A Detailed Checklist For Incorporation Of A Panama Corporation

Panama has become one of the most attractive jurisdictions for international entrepreneurs and companies seeking efficient global expansion. With its territorial tax system, business-friendly regulations, and strong legal framework, establishing a Panama Corporation offers numerous strategic advantages. This comprehensive checklist ensures you clearly understand each step of the incorporation process.

Why Choose Panama for Company Formation?

Panama is recognized for its political stability, strategic location, and welcoming business environment. The key benefits include:

1. Territorial Tax Benefits

Panama taxes only Panama-source income, meaning foreign-source income is generally exempt from Panamanian income tax (though it may remain taxable in your home jurisdiction).

2. Privacy and Confidentiality

Shareholder information is not publicly disclosed in Panama. Only directors and officers appear in the Public Registry.Ultimate Beneficial Owner (UBO) data is recorded privately by the resident agent under Law 129 of 2020.

Reference: Law 129 of 2020 – Beneficial Owner Registry

3. Efficient Corporate Maintenance

While Panama is business-friendly, companies must comply with modern requirements such as accounting records under Law 52 of 2016, UBO reporting, and annual government franchise tax. Overall, the compliance burden remains lighter than in most onshore jurisdictions.

4. Strong Legal Infrastructure

Panama’s long-standing corporate law (Law 32 of 1927) provides reliable protections for foreign investors and enables flexible corporate governance.

Step-by-Step Checklist for Incorporating a Panama Corporation

1. Choose the Right Business Entity

The Sociedad Anónima (S.A.) is the most common and flexible entity type for international business. Alternatively, Panama also allows LLCs and partnerships depending on your structure and operational requirements.

2. Appoint Directors and Officers

Panama requires at least three directors, who may be individuals or legal entities of any nationality. These positions typically include:

• President

• Secretary

• Treasurer

There are no residency requirements, and appointments must be made prior to incorporation.

3. Draft Articles of Incorporation

The Articles of Incorporation must be drafted in Spanish and filed with the Public Registry. Key elements include:

• Corporate name with suffix (“S.A.”, “Inc.”, etc.)

• Purpose of the company

• Share capital structure

• Director information

Panama has no legal minimum authorized capital; however, a standard USD 10,000 is commonly used for practicality and fee optimization.

4. Register with the Public Registry

Once the Articles of Incorporation are filed, your company becomes an officially recognized Panamanian legal entity under Law 32.

5. Open a Corporate Bank Account

To operate effectively, companies typically require a corporate bank account—either in Panama or in another suitable international jurisdiction.

Banks generally request:

• Articles of Incorporation

• Board resolution approving the account

• Passport/KYC documents of directors and shareholders

• Business activity description or plan

Expect stricter AML/KYC processes due to international banking regulations.

6. Appoint a Resident Agent

Every Panama corporation must appoint a licensed Panamanian lawyer or law firm as its resident agent, responsible for:

• Communicating legal notices

• Maintaining UBO information (Law 129)

• Holding or knowing the location of accounting records (Law 52)

• Managing corporate filings and government compliance

7. Maintain a Registered Office

A Panama corporation must maintain a registered office address in Panama, which acts as its legal domicile for official correspondence and document retention.

8. Pay Initial Incorporation Fees

Formation expenses typically include:

• Public Registry filing fees

• Resident agent fee

• Annual government franchise tax (Tasa Única) of USD 300

9. Comply with Tax and Regulatory Obligations

Panama’s tax benefits do not eliminate regulatory responsibilities:

• Annual Franchise Tax: USD 300, payable each year to remain in good standing.

• Accounting Records: Under Law 52 of 2016, corporations must maintain accounting records and supporting documentation for at least 5 years and provide them to the resident agent upon request.

  Reference: Law 52 of 2016 – Accounting Records Requirement

• UBO Reporting: Required under Law 129 of 2020, recorded privately by the resident agent.

• Financial Statements: Most non-resident corporations do not need to file annual financial statements unless operating locally or in a regulated industry.

10. Obtain Licenses and Permits (If Necessary)

Some businesses may require additional licensing depending on activity:

• Financial and investment services: regulatory approval

• Local operations: Aviso de Operación

• Specialized sectors: banking, insurance, securities licenses

Additional Tips for a Smooth Incorporation Experience

Engage Professionals

Local legal and compliance experts streamline the incorporation process and ensure full regulatory adherence.

Understand Corporate Obligations

Familiarity with Panama’s corporate governance, tax rules, and UBO requirements is essential for long-term compliance.

Prepare for Bank Due Diligence

Banking requires strong documentation and clarity about business operations. Preparing early can prevent delays.

Key Statistics About Panama Company Formation

• Approximately 70% of Fortune 500 companies use international or offshore structures as part of global tax and operational planning.

• Over the last decade, Panama’s GDP has grown at an average of around 4–5%, demonstrating stability despite temporary global fluctuations.

• Panama is home to more than 400,000 registered corporations and foundations, making it one of the most prominent offshore jurisdictions worldwide.

Common Challenges and How to Overcome Them

Language Barriers

Documents are in Spanish; professional bilingual support helps avoid errors.

Banking Requirements

Panamanian and foreign banks enforce strict AML/KYC processes—expect detailed information requests.

Regulatory Updates

Panama frequently modernizes its compliance framework; staying informed is essential for maintaining good standing.

How Mirr Asia Can Help

Incorporating a business in a foreign jurisdiction can be complex. Mirr Asia provides full-service support throughout the Panama Company Formation process—from drafting incorporation documents and managing compliance to UBO registration and banking guidance.

Start your incorporation journey with confidence through our Panama Company Formation service and let our experts manage the complexities while you focus on growing your business internationally.