That is why today we can proudly say that in our team we have specialists with years of experience, and we have the conviction that they will give their best to help our clients.

Today, we would like to introduce you toour expert partner in trust services and also in the establishment of companies in Panama. In this interview, we will address everything you need to know about Panamanian companies. Read on.

Q. Firstly, thank you for being here. Can you please tell us about your career and your experience working in corporate services in Panama?

A.I have a degree in Law and Political Science from the University of Panama, I have worked in one of the most important law firms in Panama for more than 10 years as Legal Assistant, Corporate Officer, and Trust Officer. I have experience in corporate, banking, and trust services, as well as compliance and AML policies. I have worked with several jurisdictions, to mention a few: BVI, Bahamas, Seychelles, Nevis, United States, Niue, Samoa, Vanuatu, Belize, Uruguay, Malta, UK, Ireland, Scotland, Panama, and Costa Rica, and I currently serve as Head of Corporate and Trust Services for NTL Trust Ltd and corporate consultant for Mundo.

Q. Can you tell us the requirements for registering an IBC (International Business Company) in Panama?

Here is a list of the main requirements.

A. Law 32 of 1927 on Corporations, establishes the following essential and mandatory requirements for the incorporation of a corporation:

• The name: the name of the company must end with one of the following endings: Corporation, Incorporated, Société Anonyme, Sociedad Anónima, or with the abbreviations: Corp., Inc. or S.A., A/S, N.V., B.V., AG. This must be unique, so its availability is always checked at the Public Registry.
• Subscribers: to incorporate a corporation in Panama, it is mandatory to have two or more persons or corporations.There are no restrictions on nationality: they can be Panamanians or foreigners.
• Purpose: the corporations must have a purpose established in their Articles of Incorporation. Any licit object, the corporations can develop any commercial or industrial activity. 
• The authorized capital and shares:all corporations must establish in their corporate agreement the amount of Authorized Capital and the distribution of shares as well as the classes of shares.
• Directors and Officers: the Panamanian corporations should have a minimum of three directors and Officers (President, Secretary, and Treasurer). There are no restrictions on nationality as well, these charges can be occupied by nationals or foreigners.
• Registered Agent:it is mandatory by law that every corporation should appoint a Registered Agent, this must be a Panamanian lawyer or a Law firm.
• Domicile: all the corporations must have their domicile in the Republic of Panama but can have branches in any part of the world.
• Duration: the corporation duration can be perpetual, but it could also be dissolved by the Shareholders Agreement.

Q. How about foreigners? How difficult is it for foreigners to register an IBC in Panama? Is it necessary to be formally a Panamanian resident?

A. The Panamanian law is quite permissive as to the nationality of persons interested in incorporating a company as it does not provide for restrictions on the appointment of directors, officers, shareholders, or subscribers.

Q. We understand that there are no more offshore companies, in the old sense of the word. Does Panama, after giving in to regulations, still offer benefits for foreigners who wish to establish their companies overseas? We understand that there are tax incentives.

A. Panama is one of the few jurisdictions that have a territorial tax system: only those corporations that maintain activities within the Republic of Panama pay taxes in Panama. In addition to this, we have several policies to encourage foreign investment in our country as the Free Zones. There are also other incentives such as the headquarters of multinational companies and Panama has many treaties to avoid double taxation signed, which can be very beneficial. So, to sum up, even though Panama did give in to regulations, it still remains one of the best business jurisdictions because it provides substance, it is not black-listed and still have all these tax benefits I mentioned.

Q. What are the differences between a Panama IBC and, for example, a Belize IBC.Which one would you recommend?

A. It is well known that many of the Caribbean and Central American jurisdictions (due to international pressure) have had to change their legislation on tax matters. Panama has not yet started the discussion of changing the territorial tax system, still remaininghighly attractive to businesspeople from around the world.

When comparing to Belize, for example, Panama is a more advantageous jurisdiction because Belize has substance requirements and Panama doesn’t. Also, Panama has one thing in its favor: it is a veryprosperous financial center in itself, having a strong and confidential banking system, territorial taxation, and Free Zone options. Panama offers a complete business package; for these reasons, many choose Panama over Belize when it comes to corporate.

Q. What are the substance requirements for an IBC in Panama?

A. At the moment, there are no such requirements in Panama.

Q. What activities can an IBC in Panama carry out?

A. The corporations are allowedtoconduct any licit commercial or industrial activity.

Q. One of our readers’ favorite topics are Free Zones. We constantly get inquiries about this because it is widely known that special regimes apply. Can you please explain the difference between a regular IBC and a Free-Zone-registered company? What are the benefits of both?

A. Free Zone companies have defined activities and must be domiciled in a specific Free Zone in Panama, unlike regular companies that can carry out any activity and operations from anywhere in the world, and are exempt from paying taxes for activities carried out abroad.Moreover, Free Zone companies have many benefits but also restricted activities. Which one you would choose entirely depends on the activity of your business. About this matter, I recommend the readers to ask for a personal consultation so we can review the specific case.

Q. What activities can carry out corporations registered under the free zones?

A. In the free zones, natural or legal persons, national or foreign, are dedicated to activities of production of goods, services, logistic services, higher education, scientific research, high technology, environmental services, and any other business that the Cabinet Council authorizes.

Activities that can be carried out by freezone companies:

• Higher education center.
• Scientific Research Center.
• Specialized center for the provision of health services.
• High-tech company.
• Assembly company.
• Finished or semi-finished product processing company.
• Service company.
• Environmental services company.
• General service company.
• Logistics services company.
• Manufacturing company.

Q. We also know that there are many free zones, what is the difference and in which cases you recommend one over the other?

A. It depends on what the client needs as we have now in Panama 18 Free Zones with multiples benefits that could fit the client´s requirements, some of them strategically located near ports and transportation facilities, otherscloser to the city center. The main point is that all of them offer the same benefits in terms of tax; however, the client’s activities will determine which one is the best option.

For example, if the company carries out import and export activities, it is more convenient to be established near the ports. In this case, I recommend the Colon Free Zone. If, on the contrary, the company carries out educational activities, you are going to need a place that is easy for people to access, where there is public transportation nearby, and that is close to the metropolitan area, shops, and malls. In this case, I would recommend a Free Zone that is located in Panama City.

Q. Thank you so much for your time and advice!

If you have any other questions about Panamanian companies, do not hesitate to contact us! Our team is made of professionals who have been working along with our clients for more than 20 years.

Contact us and ask for our free hour of consultation. We know you won’t regret it.

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