Corporation (Sociedad Anónima) in Panama
Corporation · Formation from $300
Last verified: June 13, 2026
Corporate Tax
25.0%
State Tax
0.0%
Formation Cost
$300
Annual Fee
$300
Comparison Scores
Privacy, remote setup, banking, and tax efficiency
Calculate full formation cost
Break down one-time filing fees and recurring costs for any supported entity type.
Who Should Choose This?
Profiles that typically benefit from this entity
- International traders and e-commerce businesses operating globally.
- Investors seeking a tax-efficient holding company for foreign assets.
- High-net-worth individuals looking for robust asset protection and estate planning.
- Digital nomads and remote entrepreneurs with no local Panamanian clients.
Who Should Avoid This?
Scenarios where another structure may be better
- Founders needing a simple, single-member LLC structure (requires 3 directors).
- Businesses that require fast, frictionless access to US-based fintechs like Stripe or Mercury.
- Companies planning to raise venture capital from US investors.
Advantages
- +Territorial tax system: 0% corporate tax on foreign-sourced income [1.1.7].
- +High privacy: Shareholders are not listed in the public registry.
- +No minimum paid-up capital requirement (standard authorized capital is $10,000 but doesn't need to be paid).
- +Directors and shareholders can be of any nationality and reside anywhere.
- +Excellent for asset protection, holding companies, and international trade.
- +US Dollar is the official currency, eliminating exchange rate risks.
Disadvantages
- -Mandatory requirement to hire a Panamanian lawyer or law firm as a Resident Agent.
- -Strict accounting record laws (Law 52/254) require annual submission of financial records to the Resident Agent.
- -Requires a minimum of three directors (President, Secretary, Treasurer), though they can be the same people.
- -Opening a local corporate bank account can be slow and requires extensive KYC/AML due diligence.
- -New economic substance rules (Law 526 of 2026) apply to multinational groups earning passive income.
Formation Steps
Step 1: Choose and reserve a unique company name with the Public Registry (must end in S.A., Inc., or Corp.). Takes 1-2 days.
Step 2: Appoint a Panamanian lawyer or law firm to act as the mandatory Resident Agent.
Step 3: Draft and notarize the Articles of Incorporation (Pacto Social) detailing directors, capital, and purpose.
Step 4: Register the notarized Articles of Incorporation with the Public Registry of Panama. Takes 3-5 days.
Step 5: Pay the initial Annual Franchise Tax (Tasa Única) of $300 to activate the company.
Step 6: Obtain the Taxpayer Identification Number (RUC) and Tax ID (NIT) from the General Revenue Directorate (DGI).
Step 7: Open a corporate bank account and establish the required accounting record-keeping procedures.
Cost Breakdown
Detailed breakdown of formation and ongoing costs
| Item | Type | Amount |
|---|---|---|
| State filing fee | One-time | $60 |
| Annual Franchise Tax (Tasa Única) | Annual | $300 |
| Notary fees | One-time | $75 |
| Resident Agent fee | Annual | $350 |
| Corporate kit & translations | One-time | $115 |
| First year total | $900 | |
| Annual ongoing | $650 | |
Real-World Examples
Typical use cases for this entity type
- An international consulting firm uses a Panama S.A. to bill clients in Europe and Asia, legally paying 0% corporate tax on this foreign-sourced income.
- A family office establishes a Panama S.A. to hold international real estate and brokerage accounts for asset protection.
- A maritime logistics company registers its vessels under a Panama S.A. to benefit from the country's favorable shipping registry and territorial tax laws.
Common Mistakes
Pitfalls to avoid during setup and operations
- Failing to pay the $300 Tasa Única on time, leading to late fees and eventual suspension of the company [1.2.1].
- Assuming 'offshore' means no accounting; failing to send annual financial records to the Resident Agent.
- Using nominee directors without understanding the banking compliance challenges it creates.
- Operating locally in Panama without obtaining a Notice of Operation (Aviso de Operación).
- Not preparing adequate KYC and proof of funds documentation before applying for a corporate bank account.
Other entity types
Other formation options in Panama
Sociedad de Responsabilidad Limitada (SRL)
- Tax
- 25.0%
- Formation
- $250
Individual Limited Liability Company (EIRL)
- Tax
- 25.0%
- Formation
- $360
Private Interest Foundation
- Tax
- 25.0%
- Formation
- $350
Branch of a Foreign Company
- Tax
- 25.0%
- Formation
- $250
Limited Partnership (Sociedad en Comandita Simple)
- Tax
- 25.0%
- Formation
- $350
Partnership Limited by Shares
- Tax
- 25.0%
- Formation
- $60
General Partnership (Sociedad Colectiva)
- Tax
- 25.0%
- Formation
- $350
Civil Partnership (Sociedad Civil)
- Tax
- 25.0%
- Formation
- $50
Compare with Other Countries
| Country / Type | Tax | Formation | Annual |
|---|---|---|---|
| 🇵🇦 Corporation (Sociedad Anónima)(Corporation) | 25.0% | $300 | $300 |
FAQ
Do I need to live in Panama to form a Sociedad Anónima?
No, 100% foreign ownership is allowed, and directors or shareholders do not need to reside in Panama.
What is the Tasa Única?
It is an annual franchise tax of $300 required by the government to keep the company in good standing, regardless of activity.
Are shareholders publicly visible?
No, only the directors and the resident agent are listed in the public registry. Shareholder information remains private.
Do I pay tax on income earned outside Panama?
No, Panama uses a territorial tax system, meaning foreign-sourced income is completely tax-exempt.
How many directors are required?
A minimum of three directors is required, typically holding the roles of President, Secretary, and Treasurer.
Do I need to keep accounting records if I only operate offshore?
Yes, recent laws require all entities to maintain accounting records and provide them to the Resident Agent annually.
What is the minimum share capital?
There is no mandatory minimum paid-up capital, though $10,000 is the standard authorized amount used during incorporation.
Can a Panama S.A. open a bank account easily?
It requires thorough KYC and due diligence. While possible, opening a local corporate account can take several weeks to months.
Detailed Tax Rates
Corporate Income Tax
| From | To | Rate |
|---|
Panama operates a territorial tax system, taxing only income sourced within Panama at a flat 25% rate. Companies with taxable income exceeding USD 1.5 million are subject to an alternative calculation (CAIR), paying the greater of 25% on net income or 4.67% on gross taxable income.
Personal Income Tax (Top rate: 25.0%)
| From | To | Rate |
|---|---|---|
| $0 | $11,000 | 0.0% |
| $11,000 | $50,000 | 15.0% |
| $50,000 | No limit | 25.0% |
Personal income tax is strictly territorial. Foreign-sourced income, such as foreign pensions, dividends, or remote work income from abroad, is completely tax-exempt for both residents and non-residents.
Capital Gains Tax
10.0%
Capital gains are generally taxed at a flat rate of 10%. For real estate transfers, a 3% advance withholding tax is applied to the gross transaction value or cadastral value (whichever is higher), which can be deemed as the definitive tax.
VAT / GST
7.0%
Registration Threshold: USD36,000
Non-resident B2C providers of digital services are generally exempt from ITBMS (VAT) registration, while B2B sales may be subject to a reverse charge mechanism.
Withholding Tax
Dividends are typically subject to a 10% withholding tax (reduced to 5% if distributed from foreign-source or export income). Royalties and interest paid to non-residents are taxed at an effective rate of 12.5% (25% CIT applied to 50% of the remittance).
Payroll & Social Security
As of April 2025, employers contribute 13.25% to social security (increasing to 14.25% in 2027), and employees contribute 9.75%. Additionally, an educational insurance tax applies (1.5% for employers, 1.25% for employees).
Other Taxes
Annual Franchise Tax (Tasa Única)
A flat annual franchise tax of USD 300 is required for all corporations to maintain good standing, regardless of business activity or income.
Notice of Operation Tax (Aviso de Operación)
Companies engaging in commercial or industrial activities within Panama must pay an annual tax of 2% on their net worth, with a minimum of USD 100 and a maximum of USD 60,000.
Incentives & Support
EMMA (Multinational Company for the Provision of Manufacturing Services)
Tax and labor incentives for multinational companies establishing manufacturing, assembly, or logistics operations in Panama.
Reduced corporate tax rate (5%), exemption from import duties, and special visa categories for foreign employees.
Eligibility: Must be part of a multinational group and perform eligible manufacturing or logistics services.
SEM (Multinational Headquarters)
Special regime for multinational companies setting up their regional headquarters in Panama.
5% corporate tax rate, exemption from dividend tax, and special immigration visas for executives.
Eligibility: Must operate as a regional HQ for a multinational group with minimum asset or revenue thresholds.
Formation Requirements
Minimum Capital
No requirement
There is no mandatory minimum paid-up capital. The standard authorized capital is $10,000, but it does not need to be deposited.
Local Director
Not Required
A minimum of three directors is required (President, Secretary, Treasurer), but they can be of any nationality and reside anywhere. Nominee directors are permitted.
Registered Office
Required
Virtual office allowed. $300-$600/year (often included in the Resident Agent fee)
Notarization Required
Yes
Power of Attorney (Remote)
Required
A Power of Attorney (POA) is required if the founders are not physically present in Panama to sign the incorporation deeds before a notary.
Timeline
Standard: 5-7 business days days
Expedited: 2-3 business days days ($250)
Required Documents
- 1Notarized and apostilled passport copyApostille needed
- 2Second form of ID (e.g., Driver's License)
- 3Proof of residential address (utility bill or bank statement)
- 4Bank reference letter
- 5Source of funds declaration / CV
Compliance & Reporting
Annual Filings
Annual Franchise Tax (Tasa Única)
Penalty: $50 late fee initially, then $300 for subsequent missed deadlines, and eventual suspension of corporate rights.
Annual Accounting Records (Law 254)
Penalty: Fines ranging from $5,000 to $1,000,000, suspension from the Public Registry, and resignation of the Resident Agent.
Income Tax Return (Declaración Jurada de Rentas)
Penalty: Fines, interest on unpaid taxes, and loss of good standing (paz y salvo).
Audit Requirement
Not Required
Audits are generally not required for offshore companies. Local companies must undergo an audit if capital exceeds $100,000 or annual sales exceed $50,000.
Accounting Standard
IFRS or US GAAP
Tax Return Deadline
March 31 for legal entities (if operating locally or generating taxable income).
VAT Filing Frequency
Monthly (if registered for ITBMS)
Data Protection
Regulated by Law 81 of 2019, which establishes rules for the protection of personal data, requiring consent for data processing and granting rights to data subjects.
Banking & Payments
Towerbank
A traditional bank that has recently become highly crypto-friendly, offering specialized accounts for crypto businesses and investors.
Credicorp Bank
Popular among digital businesses and e-commerce merchants due to its robust merchant account and payment gateway integrations.
Banco General
The largest and most established bank in Panama, offering excellent local infrastructure but strict KYC requirements.
Payoneer
Remote-friendlyA global fintech alternative that supports Panamanian entities, ideal for receiving international B2B payments in multiple currencies.
Payment Gateways
PayPal, 2Checkout, PagueloFacil, NOWPayments
Currency
USD
Multi-Currency: Supported
Account Opening
Opening a corporate bank account in Panama is notoriously slow and requires extensive KYC/AML documentation. Non-resident founders must usually visit in person for a brief interview, though some banks allow remote opening through a local lawyer.
Practical Information
Timezone
UTC-5
Business Language
Spanish (official) and English (widely used in business)
Legal System
Civil law
Ease of Doing Business
#86
IP Protection
Panama offers robust IP protection under Law 35 of 1996 and Law 61 of 2012, covering trademarks, patents, and copyrights. Registration is handled by the Directorate General of the Industrial Property Registry (DIGERPI).
Double Tax Treaties
18 countries
Notable treaties: United Kingdom, France, Spain, Singapore, Mexico, South Korea, Italy
Visa & Residency Options
Qualified Investor Visa (Golden Visa)
Grants permanent residency for an investment of $300,000 in real estate or $500,000 in the Panamanian stock market. Processing takes about 30 days.
Friendly Nations Visa
Available to citizens of 50+ specific countries. Requires a $200,000 real estate investment, a fixed-term deposit, or formal employment with a Panamanian company.
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Changelog
Data updates and changes on this page
Updated 2026 compliance requirements, including Law 526 economic substance rules and current Tasa Única deadlines [1.2.6].
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