- Corporations
- Retirement Program
- Taxes
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Many foreign investors starting a business in Panama or purchasing real estate for investment decide to use corporate entities.
Ownership through a corporation can provide a number of advantages in areas ranging from estate planning (properly structured entities can save heirs lengthy and costly probate procedures), tax management (as an example, rules on corporate expenses are more flexible than the ones on personal ones), representation (shareholders meetings can facilitate granting special powers of attorney or other types of authorizations for many actions thus not requiring local presence in the country), and asset protection. In the case of corporations hold real estate, such ownership structures can simplify the transfer of ownership at the time of sale and potentially reduce or eliminate capital gains and transfer taxes.
Panamanian commercial law recognizes many corporate forms, but only two of them offer foreigners structures very similar to the limited liability companies to which he or she may be accustomed. Such corporate forms are the “Sociedad de Responsabilidad Limitada” and the “Sociedad Anónima”. In both cases, the investors (shareholders) are only responsible for their share of the company's authorized capital. Personal assets are fully protected and out of reach from any potential creditor the shareholder may have.
The S.A. has many features, of which the most important are:
- No restrictions on nationality
- No requirements to disclose ownership
- No restrictions on foreign owned investments (with few exceptions)
- No restrictions concerning ownership of shares
- No residence requirements for Directors/Officers
- No paid-in capital requirements
- No income tax, if income is produced outside Panama
- Total tax exemption on all and any business activity or transaction carried on outside the jurisdiction
- No exchange controls
- No restrictions on Mergers, Acquisitions or Joint Ventures
- No requirements to file annual Financial Statements
- No requirement to hold annual General Meetings of Shareholders or Directors
- Total Secrecy and Anonymity
- Reasonable Annual Registration Tax and Resident Agent Fees
- Articles of Incorporation may be done in any part of the world in any language
- The accounting books for the corporation could be kept in any part of the world and in any language
Taxation
Panamanian Income tax is levied only upon net income derived from operations within the territory of the country. Income obtained from operations consummated outside Panama is not income obtained from “sources within the jurisdiction” and, therefore, is not taxable under local law.
While not providing any specific legal or tax counsel, for some individuals or companies, Panama companies may offer specific tax advantages over other jurisdictions. Any potential client seeking legal or tax advice should consult with a legal or tax advisors. It is important to note that an off-shore corporation can provide benefits for foreigners seeking to minimize taxation in their home country, but the rules can be complicated and tax shelter strategies should be well researched if this is your principal motivation for forming a Panamanian corporation.
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