FAQ
Frequently Asked Questions
Choose the subject and question of your interest
Banking
Business & Corporations
Immigration
Real Estate
Taxes
Q: Can I open a bank account in this trip?
A: Yes you can, most banks require:
- – Passport and a second ID
- – Two (2) bank reference letters
- – Last three (3) months bank statements
- – Proof of income (employment letter, income tax returns or financial statements)
Q: You said I need two bank reference letters, but I only work with one bank?
A: Most banks require the two reference letters from different bank institutions, but in that scenario, one bank reference letter and one reference letter from your accountant or attorney, with the contact information shall do it.
Q: Are there brokerage accounts available in Panama?
A: Yes there are. If you are interested in opening a brokerage account in Panama, the paperwork requirements are similar to those for opening a bank account.
Q: How long does it take to open a corporate account?
A: That depends on the bank you choose and on the board members’ residency status, but we have seen anywhere from 3 business days to 3 months, although standard it’s 2 to 3 weeks.
Q: Can I open a personal bank account online?
A: Not in Panama, as our banking regulations and “know your client” policy requires the person to personally visit the bank branch. There are seldom exceptions, but only with international banks with presence in Panama, if you are within their private clients structure.
Q: Can I open a corporate bank account online?
A: Given new regulations, and although it is possible under certain circumstances, we cannot assist you. The recommendation is to open an account in other jurisdictions, and we might be able to assist you in this case.
Q: What are the requirements to open a corporate bank account in Panama?
A: Each bank has its own requirements. But in general, you must present extensive documentation to validate the personal, corporate, and financial reputation of the signing authorities and the beneficiaries. Besides, all members of the board must sign the documents required to open the bank account.
Q: I need a Merchant Account in Panama. What can be done about it?
A: We recommend PagueloFacil. Please note that, in general, agencies that provide such service may have reservations on the type of business, product, or service you provide. For that reason, they may impose restrictions.
Q: What banks do you work within Panama?
A: We work with reputable banks, such as Banistmo, Multibank, Banesco, Banco Panama, MMG Bank, and Banco General, but the selection varies according to each case.
Q: Can I open a business and work?
A: Well, you can invest and open a business, but to work on it, you are supposed to have a working permit, even if it is your own business.
Q: What is the structure of a Corporation?
A: Corporations are conformed by the Dignataries (President, Secretary and Treasurer); Board of Directors (at least three) and the Shareholders. The Shareholders are the ones that have the control of the Corporation, and can name and assign the Board Members, who then assign the CEO or President, and other officers, which are responsible for the administrative management of the company’s functions.
Q: Do I need a resident agent?
A: Panamanian Law requires the corporations to necessarily have a resident agent, who must be an authorized attorney or law firm.
Q: What is the annual cost of a Corporation?
A: Corporations pays US$300.00 of annual tax, as a government fee for its right of existence . Additionally the resident agent might charge his own fee to represent the corporation.
Q: What is the annual cost of a Private Interest Foundation (PIF)?
A: Private Interest Foundations (PIF) pays US$400.00 of annual tax, as a government fee for its right of existence . Additionally the resident agent might charge his own fee to represent the corporation.
Q: Why would I need a Corporation?
A: A Corporation is advised if you were going into business, either in Panama or even in any other country in the world, so that you can separate the possible business liability, if any, from your personal assets. Some people also use Corporations as a Holding of Real Estate or Bank Accounts.
Q: Why would I need a Private Interest Foundation (PIF)??
A: Private Interest Foundations (PIF) are the best choice for Estate Planning, so that, in case that you have different assets, such as real estate and bank accounts, they can be hold by your PIF, so that your declared heirs can inherit them automatically, without going through an expensive and long Probate Process.
Q: What are the differences between an IBC and a LLC?
A: IBCs and LLCs share some similarities. Both are legal entities and they limit a member’s responsibility to his participation as a shareholder or partner. However, the IBC requires at least 3 Directors and 1 or more shareholders who can enjoy participation privacy – for this reason, IBCs are also known as Anonymous Corporations. On the other hand, the LLC requires a minimum of 2 Managers and 2 or more Partners. Their names must be publicly disclosed in all registration documents, providing more transparency, usually a requirement in a partner’s country of origin.
Q: Can I obtain a power to represent my corporation?
A: Yes. You can accomplish this with a minute entry in the company’s minute book or with an entry in the articles of incorporation. You can delegate general power to any person, whether they are partners, shareholders, dignitaries, directors, or managers.
Q: How do I close a corporation?
A: The process to close a corporation requires a minute entry in the company’s minute book, approving its closure. This minute must be notarized, registered in Panama’s public registry, and published in a local newspaper at least once.
Q: Can I change the Resident Agent of my Corporation?
A: Yes, but a company’s minute must be drafted and recorded at the Public Registry.
Q: How long is the approximate processing time for the incorporation of an IBC?
A: Depending on the plan chosen by the client, the processing time may vary between 4 to 6 working days.
Q: What is the minimum capital that the IBC must have in order to be incorporated or formed?
A: The minimum capital must be US$10,000 and must not be fully paid up or released.
Q: What is the minimum number of shareholders that can exist in an IBC?
A: A corporation can be formed by only one shareholder.
Q: Can the shareholders of the IBC be of any nationality?
A: Shareholders do not necessarily have to be Panamanian, they can be natural or legal persons of any nationality and domiciled anywhere in the world.
Q: What is the responsibility of the shareholders towards the IBC?
A: The liability of shareholders is limited by the amount they owe on account of their shares.
Q: What is the Public Registry of Panama?
A: The Public Registry is the institution of the state where corporations incorporated under Panamanian law are registered or recorded, as well as those foreign corporations that carry out activities in Panama. It is worth mentioning that the Public Registry of Panama is considered to be one of the most orderly, efficient and modern in all of Latin America.
Q: How much is the annual tax that IBCs have to pay?
A: The annual tax that corporations must pay to the state is US$300.00
Q: What kind of activities are considered illegal?
A: Activities related to money laundering, drug trafficking, human trafficking, terrorism, are considered illegal activities both in Panama and anywhere else in the world
Q: After obtaining residency, can I work?
A: Permanent residency only grants you with the right to reside (live) in the country legally; in other words, you can stay legally in the country for as long as your residency status allows it. Working is another right yet to be granted, by applying for a work permit. There are specific residency programs that will make you eligible to apply for a work permit, and if so you are intending, then it is important to consider those types of residency options in the first place.
Q: Do I need a Multiple Entry Visa?
A: Multiple Entry Visa is required by any foreigner that has a residency application pending of approval, and intends to travel abroad during that timeframe. A temporary resident that leaves the country without having that visa, will be fined for USD $2,000.00. We usually include the Multiple Entry Visa in our clients application, by default.
Q: After obtaining residency, how long do I need to live in the country?
A: Upon approval, you can stay in the country for as long as you decide. If you leave, it is important to visit back the country at least once every two years, so that your residency may not be subject to revocation.
Q: Can you assist me to apply for the immigration amnisty program called Crizol de Razas?
A: That is a temporary and special residency program handled by Immigration, where an attorney is not required, therefore we do not handle it, and would advise you to contact the Immigration Office at their website to learn all its details.
Q: How long my papers are good for, prior to submitting an application?
A: The criminal Record is good up to six months, unless the document itself specifically states differently. The health certificate issued in Panama is good for ninety days. The bank reference letter is good for thirty days. Marriage certificates, birth certificates, and retirement letters are valid for 6 months.
Q: How long do I need to stay in the country to apply for residency, if I live abroad?
A: Usually at least five (5) business days are required, but eight (8) to ten (10) days are recommended:
Q: Criminal Records issued by my country’s consulate in Panama are good to apply for residency?
A: It varies. some countries for which Immigration accepts criminal records issued at the local consulate are: UK, Chile, Argentina, South Korea, and Colombia.
Q: Do nationals of restricted countries need a Visa, and how long is it good for?
A: Nationals of restricted countries, require to apply for a special Visa in order to visit the country, called VTR. Nonetheless, if the applicant has a Visa to the USA or England, and has used it before, he can visit the country for up to 30 days, without a VTR. Some of the countries considered restricted are: India, China, Pakistan, Irak and Bangladesh.
Q: Do you assist me to obtain a driver’s license?
A: Residency is required in order to apply for a local driver’s license. That is a simple process, for which we can give instructions on the process, but we choose not to assist on it, as it is NOT a procedure whereas an attorney is required.
Q: Can I drive with my foreign license?
A: Foreigners are allowed to drive with their foreign license, up to 90 days only, nonetheless, once they apply for residency, they are no longer allowed to drive with it, as they will be requested to obtain a driver’s license from Panama.
Q: How long do I have to request an extension for my temporary residency?
A: According to Resolution 15703 from August 24, 2012, you have 6 months.
Q: What are the requirements to obtain permanent residency as a refugee or asylee?
A: Please review Law 14 from October 15, 2013.
Q: Is it possible to obtain permanent residency with a Work Visa for the 10% and 15% allowed for foreign labor?
A: Yes. Following Executive Order 229 from March 22, 2013, foreigners with this work permit, with a minimum salary of B/. 850, and with at least 2 previous extensions, can request permanent residency.
Q: What is the legal basis to obtain permanent residency in the Panama-Italy program?
A: Resolution 4803 from March 30, 2012; Law 15 from February 1, 1966; Law 3 from February 22, 2008; and Executive Order 320 from August 8, 2008.
Q: Is it possible for a former foreign worker of a Multinational Company to apply for permanent residency?
A: Any former foreign worker, with more than 5 years in a Multinational Company, can apply for permanent residency, following the requirements from Executive Order 822 from August 2, 2013.
Q: How long in advance do I need to request a VTR, if needed?
A: Following Executive Order 863 from June 21, 2011, you must request the VTR 60 days before your trip.
Q: What is the Special Permanent residency?
A: Any foreigner with a recommendation letter from the President may obtain permanent residency, following Executive Order 2 from January 17, 2013.
Q: For Immigration Process purposes, is it possible to use certificates (shares) issued to the bearer?
A: No. Certificates (e.g. shares) must be registered under the applicant’s name according to Executive Order 147 from March 17, 2017.
Q: Can foreigners own property in Panama?
A: Any national or foreign person or entity can purchase and own property in the country.
Q: I chose a property to buy but I am abroad and can’t travel now, How can I buy it?
A: It depends on how you want to hold the property. If you opt to hold it in your name, then you need to sign a Power of Attorney and authenticate it in the nearest Panamanian Consulate. Although, if you would like to own it in a Holding Corporation or Foundation, then we can prepare and sign the papers on behalf of your new entity, for which we would just need to coordinate it all.
Q: Are there title insurance companies in Panama?
A: Not as you know it. In Panama there is Title Search or due diligence, which is advised to be done by an experienced attorney. Title insurance is not generally offered by Insurance Companies in Panama.
Q: I intend to buy land, Do I need a surveyor?
A: Depending on the type of land you are buying, we would recommend you to survey it to make sure the measures and boundaries are as offered.
Q: Can I sign an option to buy a property?
A: Option of purchases of real estate are valid in Panama, and can be done through a contract, which is better enforced if registered at the Public Registry, for which an attorney is required.
Q: I hold my property in a Corporation, can I just sell it with the Corporation?
A: Of course, as long as the buyer is agreeable with it. In that case, a shares sale contract is drafted, and the Corporation’s Dignataries and Board of Directors shall be replaced.
Q: Can I own real estate with my foreign trust?
A: No, as only regulated Panamanian trusts are allowed. Although, it is possible to have a foreign entity that is controlled by a foreign trust, to hold property in Panama.
Q: Is there co-ownership of the property with survivorship rights in Panama?
A: Although we do have co-ownership of property, there is no option of survivorship rights.
Q: If I sell and transfer the shares of my Panamanian Corporation, do I need to pay taxes?
A: According to the Law, if the shares have been duly issued and fully paid for by its owner, at the time of transferring them, a 5% capital gain tax withhold must be done, and paid to the government.
Q: I want to sell my property, what taxes are involved?
A: Real Estate Sale taxes are two: Sale Transfer Tax, which is 2%; and Sale Capital Gain Tax, which is a 3%. Both taxes are paid by the seller, prior to the conclusion of the sale, and are paid based on the highest value between the Selling Price or the Property Registered Value.
Q: Where can I see my property or corporate taxes statement?
A: You can request a tax statement for either your property or corporation, at the Tax Office, by going in person, or by applying online for a NIT access.
Q: What is a RUC and a NIT?
A: The RUC is the “tax id” for persons, entities or properties, and is used as the “username” for online acces to the related account with the Tax Office; and the NIT is the quivalent to the “password”
Q: What is the transfer of goods and services taxes in Panama?
A: Goods and Services in Panama are taxed at a 7% rate, called ITBMS, and it is applicable by all companies that have gross sales over US$3,000.00 per month or US$36,000.00 a year.
Q: What is the ITBMS tax for hotels and hostals?
A: Hotels and Hostals pay ITBMS at a 10% rate by default, regardless of its income amount.
Q: Do I need to declare the improvements in my property?
A: According to Tax Authority’s Resolution 201-831 of March 23rd, 2007, all improvements must be declared within six months from the date of the Occupation Permit, otherwise some penalties will be applied.
Q: Do all Corporations need to register a RUC?
A: Yes. According to Tax Authority’s Resolution 201-4603 of Dec.28th, 2001, all corporations are obligated to have its RUC registered.
Q: What is statues limitations for property tax?
A: Property taxes’ statues limitations are 10 years.
Q: What is statues limitations for Income Tax?
A: ncome taxes’ statues limitations are 7 years, starting the last day of the year when they were due.
Q: How long after I had my Income Tax filed, am I allowed to file for an Income Tax Rectification?
A: We are allowed up to 36 months after the due date for filing income tax, in order to file for its rectification, as long as the tax payer is not being subject of an auditing.
Ask Your Questions
Do you have a question that’s not listed here? Send us a message!