SYNOPSIS: Independent sovereign state. Excellent corporate efficiency. Spanish speaking. Good air and sea communications with the United States. Has suffered from political instability in recent years but corporate 'friendly' environment was and is maintained.
Located in the Isthmus of Panama, south of Costa Rica and north of Columbia.
RELATIONSHIP WITH THE UK
Although Spanish is the official, because of its close connection to the United States of America, International trading and banking services, English is the de-facto business and corporate languages, most of the people working in these sectors are bilingual.
ADVANTAGES OF PANAMANIAN COMPANY
No accounts or annual summaries have to be filed with the Government, with the exception of the annual franchise tax filed by the registered agent.
As stated, Panama employs a strictly territorial tax system. However, for those actually conducting business in Panama and not covered by the aforementioned caveats there is a sliding scale of taxes for both individuals and corporations. For the former the rates vary from zero to 30%. For the latter there is a flat rate tax of 30% (since 1996),
HOW TO INCORPORATE A PANAMANIAN COMPANY
The formation procedure in Panama is very similar to that of Spain; however, the governing legislation is based on American common law and not Continental civil law. In most cases, a company will be formed on the instructions of a client through the use of a registered agent as the initial incorporator. In Panama, directors will be on file at the Public Records Office. For this reason, and the fact that Panama demands at least three shareholders, virtually all companies will appoint nominees directors
Name: The name of the corporation shall include a word, phrase or abbreviation to indicate that it is a corporation as distinguished from a natural person or partnership and can be expressed in any language. The most common endings include 'SA', 'Corporation', 'Corp.', Incorporated', Inc.'. The words "Limited1 or Ltd' are not sufficient by themselves. Names can be checked within 48 hours.
Capital: There are no minimum capital requirements and capital need not be paid up. Shares may be nominative or bearer. The corporation may operate without any issued share capital. Franchise tax payments, nevertheless, are on a sliding scale depending on the authorised share capital.
Resident Agent: All Panamanian companies must appoint a registered agent, but do not require a local registered office. This function must be carried out by a local attorney or firm of attorneys.
Board of Directors: There must be at least 3 directors, but unless provided in the articles of incorporation, directors need not be shareholders nor nationals or residents of Panama. In most cases, nominee officers will be employed in a tax efficient jurisdiction.
Directors/Shareholders: Unless otherwise stated in a company's articles/by-laws, there is no legal minimum number of shareholders. There must, however, be 3 or more directors.
Officers: There must be at least a President, a Secretary and a Treasurer, who shall be chosen by the Board of Directors. Any person may hold two or more offices, if so provided by the articles of incorporation or in the by-laws.
Books, records and seal: Every corporation must have a share register and minute book. These may be kept anywhere in the world or as provided in the articles of incorporation. Panama corporations do not require a seal. However, one may be adopted if approved by resolutions or if stated in the articles of incorporation or by-laws, if any. Names and addresses of directors must be on record at the Public Registry, where the Articles of Incorporation are also recorded. Shareholder details are not kept on public record.
Powers of attorney: A Panamanian company may grant a general or special power of attorney to any person to act on it's behalf to execute contracts, agreements, deeds and other instruments. These powers are not a matter of public record.
Certificates of good standing: Certificates of good standing can be obtained upon proper application to the Registrar of Companies.
Bearer shares: Both registered and bearer shares may be issued.
Transfer of jurisdiction: A Panamanian company may transfer it's domicile to a foreign jurisdiction permitting such a transfer. A company organised under any foreign jurisdiction may continue it's existence as a Panamanian company upon the approval of the necessary resolution by it's corporate body.
Trusts/Foundations (General): Since 1984, Panamanian law has adopted modern trust rules and regulations. No details are kept on public record, however, 'trustees' and other relevant parties exercising control of such instruments are supervised by the National Banking Commission. Since, 1995, (Law 25/1995) Panama further adopted the concept of 'Foundations' which combine the features of company with those of a trust save that control can be directly executed by it's beneficial owners. Both undertakings benefit from the same tax advantages and principles applicable to Panamanian companies.
ANNUAL FEES AND GOVERNMENT TAXES
Companies: All Panamanian companies must pay their annual franchise tax on the anniversary of their original incorporation date. As stated, the franchise tax levied will vary depending upon authorised capital, if any. In most cases, registered agent fees and franchise taxes will be charged simultaneously.
Foundations: According to Article 8: "Every Private Foundation shall pay a registration fee and a single annual registration fee equivalent to those established for corporations in Articles 318 and 3ISA of the Panamanian Fiscal Code". Nevertheless, the feet that Foundations are always going to require individual drafting by lawyers in respect to both the Foundation Charter and it's Regulations, ill by definition result in substantially higher fees. At present, a relatively basic Foundation should cost around US$4,000.00. Annual fees, providing the Foundation acts as a "holding1 type vehicle should be in the region of US$3,000.00.