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Panamanian companies, an expert’s point of view
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.
FREE
ZONE INCENTIVES |
|||
TAX |
LABOUR |
MIGRATION |
|
Tax exemption and import duties. |
Rotation of workers is allowed. |
Permanent Resident Permit as an investor |
|
Service Companies will be one hundred percent (100%)
exempt from Income Tax for their foreign operations and for their operations
with each other. |
Work on national holidays or mourning days shall be
paid for with a 50% surcharge on the ordinary day’s wage. |
Temporary Resident Permit in the capacity of trusted
personnel, executives, experts, and/or technicians, valid for the term of the
contract. |
|
Free Zone developers are exempt from income tax on
leasing and subleasing. |
The Extraordinary hours will be remunerated with a single surcharge of
25% on the salary. |
Short Stay Visa for Merchants and Investors. |
|
|
Temporary permits for special policies; Teacher,
student, or researcher from a Higher Education Centre in a Free Zone;
Researcher from a Scientific Research Center. |
||
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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