Offshore High Risk Merchants
Domestic and International Merchant accounts

Advantages of Panamanian Corporation


Panamanian Corporation law offers a wide variety of incentives for resident or non-resident businessmen and investors due to the flexibility of our fiscal law. The existing legislation provides, among others, the following incentives:

  • Taxation in the Republic of Panama is based on the principle of the source of the income. Therefore income obtained from operations performed abroad is not income obtained from sources within Panama and therefore is not taxable, under Panama law.
  • There are no currency restrictions in Panama. The U.S. dollar is the circulating medium.
  • There are no requirements to file any reports with the Panamanian government regarding any off-shore activities, except the annual government franchise tax of US$ 250.00 (first year) to remain in good standing.
  • It is not necessary to have a paid-in capital, nor time limit in which the authorized capital must be fully paid.
  • It is not necessary for the interested parties to be present in Panama, for the purpose of organizing a Corporation. In this case, corporations are formed through nominee incorporators in Panama, usually members of our Law Firm, who execute the basic instrument for the incorporation called Articles of Incorporation.
  • The directors, shareholders and officers, may be of any nationality and resident of any country. Moreover, the directors are employees of this firm and upon the client provided the resignation letter and providing new directors, our law firm will move forward to remove the nominee directors.
  • Meetings of directors and shareholders may be held in the Republic of Panama, or in any country.
  • Share certificates can be issued in Nominative or Bearer form, with or without par value.
  • Neither the directors nor the officers need to be shareholders.
  • The accounting books of the corporation may be kept within Panama or abroad.
  • Corporations conducting business outside of Panama do not require a commercial license for offshore activities.


  • The name and domicile of each subscriber to the Articles of Incorporation.
  • The name of the corporation, which must not be same as, nor deceptively similar to the name of a pre-existing corporation.
  • The name must include a word, phrase or abbreviation indicating that it is a corporation, distinguishing it from any natural person or a company having any other character.
  • The name of the corporation may be expressed in any language.
  • The general purpose or purposes for which the corporation is formed.
  • The amount of the capital stock and the number and nominal (par) value of the shares into which it is divided or if the corporation is to issue shares without nominal value, shall apply the statements referred to in Article 22 hereof.
  • The amount of the capital stock and nominal value of shares may be expressed in terms of the legal currency of Panama, or the legal gold currency of any other country, or both.
  • If there are to be shares of more than one class, the number of shares in each class and designations, preferences, privileges and voting rights and the restrictions or requirements of each class, or a statement that such designations, preferences privileges and voting powers and restrictions or other requirements may be determined by resolution passed by a majority of the Directors.
  • The number of shares that each of the subscribers to the Articles of Incorporation agrees to take.
  • The domicile of the corporation, which may be in Panama or elsewhere, as well as the name and domicile of its Resident Agent in Panama, who must be an attorney or firm of attorneys in Panama.
  • The duration of the corporation, which may be perpetual.
  • The full names and addresses of at least three Directors.
  • Any other lawful clauses to which the subscribers may have agreed.


Every corporation, organized in accordance with this law shall have, in addition to the other powers herein bestowed, the following:

  •  To sue and be sued in any court.
  • To adopt and use a corporate seal and alter it at its convenience.
  • To acquire, purchase, hold, use and transfer real property and chattels of any kinds and to make and accept pledges, mortgages, leases, liens and encumbrances of all kinds.
  • To appoint officers and agents.
  • To execute contracts of all kinds.
  • To enact By-Laws (estatutos or statutes) not incongruent with any existing law or its Articles of Incorporation, for the management, regulation and administration of its affairs and properties, for the transfer of its shares of stock, for the calling of shareholders or directors meetings and for any lawful purpose.
  • To conduct its business and to exercise its powers in foreign countries.
  • To dissolve itself in accordance with the law, whether voluntarily or by other reason.
  • To borrow money and incur debts in relation or connection with its business or by any lawful purpose, to issue bonds, promissory notes. bills of exchange and other documents of obligation (which may or may not be converted into stock of the corporation) payable at a specified date or dates or upon the happening of a certain event, whether secured by mortgage, pledge or otherwise, or unsecured, for money borrowed or in payment for property purchased or acquired or for any other lawful purposes.
  • To guarantee, acquire, purchase, hold, sell, assign convey, mortgage, pledge or otherwise deal with or dispose of shares, bonds, or other obligations issued by other corporations or by any municipality, province, state or government.
  • To do and perform any and everything that may be necessary in carrying out the purposes enumerated in the Articles of Incorporation or its amendments thereof, or what ever becomes necessary or convenient for the protection and benefit of the corporation and in general to carry on any other lawful business whether or not such business is set forth in its Articles of Incorporation or in any amendment thereof.


Generally, the management of the affairs of a corporation is vested in a Board of Directors and the shareholders are attributed few administrative functions, however, the shareholders constitute the supreme power of the Corporation.

The main functions of the Shareholder’s Meeting are as follows:

  1. To appoint the Directors.
  2. The amendment of the Articles of Incorporation.
  3. The sale, lease, exchange or disposal of capitals assets.

The holding of Shareholder’s Meeting at certain date or within affixed time is not required by law. This is to be provided by the Articles of Incorporation if it is not so therein provided; the shareholder’s meeting may be held any time and place, within or outside the Republic of Panama.


The management, administration and business of the Corporation is vested in a Board of Directors, composed of at least three natural person of full age, and subject to that which is prescribed by law and provisions to that effect in the Articles of Incorporation, the Board of Director has absolute control and management of corporate affairs, including the adoption, amendment and repeal of By-Laws.

In absence of a provision to the contrary in the Articles of Incorporation, it is not necessary that the members of a Board of Director be shareholders. Additionally, if expressly authorized by the articles of incorporation, it is possible for directors to be represented at meetings of the Board of Directors through proxy holders, who need not be directors, and who must be appointed by public or private instrument, with or without power to substitute.


Corporations shall have power to create and issue one or more classes of shares of stock, with designations and preferences, privileges, voting powers, restrictions or qualifications thereof and other rights as may be provided by the Article of Incorporation.

Corporations must have a President, a Secretary and a Treasurer, who are elected by the Board of Directors. In absence of a provision to the contrary in the Articles of Incorporation or the By-Laws, such officers may be replaced at any time by, resolution adopted by the majority of the members of the Board of Directors or stockholders.


The Panamanian corporations must have a registered agent in the Republic of Panama. According to the Panamanian Law, the Registered Agent must be an Attorney or a Firm of Attorney. The Registered Agent may be replaced by means of an amendment to the Articles of Incorporation.


When the corporation operations are not performed in Panama, it requires only a minute Books and a Stock Registry Book, which may be kept in any part of the world.


  • Income tax in Panama is levied upon net Income derived from operations within the territory of the Republic of Panama.
  • Profits and dividends arising from activities outside of Panama are not subject to taxation by Panamanian law.
  • Even if a Panama corporation has an office in Panama, employees in Panama, and a license to engage business in Panama, it still does not pay a Panama income tax if the transactions out of which the income arose were consummated outside of Panama. In other words, a Panama corporation with Directors and Officers and an office and employees in Panama does not pay income tax in Panama if the office conducts its business outside of Panama.
  • A Panama corporation not operating in Panama may distribute all or part of its assets to its stockholders without any obligation to declare such distribution. This is the case even though the assets distributed to the shareholders may have a value at the time of distribution which is greatly in excess of their value when originally transferred to the corporation.
  • No estate tax will be imposed on the transfer causa mortis of shares of a Panama corporation which have no business within Panama or which owns no real estate in Panama.
  • As to individuals who receive salaries, wages or any other compensations from Panama corporation, such individuals are subject to the Panama income tax only if they reside in the Republic of Panama. Thus, if a Panama corporation pays a salary to a resident of a foreign country, that individual does not have to pay a Panama income tax on this salary, nor is there any withholding tax on such salary.
  • Only individual or corporations with taxable income, that is, income obtained within Panama as herein above explained, are required to file yearly income tax returns. Accordingly, corporations organized in Panama with no income obtained within the Republic of Panama are not required to pay any tax to the Government of Panama nor are they required to file income tax returns or any other forms with any governmental authority of the Republic of Panama or seek a tax exemption.