How does a corporation work in Panama?

A corporation in Panama is a legal body regulated by law 32 of February 26, 1927. Where there may be a single owner or several (partners) who come together for a common commercial or patrimonial purpose, the partners (shareholders) They must establish the percentage of participation equivalent to an amount of shares.

At the time of creating the corporation pact, it must be signed by two subscribers who accept at least one share of the company and are not strictly the owners of the company. In practice, it is usual for the articles of incorporation to be signed by the lawyer (resident agent), together with another lawyer from his office. After the agreement is formed, the subscribers renounce the shares they have subscribed or, if required by the client, remain with said actions for administrative reasons.

Panamanian corporations may engage in any lawful business that is not contrary to any law, they may also conduct business abroad and locate their offices anywhere in the world. The business possibilities offered by a Panamanian corporation are diverse, one of its main attractions is that when the commercial activity is not carried out in Panamanian territory, it is exempt from paying taxes on that activity and the money it generates can be received in Panama free of taxes.

Another interesting point is that the capital stock to form a corporation in Panama is a registered capital and it is not necessary that it exists liquidly in a bank account in Panama, this facilitates its constitution. However, if necessary through the company, a foreigner, whether a natural or legal person, can open bank accounts or fixed terms in Panama, the latter with interesting returns of up to 5.5% in the banks of the Panamanian market.

Advantages of using a corporation in Panama:

  1. The corporation is a legal body independent of its shareholders.

  2. It is a legal body of international protection.

  3. It is a safe and easy to transfer legal body.

  4. Discretion when issuing your shares.

  5. Ability to merge with another corporation.

What is an Off Shore company?

Offshore Companies, allow removing obstacles to trade and streamline exchanges, through proper planning of the tax structure of companies.

Panamanian offshore companies are, by definition, those corporations that do not carry out their commercial activity in the Panamanian territory, this eliminates the tax burden in Panama for this type of companies, being totally exempt from payment for the income obtained outside the Panamanian territory.

The Territoriality Principle of the Panamanian Tax Law allows Public Limited Companies, Limited Liability Companies or of any other nature, whose income and profits come exclusively from extraterritorial activities, not to pay taxes in Panama, being considered tax exempt.

Basic requirements to open an offshore company:

  1. 3 name options for the company.

  2. Initial capital amount.

  3. Name of 3 members of the board of directors.

  4. Name of the people who will occupy the positions of: president, treasurer and secretary.

  5. Commercial activity of the company.

  6. Share percentage.

Corporations Law:

I hope the information has helped to clarify your doubts and if you had no doubts at least to know about the comparative advantages of establishing a corporation in Panama. If you want we can talk, just send me a message by filling out the contact form you find in the menu or if you have already decided to coordinate a web meeting to talk about your next Panamanian society, I leave you the link below.

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