Sociedad de Responsabilidad Limitada (SRL) in Panama
LLC · Formation from $250
Last verified: June 13, 2026
Corporate Tax
25.0%
State Tax
0.0%
Formation Cost
$250
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
- Small to medium-sized closely held businesses with a small number of trusted partners.
- Joint ventures requiring restricted transfer of ownership to prevent outside interference.
- Entrepreneurs seeking a tax-efficient offshore vehicle for international trade and services.
- Families setting up a holding company for asset protection and estate planning.
Who Should Avoid This?
Scenarios where another structure may be better
- Solo founders, as a minimum of two partners is strictly required by law.
- Startups looking to raise venture capital or issue complex stock options to employees.
- Businesses planning to go public or list on a stock exchange in the future.
Advantages
- +Territorial tax system means 0% corporate tax on foreign-sourced income.
- +No minimum paid-up capital requirement to incorporate.
- +High level of privacy, as partners' details are not always fully public in the same way as corporate directors.
- +Flexible management structure that can be administered by the partners themselves or third-party managers.
- +No restrictions on the nationality or residency of partners and administrators.
- +Excellent for joint ventures and closely held businesses where restricted transfer of quotas is desired.
Disadvantages
- -Requires a minimum of two partners (cannot be formed as a single-member LLC).
- -Transfer of participation quotas is restricted and usually requires the unanimous consent of other partners.
- -Strict compliance and accounting records must be kept and provided to the resident agent, even for offshore operations (Law 254 of 2021).
- -An annual franchise tax (Tasa Única) of $300 USD applies regardless of business activity or income.
- -Less recognized globally for raising venture capital compared to a Panama S.A. (Corporation) or a US LLC.
Formation Steps
Step 1: Choose and reserve a unique company name ending in 'S.R.L.', 'S. de R.L.', or 'LLC' with the Public Registry (1-2 days).
Step 2: Appoint a licensed Panamanian attorney or law firm to act as your mandatory Resident Agent.
Step 3: Draft the Articles of Incorporation (Pacto Social) detailing the partners, capital quotas, and appointed administrators.
Step 4: Notarize the Articles of Incorporation before a Panamanian Notary Public.
Step 5: Register the notarized document with the Public Registry of Panama and pay the initial Franchise Tax (Tasa Única).
Step 6: Obtain a Tax Identification Number (RUC) from the Directorate General of Revenue (DGI).
Step 7: If operating locally within Panama, obtain a Notice of Operation (Aviso de Operación) from the Ministry of Commerce.
Step 8: Open a corporate bank account, which requires extensive KYC, business plans, and due diligence (2-4 weeks).
Cost Breakdown
Detailed breakdown of formation and ongoing costs
| Item | Type | Amount |
|---|---|---|
| Public Registry & Notary fees | One-time | $150 |
| Legal & Incorporation Service fees | One-time | $200 |
| Annual Franchise Tax (Tasa Única) | Annual | $300 |
| Registered Agent fee | Annual | $300 |
| First year total | $950 | |
| Annual ongoing | $600 | |
Real-World Examples
Typical use cases for this entity type
- An e-commerce joint venture between two European entrepreneurs using a Panama SRL for tax-efficient global sales.
- A family-owned holding company managing international real estate investments and protecting family assets.
- A consulting firm with partners residing in different countries utilizing Panama's territorial tax system to legally minimize corporate taxes.
Common Mistakes
Pitfalls to avoid during setup and operations
- Assuming a single person can form an SRL (it requires at least 2 partners).
- Failing to pay the annual Tasa Única, which leads to the company being suspended and incurring hefty fines.
- Neglecting to send accounting records to the Resident Agent, violating strict new transparency laws.
- Using an SRL when an S.A. (Corporation) would be much better suited for issuing shares to multiple investors.
- Believing that 'offshore' means no bookkeeping or financial tracking is required.
Other entity types
Other formation options in Panama
Corporation (Sociedad Anónima)
- Tax
- 25.0%
- Formation
- $300
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 |
|---|---|---|---|
| 🇵🇦 Sociedad de Responsabilidad Limitada (SRL)(LLC) | 25.0% | $250 | $300 |
FAQ
Can a Panama SRL have a single owner?
No, a Panama Sociedad de Responsabilidad Limitada requires a minimum of two partners to be formed and maintained.
Do I need to visit Panama to form an SRL?
No, the entire formation process can be completed remotely through your appointed Panamanian Resident Agent.
Is foreign income taxed in a Panama SRL?
No, Panama uses a territorial tax system. Income generated entirely outside of Panama is legally exempt from corporate income tax.
What is the Tasa Única?
The Tasa Única is an annual franchise tax of $300 USD that all registered entities in Panama must pay to remain in good standing.
What is the difference between a Panama S.A. and an SRL?
An S.A. (Corporation) issues shares, requires at least 3 directors, and is better for raising capital. An SRL uses participation quotas, requires at least 2 partners, and has a simpler management structure suited for closely held businesses.
Are accounting records required for offshore SRLs?
Yes. Under Law 254 of 2021, all Panama entities, including offshore ones, must maintain accounting records and provide copies to their Resident Agent annually.
Can foreigners be partners and administrators?
Yes, there are no restrictions on nationality or residency. An SRL can be 100% foreign-owned and managed.
How long does it take to register a Panama SRL?
Once all KYC documents are provided to the Resident Agent, the actual registration with the Public Registry typically takes 5 to 10 business days.
Detailed Tax Rates
Corporate Income Tax
| From | To | Rate |
|---|
Panama applies a flat 25% corporate income tax rate on net taxable income sourced within the country. Companies with taxable income exceeding $1.5 million USD are subject to an alternative minimum tax (CAIR) calculated as the greater of the standard 25% on net income or 4.67% of gross taxable income.
Personal Income Tax (Top rate: 25.0%)
| From | To | Rate |
|---|---|---|
| $0 | $11,000 | 0.0% |
| $11,001 | $50,000 | 15.0% |
| $50,001 | No limit | 25.0% |
Panama operates a territorial tax system, meaning only income generated within Panama is subject to personal income tax. Foreign-source income is entirely exempt.
Capital Gains Tax
10.0%
Capital gains are generally taxed at a flat rate of 10%. For real estate transfers, a 2% transfer tax and a 3% advance income tax apply, though the definitive capital gains tax rate remains 10%.
VAT / GST
7.0%
Registration Threshold: USD36,000
Non-resident B2C providers of digital services are generally not required to register for ITBMS (VAT) in Panama. A reverse charge mechanism may apply for certain B2B transactions.
Withholding Tax
Standard dividend withholding is 10% (5% if from foreign-source/export income, 20% for bearer shares). Royalties and interest are taxed at an effective rate of 12.5% (25% CIT applied to 50% of the remittance). Rates may be reduced under Panama's double taxation treaties.
Payroll & Social Security
Employers contribute 13.25% to social security (increasing to 14.25% in 2027) plus 1.5% for educational insurance. Employees contribute 9.75% to social security and 1.25% for educational insurance.
Other Taxes
Annual Franchise Tax (Tasa Única)
A flat annual fee of $300 USD is required from all registered corporations and LLCs to maintain good standing, regardless of whether they are actively operating.
Notice of Operation Tax (Aviso de Operación)
An annual local tax levied at 2% of the company's net worth, with a minimum payment of $100 USD and a maximum of $60,000 USD.
Incentives & Support
EMMA Regime (Manufacturing Services)
Special regime for multinational companies establishing manufacturing, assembly, remanufacturing, or maintenance operations in Panama.
Reduced 5% corporate income tax rate, exemption from dividend tax, ITBMS (VAT) exemption on exported services, and special visas for foreign executives.
Eligibility: Must be part of a multinational group with consolidated assets of at least $75 million USD or provide services to at least 3 related parties.
SEM Regime (Multinational Headquarters)
Special regime for multinational companies establishing regional administrative, logistics, or back-office headquarters in Panama.
Reduced 5% corporate income tax rate, dividend tax exemption, and income tax exemptions for foreign executives.
Eligibility: Must manage $75 million USD or more in total group assets or have at least 3 subsidiaries globally.
Formation Requirements
Minimum Capital
No requirement
There is no legal minimum capital requirement for a Panama SRL, although a standard authorized capital of $10,000 USD is commonly recommended and used.
Local Director
Not Required
A Panama SRL requires at least two partners and administrators, who can be of any nationality and reside anywhere in the world.
Registered Office
Required
Virtual office allowed. $300-600/year
Notarization Required
Yes
Power of Attorney (Remote)
Required
A notarized and apostilled Power of Attorney is required if the partners are not physically present in Panama to sign the incorporation documents before the Notary Public.
Timeline
Standard: 5-10 business days days
Expedited: 2-3 business days days ($200)
Required Documents
- 1Passport copy of all partners and administratorsApostille needed
- 2Proof of residential address (e.g., recent utility bill)
- 3Bank reference letter
- 4Articles of Incorporation (Pacto Social)
- 5Power of Attorney (for remote formation)Apostille needed
Compliance & Reporting
Annual Filings
Annual Franchise Tax (Tasa Única)
Penalty: Late fee of $50, plus suspension of corporate rights and inability to obtain good standing certificates if unpaid for 3 consecutive years.
Accounting Records Declaration (Law 254)
Penalty: Fines ranging from $5,000 to $1,000,000, suspension of corporate rights, and forced resignation of the Resident Agent.
Corporate Income Tax Return (ISR)
Penalty: Fines and interest charges on unpaid taxes, plus loss of 'paz y salvo' (good standing) status.
Audit Requirement
Not Required
Only mandatory for local entities with capital exceeding $100,000 USD or annual sales exceeding $50,000 USD. Offshore entities are exempt.
Accounting Standard
IFRS
Tax Return Deadline
March 31 for legal entities (can be extended by 1 month upon request).
VAT Filing Frequency
Monthly (by the 15th of the following month)
Data Protection
Governed by Law 81 of 2019, which requires explicit consent for data processing, establishes strict confidentiality rules, and mandates data protection protocols for businesses.
Banking & Payments
Towerbank
Remote-friendlyA crypto-friendly Panamanian bank that is increasingly popular for tech and blockchain businesses, offering remote account opening options.
Credicorp Bank
A mid-sized onshore bank known for understanding e-commerce and online businesses, though in-person visits are often preferred for account opening.
Payoneer
Remote-friendlyA global fintech platform that supports Panamanian entities for receiving international B2B payments in multiple currencies.
Facebank
Remote-friendlyA Puerto Rico-based bank that frequently opens USD accounts remotely for Panamanian offshore companies and Latin American clients.
Payment Gateways
PagueloFacil, 2Checkout, PayPal, PayU, Zota
Currency
USD
Multi-Currency: Supported
Account Opening
Opening a corporate bank account in Panama for an SRL can be challenging and time-consuming, especially for non-resident founders. While some banks allow remote opening via video interviews and apostilled documents, many traditional banks prefer an in-person visit and require extensive KYC, business plans, and proof of economic ties.
Practical Information
Timezone
UTC-5
Business Language
Spanish (Official), English (Widely used in business)
Legal System
Civil law
Ease of Doing Business
#86
IP Protection
Panama has a robust intellectual property framework governed by Law 35, protecting trademarks, patents, and copyrights. It is a signatory to major international IP treaties, including the Paris Convention and WIPO.
Double Tax Treaties
17 countries
Notable treaties: United Kingdom, Netherlands, Ireland, Spain, Singapore, Mexico
Visa & Residency Options
Qualified Investor Visa
Grants immediate permanent residency for a minimum $300,000 real estate investment (increasing to $500,000 in late 2026), $500,000 in securities, or a $750,000 bank deposit, with a path to citizenship after 5 years.
Friendly Nations Visa
Offers a fast-track residency pathway for citizens of over 50 designated countries through a $200,000 real estate investment, fixed-term deposit, or local employment.
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Changelog
Data updates and changes on this page
Updated Panama SRL formation costs, compliance requirements under Law 254, and 2026 tax details.
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