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7 Benefits of incorporating a company in Panama

2 April 2020
Panama has the second largest economy in Central America and is also the fastest growing economy and largest per capita consumer in Central America. Since 2010, Panama remains the second most competitive economy in Latin America, according to the World Economic Forum's Global Competitiveness Index.

Though Spanish is the official language of Panama, English is widely spoken and used in business communication. To date more than 500,000 Panama offshore companies have been incorporated by the Panamanian registrar.

Located between Costa Rica and Colombia, it has direct flights with any major cities of the US, Canada and other countries.

If you’re planning to incorporate a Panama company, you will want to know the benefits of doing so. Here are 7.
  • A Panama company can be used for international trade, to settle trusts or foundations, to establish offshore bank or investment accounts and to hold ownership of real estate or intellectual property. A Panama company can also hold any other type of asset making it extremely flexible and suitable for a number of business activities.
  • Incorporating an offshore company in Panama allows maximum confidentiality and anonymity which allows ease of operations, maintenance and control.
  • Panama has a territorial tax system meaning that income of your Panama company is only taxed if your business conducts business in the country. Offshore companies not conducting business in the country enjoy 0% tax when income is obtained from a source outside of Panama, as previously mentioned. The government also does not oblige Panamanian companies to declare offshore activities.
  • Corporate assets or capital of a Panama company can be kept outside of Panama. There are also no residency requirements or nationality restrictions with regards to company ownership, directorship or shareholders.
  • There are no restrictions on shares when your company is incorporated in Panama. Shares may be held in registered or barer form.
  • Incorporating a company in Panama requires no paid-up capital and is not subject to inheritance tax. There are also no currency exchange controls on a Panama company.
  • A Panama company can carry out a legal business and investment activity worldwide however, there are restrictions on bank, insurance or trust services. If you wish to carry out these restricted activities, prior authorization from the Panama Financial Services Commission.

What is the incorporation procedure with SFM?

Upon receipt of the client’s KYC documents (passport copy and proof of address issued within the last 3 months) and description of the intended business activity, and after our legal department’s due diligence checks, SFM will incorporate the Sociedade Anonima via our Panama-based solicitor as it is necessary for company formations in Panama to be processed by a local solicitor’s office. The solicitor will present the proposed company’s signed Articles of Incorporation before a Notary Public who creates a Public Deed for registration at the Public Registry. Offshore incorporation of an Panama company with SFM can take as little as 3-4 days.

For more information on offshore company incorporation contact SFM today.

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