Offshore Company Formation – Panama
Panama is located in the central part of America and borders on Costa Rica. Its flexible corporate structure, growing economy and benefits for investors make it one the most developed financial offshore centers. The legal system is based on civil law. The main corporate acts are Law 32 of 1927 and Commercial Code. Offshore companies are incorporated in the form of an International Business Company (IBC).
Basic Information and Calculation of Expenses
Offshore companies carry out their business activity outside Panama. Each company in Panama has the registered office and local Agent. It should be noted, that he minimum number of directors is three (the Board of Directors): President, Treasurer and Secretary. Bearer shares issuance is available. Corporate meetings may be held in any part of the world.
Incorporation package usually costs 1300 USD and includes the following: complete set of documents together with the General Power of Attorney, trading account and Annual Franchise Tax. A bank account in Panama costs 500-700 USD. Nominee services are 300-400 USD per year. A company may open a bank account in any country (300 USD in Cyprus, 1000 USD in Luxembourg, 800-900 USD in UAE). A maintenance fee payable from the second year is 800 USD and includes the renewal fee of 300 USD payable to the Public Registry Office.
Optional services include additional set of documents or certificates (100-200 USD), courier services (USD 100), corporate seal (100 USD), translation services (100-150 USD), etc.
The registration procedure takes 1-2 business days and additional 5-8 business days for share certificates, Apostille, and delivery of the documents to the client.
Incorporation procedure consists of the following steps:
- Selecting a corporate name for a new company. Law firms inform clients whether the chosen company name is available for registration. Clients can also acquire ready-made companies.
- Considering corporate structure, appointment of President, Treasurer and Secretary. Deciding on the share capital, class and types of shares (bearer or registered shares).
- Preparation of the documents.
- Payment of registration fee to the Public Registry Office (250 USD).
- Filing the documents to the Public Registry Office. Clients do not need to come and sign the documents personally.
- Notary certification and Apostille.
- Delivery of the documents to the client. Translation services if necessary.
Taxation in Panama
Non-resident companies of Panama are 100% tax-free provided that their business activity is carried out outside the country. An Annual Franchise Tax (250 USD upon incorporation and 300 USD for the subsequent years) is a fixed tax paid to the Government and usually included in registration packages. Offshore companies are not obliged to submit a tax return to the authorities. Tax information is not exchanged with other countries.
There are no statutory audit and accounting requirements. Offshore companies prepare financial statements and keep records for external purposes only. Accounts and beneficial owners are not filed with authorities and Public Registry Office. However, the directors’ names are stated in the Articles of Incorporation. If a client needs full anonymity, nominee services are possible.
Advantages of Offshore Companies in Panama
- Non-resident companies are fully exempted from taxes and stamp duties.
- Independent jurisdiction with developed financial services.
- Citizenship programs for investors.
- High level of confidentiality and nominee services.
- Absence of exchange control.
- Cost efficiency annual support.
- Banking secrecy.
- Bearer shares are available.
- No accounting requirement.
- No requirements in respect of minimum paid-up capital.