The offshore jurisdiction of the Republic of Panama incorporates a number of Panama companies, and has legislations that provides for several types of Panama company formation including Panama Corporations, Panama foreign companies, Panama Civil Partnership, Panama General Partnership and Panama Limited Liability Partnership. Panama also offers offshore services such as offshore banking services, offshore trust, and insurance offshore private foundations among others as part of its Services Sector. The Republic of Panama is known as the international business center of Central America.
Panama Corporations also known as Panama Offshore Companies are among the most common types of Panama companies registered in the Republic of Panama. They are used for estate and tax planning and asset protection. Once incorporated in the jurisdiction of Panama, a Panama company can transact business anywhere in the world. Panama Companies will pay no local taxes on capital gained outside of the country.
Panama Companies, are more formally regarded to as Panama Corporations, but for the sake of recognition, we will refer to Panama corporations as Panama companies interchangeably.
In order to incorporate a Panama company, there must be a minimum of three directors and two subscribers. To register a complete Articles of Association for a Panama company the said document must be notarized by a Notary Public in Panama and must be submitted to the Public Registry. This document contains information such as the name and address of the Panama company, the types of shares, names and addresses of the directors, subscribers and registered agent and the amount of share capital among other information pertaining to the Panama company. Any two or more persons over the age of 18 of any nationality can incorporate a Panama Company. Panama Corporations have no financial reporting duties.
The Corporation laws of the Republic of Panama allow foreign companies to retain offices in Panama and to carry out its company operations. In order to do so the foreign companies must record with the Public Registry the following:
- Its articles of incorporation for the foreign
- A duplicate of the foreign company’s last balance sheet
- A certificate from a Consular Representative in the country of incorporation to show that the company had been incorporated
Foreign Corporations registered in Panama can conduct their business transactions anywhere in the world it desires as long as its operations are considered to be legal in the chosen country.
Panama Limited Liability Companies (Panama LLCs) are regulated by the Limited Liability Partnership law of 1966. This type of Panama Company registration, a Panama Limited Liability requires that the Panama LLC have no more than twenty (20) partners and no less than two (2) partners. These Panama companies can carry out any type of business operations deemed legal. All Limited Liability Companies in Panama are accountable for any debts which the Panama LLC acquires during its life. This means that the partners (individually) are not liable and that the Panama company/Panama partnership and the members of such companies are separate entities.
To incorporate a Panama Limited Liability Company (LLC) a Public Deed must be filed with the Public Registry and should contain the names and addresses of the partners and that of the Panama company, the purpose of the Panama company, the contributions of each partner and the by- laws of the Panama company among other information.
Panama Also registers General Liability Companies. In this type of Panama company/partnership all the partners have unlimited liability toward the company’s obligations. This means that if one partner incurs debts or blunders in the business then all the partners can be sued. To incorporate a General Liabilities Partnership a complete Articles of Incorporation must be signed by all the partners and include the following information; the names and addresses of the partners, the capital which includes the amount contributed by each partner, the voting rights of each partner, name and address of the company, the objectives of the partnership, the duration of the company and the by – laws of the Panama partnership just to name a few.
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A Panama General Liability Company has to pay an annual renewal fee to the relevant authority in the Government of the Republic of Panama. A General partnership does not pay local taxes on capital and incomes accumulated outside of Panama even though it is deposited in the country. However this type of Panamanian company is subjected to local taxes if it owns real estate or operates businesses in the jurisdiction of Panama.
The Commandite Company is another type of company in Panama. Best described as a cross between a corporation and a partnership this type of Panama company needs at least one person to incorporate. Also known as a simple partnership, limited partners are only liable for an amount which is equivalent to what was invested by them. General Partners engage themselves with managing the company and are liable for all the debts of a partnership in a Commandite General Partnership type company. Like all other types of business companies formed o the Republic of Panama income gained outside of the country is not taxed. Joint Stock Partnerships also known as Commandite en accion is a type of company where the partners’ contributions are in the form of shares and partners’ liabilities can be general or limited.
The Republic of Panama is considered to be one of the best offshore jurisdictions available at present. The republic of Panama as an offshore jurisdiction is well respected and very well known. The business sector of the country is opened to persons from every country. Over the years Panama has attracted lots of investors which resulted in the incorporation of thousands of companies in the country. A tax free have Panama applies no taxation on foreign earned income. Panama Companies can operate as either a Panama offshore company or a local Panama company which is a major advantage which the Republic of Panama has over the other jurisdictions.