Panama Law 186 of 2020: About Entrepreneurship Companies

Panama Law 186 of 2020 is a regulation aimed at encouraging and promoting entrepreneurship in the country through the creation of a new legal entity called an entrepreneurship company. This company is a new legal entity that facilitates businesses through a simplified registration process and by granting tax incentives to the owners.

The objective of this law is to stimulate the economy and foster the development of entrepreneurship companies. A newly created entity category, namely the entrepreneurship company, is to be engaged in the research, development, and commercialization of innovative products or services.

The Law establishes certain limitations for the constitution of entrepreneurship companies. They can only be formed by 2 to 5 natural persons. In addition, the purpose of the company must be lawful, and a person who is part of an entrepreneurship company cannot be part of another one. The liability of each partner is limited to their participation amount. The minimum required investment capital is B/.500.00 which can be increased or decreased through reforms to the company’s bylaws.

It is important to mention that the Law establishes income limits for entrepreneurship companies. A micro-enterprise has a gross income limit of B/.150,000.00 per fiscal year and if it exceeds this amount, it will be classified as a small company as long as it does not exceed B/.1,000,000.00 gross annually. If a company exceeds this limit, it must turn into another type of legal entity within 6 months.

Get the Legal Advice You Need

If you’re interested in creating an entrepreneurship company in Panama and need legal advice, Kraemer & Kraemer is ready to assist you. Contact us now to learn more about how we can support you in this process.

Download Panama Law 186 of 2020:

Panama Law 186 of 2020

Published April 19th, 2023, as Laws on Business by Johana Sum