• Tax advantages. If you invoice through a company incorporated in Panama but your income is generated in another jurisdiction, everything invoiced outside Panama will not be subject to income tax in the country of incorporation, which in Panama is 25%. Therefore, you will not have to pay income tax on that company, as Panama applies the principle of territoriality in tax matters. 

• Administrative and accounting advantages. Although it is not necessary to file annual income tax returns, Panamanian regulations allow accounting records for companies or entities that do not carry out operations that are perfected, consumed, or take effect in the Republic of Panama to be kept outside the Republic of Panama. However, the accounting records of these companies must be notified to the Resident Agents of the Company in Panama, who must be aware of the general details and contact information of the person responsible for these records and the supporting documentation, as well as their physical location. 

• Reduced annual expenses. The offshore company in Panama only has annual expenses of US$725. 

The requirements for establishing an offshore company in Panama are as follows:

• • Copy of the passports of the shareholders and directors of the company (minimum of one shareholder and three directors). Passports must be valid, and directors must be of legal age.

  • Home addresses of shareholders and directors.

  • Complete the Know Your Customer Form.

  • Complete the Company Formation Form.

  • Complete the Due Diligence Form.

Different cases depending on:

• • If the shareholder is a company or legal entity, the applicant must submit a valid Public Registry Certificate (issued within the last three months) if the company was incorporated in Panama. 

  • If the company was incorporated abroad, the applicant must submit a Public or Commercial Registry Certificate from their country (issued within the last three months), duly apostilled.

The cost of setting up an offshore company consists of registration fees and the firm's fees. The costs are as follows:

• One-time fee US$300

• Notary fees US$100

• Registration fees US$60

• Certification of public registration US$30

• Transaction fees US$90

• Operating notice US$ 55 

• Total amount US$ 635.

Plus the firm's fees as agreed, which will include expenses for a resident agent and tax domicile.

An offshore company has the capacity to operate anywhere in the world. If you wish to operate in the Republic of Panama, you will need to open a notice of operations and comply with the required registration in the corresponding municipality.    

An offshore company may engage in any type of activity covered by Article 19 of Law 32/1927.

An offshore company can be incorporated by anyone over the age of 18, of any nationality, as long as they have a valid passport. Directors and shareholders do not need to reside or be based in Panama in order to incorporate an offshore company in Panama. 

The benefit of an offshore company lies in its ability to invoice commercial activities carried out in international markets without having to file an income tax return in Panama or anywhere else in the world, and with an annual company maintenance cost of US$725. 

The taxes that offshore companies in Panama must pay annually are as follows:

• US$300 corresponding to the single tax, which all Panamanian companies must pay to remain in good standing.

• US$300 ITBMS (7%) for services as your company's resident agent. The law defines a resident agent as the lawyer or law firm that registers the Articles of Association and acts as the point of contact between the shareholders and the Panamanian government. In addition, Panamanian law requires all companies to have a resident agent. Failure to do so will result in the company losing its validity and being unable to operate.

• US$75 plus ITBMS (7%), due diligence of the company. With the approval of Law 254 of November 11, 2021, the Resident Agents of the incorporated Company must submit, once a year, an Affidavit to the General Revenue Directorate of Panama, providing the company's accounting records and supporting documentation, as well as the general details of the public accountant who keeps them in custody, and complete the annual risk matrix that will guarantee due diligence of the Company.

Yes, an offshore company has the capacity to hold trademarks, patents, or any type of physical or intellectual property. 

The operating company in Panama must pay the following taxes:

• Income tax (ISR). This tax is paid annually and is filed through an ISR return with the General Revenue Directorate (DGI) through a Panamanian Certified Public Accountant. The company must pay 25% of its profits as income tax.

• Single Tax Payment to the General Revenue Directorate. The company must pay a single annual tax, which is a kind of tax to maintain the company's validity. The total amount payable is US$300. Please note that if payment is delayed, an additional US$50 will be charged as a surcharge.

• Payment of Commercial License (Notice of Operations). A fee must also be paid annually to the Ministry of Commerce (MICI) of Panama, which corresponds to 2% of the company's share capital.

• ITBMS declarations. On a monthly basis, and provided that the company issues invoices for its commercial activity, it must make the corresponding ITBMS declarations. This is a tax known in other countries as VAT (value added tax).

• Municipal Taxes. If a company has a commercial license or notice of operations, it is required to register with the municipality where it has its headquarters, in which case it must pay the municipal taxes corresponding to that municipality.