Register Company in Panama
Why Register a Company in Panama?
Panama’s location at the end of Central America between Costa Rica and Colombia has historically served as the crossroads of trade in the region. As a Central American country that houses the population of 4 million, Panama is not only a transportation hub but also an international trading, banking, and services centre. The large service sector in Panama is currently the powerhouse of its economy where it accounts for 80% of Gross Domestic Product (GDP) of the country. The fast-growing economy of Panama has indeed attracted many foreign investors to venture in the country as well as to set foothold to enter other nearby markets.
How to Register a Company in Panama?
The rise of Panama as one of the investment hotbeds has prompted many foreign investors to start a new Panama businesses or setup a Panamanian company every year. In Panama, it takes approximately 24 hours plus two days to register a company at the Panama Registry. As such, sufficient knowledge about Panama’s business laws along with their company incorporation’s procedures is crucial before registering a company in Panama.
Here is a comprehensive guide about company incorporation in Panama.
1. Decide the Business Types:
The following business types are available in Panama:
- Sole Ownership – This type of company involves only an individual (or a family) in business operation and ownership.
- Corporation – A legally registered business entity with Panama’s Public Registry. This type of company is required to issue corporate stocks and maintain a Board of Directors with a minimum of three officers.
- Partnership – Partnership means it involves two or more people in setting up the company. Three types of partnership are available in Panama:
Panama General Partnership
This kind of partnership is called “Asociacion General” in Panama. All of the partners in such partnership can be held liable by a civil court if one of them is negligent (or fraudulent) during the course of conducting business on behalf of the partnership.
Panama Limited Partnership
This type of partnership is called “Sociedad de Responsibilidad Limitada” (SRL). It requires a minimum of two to a maximum of 20 partners from any country to form the limited partnership. The capital can range between $2,000 USD to $50,000 USD and every member’s name must be filed with Panama’s Public Registry along with his or her capital contribution.
Panama Civil Partnership
In Panama, Civil Partnership is called “Sociedad Civil” where partners are subject to unlimited civil court judgment liability. This kind of partnership is common for professionals like doctors, attorneys, and architects.
2. Name the Business:
Decide a name for your business is one of the important steps in company incorporation. In Panama, there are certain rules to follow when naming your business. The Panamanian company name must end in any of the following words or abbreviations: Corporation (Corp.), Incorporated (Inc.), or Sociedad Anónima (S.A.). The next step is to check the availability of name must by the Public Registry.
3. Incorporate your company:
- Get the professional service from a lawyer (or a law firm) to serve as Resident Agent of the corporation and prepare the Articles of Association.
- Notarize articles of incorporation:
The articles of incorporation to be notarized must include:
- the name and nationality of each subscriber to the articles of incorporation;
- the domicile of the company and of the resident agent ( who must be a lawyer or a law firm in Panama);
- the names and addresses of the directors and the officers (the Directors and officers can be any nationality);
- the company’s name (already registered with the Public Register)
- the company purpose (or general objectives);
- the name list that include at least the president, the secretary, and the treasurer
- information about the capital
- information about the type and number of shares [into which it is divided];
- The directors full name, date of birth, address and nationality
4. Register at the Mercantile Division of the Public Registry and pay Annual Franchise Tax
Please note that the payment of Annual Registration Tax of USD 250 is mandatory (Payments can be made at the National Bank of Panama or at any cashier of the Ministry of Economy and Finance). In addition, those companies that do not generate any income from a Panamanian source, as well as any trading activities within Panama, are only subject to the payment of a fixed annual tax of around USD300. In other words, all income generated outside Panama is completely tax exempt and any incomes derived from sources within Panama are taxable.
5. Obtain a notice of operation (“aviso de operación”) through the “Panama emprende” website
Starting a business in Panama make a perfect sense where this country houses the excellent infrastructure, well-trained human resources and attractive tax systems. On top of that, Panama is home to the second largest international banking centre in the world (next to Switzerland) and the second largest international distribution centre in the world after Hong Kong. If you are planning to expand your business internationally, Panama has lots to offer.
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