A few years ago, not so many people knew Panama. In fact, its geographical location was unknown to many. It has always been associated with the Panama Canal and the Caribbean. Over the years, the “Panama Papers” have remained current, making Panama even more known as time goes by. For this reason, Panama keeps present in the mind of everyone. However, the importance of this situation, is that Panama has always been related to papers, that is…the Panama Legal Papers.
ut, why Panama? The answer is simple: Panama has it all. It is one of the few countries in Latin America that has an investment grade and represents a dynamic hub for the region. The country offers a developing and stable jurisdiction, which attracts international investors to carry out import and export activities, the development of oil and/or mining activities, the settlement of regional offices, the provision of tourist services, and of course, the well-known “offshore” operations.
Incorporating a company in Panama is simple. In fact, a company can be incorporated in an average of 48 to 72 hours, once all of the required information is available and payments have been made. In Panama, “Corporations” are the most common type of companies used to carry out different commercial activities or to safe guard assets (as a “holding” company).
To incorporate a Corporation, a minimum of three Officers or Directors of any nationality or place of residence are required. The management of the company’s business is conducted by the Board of Directors, but the supreme authority are the shareholders (whose identity remains private). Corporations do not require their Share Capital to be paid on incorporation, and after registration in the Mercantile Section of the Public Registry of Panama, a tax number (RUC) will be assigned to each new company.
A company in Panama may engage in any activity as long as it has a lawful purpose. In order to start a commercial, industrial or service provision activity within the territory of the Republic of Panama, a commercial license called a “Notice of Operations” is required. There are licenses with and without previous requirements, and they can be processed (depending on the activity) in an average term of 24 hours.
One of the great advantages of Panamanian Corporations is its fiscal system: Only income and profits derived from a Panamanian source are subject to taxation. Any profit derived from activities carried out outside the Panamanian territory, are exempt from income tax in Panama. This is where the “offshore companies” origin lies.
The only tax imposed is the payment of the Annual Franchise Tax, and the annual legal fees for the services of an Authorised Agent in the Republic of Panama called the “Registered Agent”. The Registered Agent must be a Lawyer in Panama or a Panamanian Law Firm, and acts as your main point of contact for any question or concern regarding the management of your company in Panama. Investment in Panama yields many benefits. EG