Business life is complicated and risky. Starting a business cannot be taken lightly or done without caution.
The Panamanian business system offers multiple legal means for business development. From the classic corporation, to the limited liability company, to the limited liability entrepreneurship company or the limited liability micro-enterprise, among others, which constitute the categories of SMEs that benefit from tax advantages for their incorporation and development.
Some of these instruments can be combined, while others cannot. However, all of them —whether intended strictly for local or onshore use, or for activities conducted offshore or extraterritorially— require proper preparation to ensure they fulfill the purposes for which the corporation is being created, while also reducing risks and preventing conflicts.
In the current state of our legislation, it is important to comply with the contributions, the creation of commercial and corporate books, accounting records, the registration of ultimate beneficiaries, and the corresponding filings.
The legislation has expanded the obligations and responsibilities of Resident Agents, which is why teamwork is important.
The confidentiality of our times cannot be understood as the absolute secrecy that many used to believe in. In a more connected world, various international agreements have imposed obligations of transparency, Know Your Customer practices, and the requirement to provide this information upon request by the authorities.
Now, if the formation of companies is an act that requires significant effort, when ventures or investments fail, our office can also guide you through the process of dissolution, liquidation, and company closure.
An Offshore Corporation in Panama or a Company in Panama is an instrument of commercial and patrimonial management that is usually formed through a contract called Articles of Incorporation, the purpose of which is the development of one or more activities, for which they contribute assets or a common effort, in order to obtain benefits or generate savings.
Commercial Companies play an essential role in the economy and society in general. Here are some of their main benefits and uses:
To achieve the objectives set, the parties must structure their activity and define the form of organization that suits them best. From this point of view, companies are a form of optimization of the organization and assets of the company, in order to technically regulate coexistence and operation, in order to reduce risks and increase profits.
The incorporation of companies requires adequate planning, an effective definition of the partners' contributions, a convenient drafting of associative deeds, articles of association, the issuance of shares, corporate books or agreements or regulations between the partners, whether they are Corporations, Limited Liability Companies, Commercial Companies of any other type or Offshore Companies, Trusts, or Private Interest Foundations.
To achieve the incorporation or formation of Panamanian companies, the client must comply with the due diligence imposed by the Know Your Customer laws, which begins with filling out the forms and providing identity information and documents.
The Center for Corporate and Business Services of the Republic of Panama offers multiple legal instruments aimed at promoting investment, Planning and Wealth Protection.
In Panama, clients can apply for the formation of an offshore corporation, offshore a limited liability company, to a trust or a Private Interest Foundation. These instruments allow you, whether structured jointly or individually, to properly manage and protect your assets, as well as to plan or optimize your wealth appropriately, based on the client's interests.
Panamanian offshore companies are the most in demand in the market. They are regulated by Law 32 of 26 February 1927 and Decree-Law 5 of 1997.
The latest reforms of the legal regime for offshore services in Panama have not changed the essence of the system, nor of the legal service offered, so that all offshore investment vehicles can be constituted by persons of any nationality.
A Panamanian corporation, as well as limited liability companies or offshore private interest foundations, can be registered within 3 business days. However, it is possible to register more quickly, but still before complying with the know-your-customer measures.
The incorporation of a Panamanian corporation does not require the payment of the capital contribution for its incorporation and can be ready to be shipped in a short period of time, depending on the client's request. Payment of the contribution can be made at a later date.
Through our suppliers in different jurisdictions, we can also offer you offshore companies or companies in other jurisdictions such as British Anguilla, Bahamas, British Virgin Islands (BVI), Samoa and Seychelles, among others.
Incorporating offshore companies or companies in other jurisdictions is very easy and quick and its administration is quite simple.
It is important to understand the use and management of investment instruments or vehicles (such as corporations, limited liability companies, trusts or private interest foundations), as well as bank accounts and the tax consequences of the laws of each country, where the client resides or carries out transactions, by advising you properly, in order to obtain the greatest possible advantage.
To achieve the objectives, it is important that the client helps us by providing the required information, providing supporting documents and filling in the forms that we make available, in order to comply with Know Your Customer's obligations, within the framework of the Legal Regulatory Compliance Regime aimed at combating money laundering derived from illicit activities.
In the current state of our legislation, it is important to take into account the fulfilment of the obligations to make the contributions, the creation of the companies' business books, the accounting registers, the registration of the final beneficiaries and the corresponding declarations, to define the form of administration and the registered office, as all this is aimed at giving economic substance to the operation.
Economic substance, for business or corporate investment transactions, implies that a transaction or activity has a real economic purpose and not merely a formal or apparent one, so that it must be justified beyond the sole objective of obtaining a tax advantage, by reason of the residence or domicile or place of incorporation or formation of the company. The real being more important than the apparent, the substance over the form.
The Republic of Panama, by Law No. 52 of October 27, 2016, amended by Law 254 of November 1, 2021, established the obligation to keep accounting records and have supporting documents for all offshore companies.
This obligation is part of the efforts made by the Republic of Panama, as an active member of the Global Transparency Forum, to bring more seriousness, transparency and stability to Panamanian offshore companies, for which the standard model is applied by offshore jurisdictions such as the British Virgin Islands, Belize, Hong Kong, Singapore and others.
Although the Commercial Code of the Republic of Panama, in articles 71 to 94, already establishes the obligation to keep accounts that clearly and precisely indicate their business operations, assets, liabilities and equity, as well as the amounts and nature of transactions, it was understood that this obligation did not extend to non-operational companies, also known as offshore companies.
However, the legal regime established by these new arrangements and their recent update eliminate this omission, specifying that they must not file tax or similar returns, but must have accounting books, record their business transactions and have supporting documentation to support these records.
Clients, interested in the creation of investment vehicles, companies or bank accounts, should be aware that the Republic of Panama has established, by Law No. 52 of October 27, 2016, amended by Law 254 of November 1, 2021, the obligation to keep accounting records and have supporting documents for all offshore companies.
Our office is able to help you fulfill the obligation to keep accounting records, for which we have the collaboration of the ATRICO CPA Accounting Firm (Tax Advisors and Consultants), which has different service plans available to clients.
Likewise, by updating the legal regime applicable to our offer of companies (corporations, trusts, foundations), the Republic of Panama, through Law 129 of 2020, has implemented the Official Private Registry System of Final Beneficiaries of legal entities in Panama.
We must understand by beneficial owner the natural person who, directly or indirectly, owns, controls and/or exercises significant influence over the bank account, the contractual and/or commercial relationship or also the natural person in whose name or for whose benefit a transaction is carried out, which also includes the establishment of corporations, limited liability companies, trusts, private interest foundations or other investment instruments over which they exercise final control.
This system is administered by the Superintendence of Non-Financial Subjects (SSNF), one of the state entities that supervise resident agents, guaranteeing the confidentiality and security of the system.
The Single and Private Registry of Final Beneficiaries of Legal Entities (RUBF) is the tool created to collect, maintain and protect information related to the final beneficiaries of legal entities or offshore companies incorporated in Panama, being a system similar to the one that operates in other jurisdictions that provide similar services, in which all Resident Agents are required to register in the RUBF and obtain the Single Registration Code (CUR), which will be assigned to each Resident Agent.
All resident agents of offshore companies and private interest foundations must have the Single Registration Code (CUR) to carry out any procedure that needs to be registered. If they do not do so, the corresponding procedure will be suspended until it is obtained. If you are a Resident Agent and do not have the CUR, in accordance with articles 22 to 24 of Law 254 of 11 November 2021, you may be subject to sanctions.
Our office maintains the Single Beneficial Ownership Register, as required by law, for the benefit of our clients.
Likewise, we are in a position to offer our advisory and representation services in various areas such as: