• Tax treatment: an offshore company in Panama may be relevant in international structures due to Panama’s territorial tax system. However, its application must be analyzed according to the real source of income, the activity carried out, the tax residence of the beneficial owners and the regulations applicable in Panama and in the countries involved.

• Accounting and documentary obligations: Panamanian offshore companies must maintain accounting records and supporting documentation in accordance with the applicable regulations. The location, custody, notification to the resident agent and formal obligations must be reviewed according to the company’s activity and the specific case.

• Annual maintenance: the maintenance costs and obligations of an offshore company in Panama may vary depending on the structure, resident agent, compliance obligations, accounting documentation and services contracted.

In general terms, to incorporate an offshore company in Panama, the following may be required:

• • Copy of the passports of the shareholders and directors of the company —in general terms, at least 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 creating an offshore company in Panama may include registration fees, registry procedures, resident agent, professional services and other costs associated with the specific case. 

• 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 in Panama may be used for commercial activities or business relationships outside Panama, provided that its structure, contracts, source of income, tax obligations and compliance requirements are properly reviewed.

If the company carries out economic activity within Panama, it may require a notice of operations, municipal registration and other applicable legal, tax or accounting obligations.

An offshore company in Panama may carry out activities permitted by the applicable regulations, provided that its corporate purpose, contracts, source of income, tax obligations and compliance requirements are reviewed in advance.

In general terms, an offshore company in Panama may be incorporated by national or foreign persons, provided that they are of legal age, have a valid passport and provide the required documentation.

Directors and shareholders do not necessarily need to reside in Panama, without prejudice to the applicable due diligence, beneficial ownership and compliance obligations.

An offshore company in Panama may be useful for structuring certain commercial activities carried out outside Panama, coordinating international operations, organizing assets or separating business activities in an orderly manner.

The absence of tax, accounting or reporting obligations should not be assumed automatically without first analyzing the source of income, the tax residence of the beneficial owners, banking requirements, accounting obligations and the regulations applicable in the jurisdictions involved.

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.

An offshore company in Panama may own certain assets, trademarks, patents or other intangible assets, provided that the applicable legal, registry, contractual and documentary requirements are met.

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.