Many companies and entrepreneurs include in their business plans participation in markets of other countries. In this context, starting a business in Panama as a foreigner has become a more frequent decision. Why? Its ideal location, a stable economy, and a favorable legal framework provide the perfect scenario to grow and diversify income.
In this article, we will see the reasons why Panama is a perfect destination for business, the advantages the country offers, the process to establish a corporation correctly, from the choice of the type of company to the mandatory requirements.
Reasons for Doing Business in Panama
In 2024, 12 new multinationals arrived in the country and injected $24.2 million into the economy, consolidating the nation as the second in the region with greater foreign investment. This demonstrates the trust that both large corporations and small entrepreneurs have in the Panamanian corporate environment. But what makes starting a business in Panama as a foreigner such an attractive option?
- Panama is an important logistic center for international trade due to its interoceanic canal, as well as its connection with ports and international airports.
- The banking system is solid and uses the US dollar as legal tender, which provides confidence in transactions.
- The territorial tax regime is one of its greatest advantages. This means that by starting a business in Panama as a foreigner, income generated outside this country has no local tax burdens.
- The country has renowned free zones that facilitate imports and exports.
- Panama has free trade agreements with many countries, which facilitate and promote commerce, encouraging foreign investment.
- Modern highways, telecommunications, and port services in Panama provide the necessary support to sustain business activity.
- Local legislation offers facilities to register a company in Panama quickly and clearly.
Choosing the Right Type of Company
One of the most important steps in starting a business in Panama as a foreigner is choosing the legal structure that best suits the project. Each model has its particularities that directly influence corporate management, legal compliance, and the relationship between partners. Below are the most common types of company:
Limited Liability Company (LLC):
Formed with a limited number of partners, and their responsibility is restricted to the capital contributed. It is common in small and medium businesses that do not require a large number of participants.International Business Company (IBC):
Allows the issuance of shares and facilitates the incorporation of investors. It is one of the most widely used structures in the country due to its versatility and suitability for projects with greater growth ambitions.Headquarters of Multinational Companies (SEM):
This type is an option for multinational companies that wish to establish their headquarters in Panama to provide services to their parent company, subsidiaries, or associated companies.Private Interest Foundation:
Although not a commercial company as such, it allows management of assets for family or planning purposes and in some cases may be part of a corporate structure.
Before starting a business in Panama as a foreigner, the correct model must be chosen, since it not only favors the registration process but also guarantees that the entity can function effectively, without legal obstacles, and with the freedom needed to achieve enterprise goals.
What You Need to Register a Company in Panama
To register a company in Panama, it is necessary to follow some legal and administrative steps. The process, although clear, involves precise requirements established by law, which must be fully met, such as:
Business name and activity
Articles of incorporation
Registered agent
Inscription in the Public Registry
RUC (Tax ID)
Notice of Operation and Commercial License
The first requirement is to choose a unique name to identify the Panama company. This must be verified in the Public Registry to confirm that no other entity has the same denomination. In addition, to start a business in Panama as a foreigner or local, it is necessary to define the activity, which must be described in the initial documentation.
The articles of incorporation are the basic documents to start a business in Panama as a foreigner and national. They details partner data, company purpose, capital, and operating rules. It is the legal foundation of the corporation and must be presented formally. In other words, the articles of incorporation constitute the backbone of the entity.
Panamanian law requires that all companies have a registered agent, who must be a lawyer or an authorized firm in the country. Their main function is to receive legal notifications and keep institutional information updated.
Starting a business in Panama as a foreigner without appointing a registered agent is not possible, since the role is mandatory and guarantees the relationship between the company and the local legal system. It is important to keep all corporate information up to date with this representative.
The procedure to register a company in Panama must be completed before the competent body, in this case, the Public Registry. This step, which includes the registration of the articles of incorporation, turns the entity into a legally recognized and valid company in Panamanian territory.
It is the fiscal identification number of the corporation, obtained through the General Directorate of Revenue. Starting a business in Panama as a foreigner without the RUC would prevent declaring income, issuing invoices, and fulfilling tax obligations.
To register a company in Panama and start activities in the country, you must first obtain a Notice of Operation through the MICI’s Panama Emprende system and then a Commercial License from the municipality and AMPYME. Both are mandatory requirements for starting commercial or industrial activities in the country.
Considerations When Starting a Business in Panama as a Foreigner
- Social security: If the company hires local staff, it must enroll them in the Social Security System and make the mandatory monthly contributions.
- Residency and management: Although it is not an indispensable obligation for starting a business in Panama as a foreigner, obtaining some type of migration permit is advisable if you plan to live in the country and participate in management.
- Special economic zones: For companies dedicated to import, processing, or re-export, establishing in a free zone can be a great advantage. These areas offer tax and customs incentives that may greatly benefit the company.
- Relationship with banks: Although starting a business in Panama as a foreigner does not automatically grant a bank account, it is completely possible. You only need to present the required documentation, demonstrate solvency, and comply with transparency standards demanded by local banks.
- Maintenance and compliance: To keep business continuity, it is important to maintain company information updated in the Public Registry, comply with all tax obligations, and rely on the support of a registered agent.
Register Your Company in Panama Now
Establishing a corporation in another country may seem like a challenging process, but with proper guidance it is much clearer than expected. Starting a business in Panama as a foreigner is an investment with potential that offers growth opportunities. If you are ready to begin, at Kraemer & Kraemer, we guide you through each stage, guaranteeing that your company complies with all regulations and starts to function correctly. Contact us.
