direct investment. Most business activities can begin without special licenses, unless in regulated sectors.
Combined with its zero taxation on offshore income, Panama offers a unique jurisdiction for entrepreneurs seeking efficiency, discretion, and legal flexibility in their global operations.
6 key advantages of incorporating in Panama
Panama operates under a territorial taxation model, meaning only income earned within the country is taxed. Any income generated from international operations is fully exempt, regardless of whether it is remitted to Panama or not.
This makes Panama highly attractive for businesses engaged in consulting, trading, e-commerce, or asset holding abroad.
There are no restrictions on foreign ownership. Companies can be formed and managed entirely by non-residents, with full control over the structure.
Additionally, shareholder details are not disclosed publicly, and nominee directors are allowed, offering a high level of confidentiality for international investors.
There is no minimum paid-up capital requirement, and shares can be issued in any currency, with or without par value. Incorporation is quick, and annual reporting obligations are minimal, especially for offshore entities.
The cost of company incorporation in Panama is low relative to other jurisdictions offering comparable benefits.
Located at the heart of the Americas and home to the Panama Canal, the country serves as a major hub for shipping, logistics, and trade. It also offers access to a robust international banking system with more than 70 licensed institutions.This infrastructure supports businesses with global reach and cross-border operations.
Panama’s Sociedad Anónima (S.A.) allows a single shareholder and up to three directors, who can be individuals or legal entities, resident or not. Companies can also issue bearer shares, held in custody by a registered agent.
This flexibility makes it ideal for holding companies, investment vehicles, and multi-purpose entities.
Founders from over 50 “Friendly Nations” can qualify for permanent residency through company formation, giving them the ability to live and work in Panama legally.
This integration of immigration and corporate law provides a unique advantage for entrepreneurs seeking both operational freedom and a stable legal base in the region.
6 common challenges for foreign founders
Although shareholder identities can remain private, directors’ details must be made public through the Registry. Foreign founders often use nominee directors, which is legal but requires proper trust agreements and oversight.
It’s important to structure your company carefully to balance privacy, control, and compliance.
Every Panamanian company must appoint a resident agent, typically a licensed local law firm. A registered office in Panama is also mandatory, even if your operations are entirely offshore.
Working with a reliable provider is essential to meet ongoing obligations and maintain good legal standing.
Opening a corporate bank account in Panama or elsewhere can be time-consuming due to strict KYC and AML requirements. Banks may request documents such as proof of income, certified ID, and detailed business descriptions.Having accurate, well-prepared documentation is key to avoiding delays or rejections.
To benefit from Panama’s offshore tax exemptions, your business must avoid creating local-source income or obtaining an Operations Notice. Engaging in local commerce triggers reporting and taxation.
Careful planning is required to keep your company within the offshore category and retain tax advantages.
While Panama allows electronic signatures, much of the corporate process still relies on manual filings and physical documentation. This can slow down procedures and create inefficiencies for foreign founders used to fully digital systems.
Partnering with a local expert helps bridge this gap and manage documents effectively.
While citizens of over 50 “Friendly Nations” have a clear path to residency via incorporation, others may face stricter requirements.
This includes higher financial thresholds or longer approval times.
Founders outside this list should prepare in advance and consider alternative visa or residency routes linked to business activity.
Banking in Panama: what to expect
Banking in Panama is globally recognized for its robust infrastructure and financial privacy, but it also involves strict due diligence. Understanding local requirements helps ensure a smooth setup and ongoing compliance.
Opening a business bank
account
Opening a corporate bank account in Panama requires a solid application and clear documentation. Most banks request the company’s Articles of Incorporation, board resolutions, and KYC forms for all directors and shareholders.
In some cases, in-person meetings may be required, though remote onboarding is increasingly available with the support of local intermediaries.
KYC, source of funds, and residency considerations
Banks must comply with international Know Your Customer (KYC) and Anti-Money Laundering (AML) standards. Applicants must provide certified ID, proof of address, bank references, and a declaration of source of funds.Though you don’t need to be a resident, some banks give preference to applicants with Panamanian residency or legal ties to the country.
Taxation and compliance requirements
Panama uses a territorial tax system, meaning only income generated within Panama is taxable. Offshore activities are tax-exempt, including international trading, consulting, and holding operations.This makes it critical to structure operations properly and avoid generating local-source income unless intended.
Corporate income tax (on Panamanian-source income only)
For companies operating locally, corporate tax is 25% on Panamanian-source income. A simplified calculation (CAIR) may apply to companies earning over $1.5M in taxable income, based on gross revenue.If your business remains offshore, you’re exempt from this obligation entirely.
Annual maintenance fees, resident agent, and accounting obligations
All companies must pay a $300 annual franchise tax, maintain a resident agent, and keep basic accounting records for at least five years. These documents should be available through your registered office in Panama.Companies not conducting business in Panama are exempt from filing annual tax returns, financial statements, or audits.
Company registration timeline
Panama offers one of the fastest incorporation processes in the region, with most companies formed within a few business days. Understanding the required steps and key institutions involved ensures a smooth and compliant setup.
Authorities involved (Public Registry, DGI, Municipality)
The main authorities in the business incorporation process in Panama are the Public Registry, which formalizes the company’s legal existence, the Dirección General de Ingresos (DGI) for tax registration, and the Municipality, which issues the operations license when local activity is planned.A resident agent, typically a licensed Panamanian attorney, is required throughout the process.
Typical timeline: 3–5 business days for company formation
Incorporation can be completed in as little as 3 to 5 business days, assuming all documents are in order. This includes registration, issuance of the company number, and access to certified documents.
Additional time may be needed for bank account setup and municipal registrations, depending on the company’s intended activities.
Step-by-step: how to incorporate a company in Panama
Most foreign investors choose the Sociedad Anónima (S.A.), a flexible corporate structure that functions similarly to a private limited company, allowing limited liability, multiple share classes, and full foreign ownership.
Panamanian companies require three directors (President, Treasurer, Secretary) and a resident agent. Directors can be individuals or legal entities of any nationality.
The Articles of Incorporation must include the company’s name, objectives, capital, share structure, and director details. A Panamanian notary must certify the document.
The notarized documents are submitted to the Public Registry, which formalizes the company’s legal existence and assigns the corporate registration number.
If the company intends to operate locally, it must register with the DGI to obtain a Registro Único de Contribuyentes (RUC) for tax purposes.
Offshore companies with no local activity may not need this step.
With incorporation complete, the company can open a corporate bank account. Most banks require KYC documents, a business plan, and proof of registration.Account opening typically takes 1 to 2 weeks, depending on the bank and structure.
Companies conducting business in Panama must obtain an “Aviso de Operación” and register with the local municipality. This is necessary to comply with local tax and licensing obligations.For purely offshore entities, this step is not required.
Panamanian business culture & practices
Formal communication and emphasis on professional services
Business in Panama is conducted with formality and respect, especially in legal and financial matters. Clear, documented communication and properly structured agreements are essential.
There is a strong reliance on professional intermediaries, including lawyers, accountants, and resident agents, to manage compliance and corporate matters.
Importance of legal representation and documentation accuracy
By law, every company must appoint a resident agent, who is a Panamanian attorney responsible for liaising with authorities. This role is not just symbolic, it ensures your entity is correctly maintained under local regulations.
In Panama, accuracy is critical. Errors in filings, translations, or notarizations can delay processes or result in penalties. Precision and legal oversight are not optional, they’re expected.
How C2Z advisory can help you succeed in Panama
Our team provides seamless global execution, supporting entrepreneurs through every step of the incorporation process. Whether you’re launching a holding company or setting up operations, we tailor our guidance to your business model.We serve clients with both international reach and local insight, ensuring full compliance while maximizing structural flexibility.
Offshore and onshore incorporation services
We assist with the setup of both offshore entities, ideal for holding, trading, and tax planning, and onshore companies registered for local commerce. Our service includes all filings, corporate structuring, and nominee director options when required.From A to Z, we ensure your entity is structured for security, privacy, and efficiency.
Banking setup, residency applications, and legal compliance
C2Z supports corporate bank account openings, preparation of KYC documents, and liaison with Panamanian banks. We also guide foreign founders through residency applications, including Friendly Nations and investor visa pathways.With our global footprint and local expertise, we manage your compliance obligations and documentation, so you can focus on scaling your business.
Frequently asked questions
Yes. Panama allows full foreign ownership with no restrictions on nationality or residency. Both shareholders and directors can be individuals or legal entities, and there is no obligation to include local partners.
This flexibility makes Panama especially attractive for international founders seeking full control over their corporate structure.
To open a corporate bank account, you’ll need the company’s Articles of Incorporation, identification for all directors and shareholders, and proof of source of funds.
Banks also require KYC documentation and may request a business plan or projected activity summary.
Some banks may prefer clients with Panamanian residency or local ties, but remote account setup is possible with the right support.
Panama is not a tax haven in the traditional sense. It offers a territorial tax system, meaning only Panamanian-source income is taxed. Foreign-sourced income is fully exempt, even if managed from Panama.
While it offers tax advantages, the country complies with OECD transparency standards and enforces strict anti-money laundering regulations.
The process for new company registration in Panama usually takes 3 to 5 business days. This includes the drafting, notarization, and registration of your Articles of Incorporation.
Additional steps, such as tax registration or bank account opening, may extend the timeline depending on the company’s structure and activity.
For offshore companies with no operations in Panama, there are minimal reporting obligations. These entities are not required to file tax returns or maintain physical offices, but must keep accounting records for five years.
Companies engaging in local business must meet substance requirements, including tax filings, licenses, and municipal registrations.