Panama is home to the second largest international distribution and trade center (free trade zone) in the world next to Hong Kong. Panama’s Colon Free Zone has over 1500 international import/export businesses operating within it, receives more than 250,000 visitors yearly, and generates exports and re-exports valued at more than US$11 billion annually.Under the 2004 Business Companies Act, several different types of companies can be incorporated including:
The service sector contributes more than three-quarters of Panama’s economy, which is based on banking, tourism, mining and commerce. The Colon Free Zone is very successful, accounting for around 10% of GNP. The Balladares administration pulled Panama back from a very poor situation between 1994 and 1999, reorganising debt, trimming state expenditure, liberalising and privatising. The government is trying to make productive use of the canal’s facilities with export processing zones and many investment incentives.
In the 1990s, growth had been running at 4% with low inflation, however it fell from 2.5% in 2000 to only 0.3% in 2001 and about 0.8% in 2002. Growth picked up again in 2003 to 4.1% and jumped to 6% in 2004, due partly to a one-off tax break aimed at investors in housing construction. Under Torrijos Panama is enjoying something of a boom; growth was 8.1% in 2006, exceeded 10% in 2007 and was 8.3% in 2008. Inevitably, the world financial and economic crisis dampened growth in 2009, falling to an estimated 2.4%.
In April 2009, following that month’s landmark G20 summit in London, Panama was placed on the OECD’s ‘grey list’ of territories which have committed to, but not yet substantially implemented, the internationally agreed standard in tax transparency and information exchange. Although Panama has set about negotiating tax agreements in response, as of 2010 it remains a ‘grey-listed’ country.
Type of companies:
- The corporation limited by shares.
- Foreign Corporation.
- General Partnership.
- Limited partnership.
- Civil Partnership.
- Commandite company
- Foundation
- Trusts
Applicable Law
- Company Law No. 32 1927
Restrictions on company names
- Names identical or similar, offensive words
- Corporation, Incorporated, Sociedad Anonima, or its abbreviations
- Any language using the Latin alphabet
Requirements for companies
- Minimum Number of Shareholders One
- Minimum Number of Directors Three
- Annual General Meeting of Shareholders Required No
- Annual General Meeting of Directors Required No
- Location of Directors and Shareholders Meetings Anywhere
- Minimum Annual License Fee or Franchise Tax US$300.00
Tax Exemptions
Panama has territorial taxation, thus only locally-sourced income is taxed. There are no ‘offshore’ regimes as such other than the Colon Free Zone and the export processing zones. There are more than 120,000 companies in Panama, most of which trade or hold assets externally. It is reasonably easy to form corporations, and privacy is assured. There are no tax treaties. Banking and shipping are Panama’s two main ‘offshore’ industries.
In mid 2005, there were 80 licensed banks, of which 30 had international licences, and Panama is the world’s largest shipping registry. Once, it would have been fair to say that drug running and money-laundering were well-rooted in Panama, but with lots of US pushing and shoving, the country seems to have moved in a better direction lately. There is a small but growing stock exchange, and there is ‘captives’ legislation which is little used.
In price for company included:
- Incorporation Fees
- Certificate of registration
- Memorandum and Articles of Association
- Share certificate
- Minutes of first meeting of Directors
- Register of Members
- Register of directors
- Resolution of director in writing
- Letter of resignation
- Share certificate
- Declaration of Trust
- Agreement for the provision of nominee services
- Apostle for all documents
- Delivery of documents to Ukraine
- Stamp
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