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The Republic of Panama is situated in Middle America, bordering both the
Caribbean and the North Pacific Ocean, between Colombia and Costa Rica.
The
official language is Spanish although English is widely spoken, particularly in
business.
The
law relating to the incorporation and operation of offshore companies, is based
on the US State of Delaware law at that time, Law No.32 of 1927, and the
Commercial Code (Decree – Law No.5 of 1997, Article 5).In order to remain tax-exempt, companies may
not do business in Panama.Panamanian corporations may carry out most
business purposes with certain exceptions for regulated businesses such as
banking and insurance.
The
legislation covers the following main points:
Capital
-No minimum capital
requirement.
-Par and no par value
shares are permitted.
-Companies must have
at least one shareholder.
-Bearer shares are
permitted.However, the registered
agent must keep the
bearer share certificate in safe custody and must
notify the Registrar.
-Annual general
meetings of the shareholders are not required.
Officers
-The minimum number of
directors is three and they may be of any nationality.In addition, a President, Treasurer and
Secretary must be appointed who do not need to be members of the board although the Directors may fill these appointments.
-Corporate directors
are not permitted.
-Meetings may be held
anywhere in the world and in any language although any minutes that are to
be used for legal purposes in Panama, for example a change
of director, must be translated into Spanish.
-Whilst there is no
requirement to file annual returns, elections of officers and directors
must be filed with the Panamanian Mercantile Registry.
-The directors are
empowered to issue a broad Power of Attorney in favour of one or more
individuals.
Accounts
-The preparation and
filing of annual financial statements is not required unless the
corporation generates taxable income in Panama in which case books must be kept and an income tax return filed concerning
that part of the income which is earnt in Panama.
Incorporation
-Incorporation
normally takes two to three days.
-Shelf companies are
available.
-A registered agent
must be appointed and the company must have its registered office address
in Panama.
-The Panamanian
authorities do require disclosure of the beneficial owner.
-Company names in any
language are permitted.
-Company names must
include a word or abbreviation in any language indicating that it is a
corporation such as : “S.A.”,
“Inc”, “Sociedad Anomina”, “Corp.”,” Corporation”.“Limited” and “Ltd.” however, are
prohibited as they can also denote other legal entities such as
partnerships.
-Certain words either may not be included in a company name or are restricted. Amongst these are “Bank”, “Banco”, “Insurance”, “Seguros”, “Fiduciary”, “Fiduciaria”.
-It should be noted
that a corporation is not deemed to exist under Panamanian law with
respect to third parties until it has been registered with the Mercantile
Registry.
-By resolution of its
Board of Directors, a Panamanian corporation is permitted to change its
domicile and carry on business as a company incorporated under the laws of
a jurisdiction outside Panama provided that jurisdiction permits such a
transfer.
-Furthermore, by
resolution of the relevant officers, a company incorporated under the laws
of a jurisdiction outside Panama is entitled to continue under the laws of Panama.
Taxation
-The government
franchise tax is currently fixed at US$250 when a company files its articles of incorporation.Thereafter the annual franchise tax is US$300. The increase to US$300 took effect from 1st January, 2006 for existing companies.
-There is no other taxation on
non-Panamanian income.Panamanian
income is taxable but is treated separately from non-Panamanian income.
-Panama has no double taxation treaties with other countries.
There are no exchange
controls on offshore companies.
Other
-Panama has a well-developed shipping registry.
-Panama was removed from the FATF black list in June 2001 following
substantial efforts to introduce good practice against money laundering.
Useful links : Panama Tourist Bureau - http://www.panamatours.com
Please contact us for further information
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