In addition to the famous Panama Canal, Panama is an international center for banking, insurance, finance and shipping. Hundreds of thousands of individuals and companies from around the world have established Panamanian Offshore Corporations here, and enjoy Panama’s offshore tax free status and strict regulatory and confidentiality protection.

Panama is similar internationally to Hong Kong and Singapore due to its trading and re-export economy, and boasts the largest merchant marine fleet in the world, with over 8,000 ships. The U.S. dollar is Panama’s currency, and all Panamanian bank accounts are expressed in U.S. dollars. Panama is home to over 120 international banks, including regional branches of Citibank (USA), Banque Nacionale de Paris (France), Lloyds Bank (UK), HSBC (Hong Kong), Scotiabank (Canada), Union Suisse Bank (Switzerland), and many others.

Panama’s offshore corporate legislation is a hallmark of well established jurisprudence and is recognized around the world for its legal precedence, stability, and high degree of confidentiality.

Just like U.S. and other nations’ corporations, Panamanian Offshore Corporations are proven legal entities utilized by hundreds of thousands of individuals and companies around the world for transacting business.

However, unlike many other nations, the Republic of Panama levies no taxes on foreign income derived from corporate activities, nor does it tax interest income generated from corporate monies deposited in Panamanian banks. Panama only taxes domestic (Panamanian) income from active business enterprise.

The Corporation is duly registered in Panama’s Public Registry, thus ensuring its legal status. The Corporation’s stock may be issued to the bearer, thus ensuring the owner’s confidentiality. Disclosure of ownership is not required under Panamanian law. The owner(s), directors and officers of the Corporation can be of any nationality, and can be individuals or other companies. Panama does not tax the salaries or compensation of employees, officers or directors of a Corporation, as long as those individuals reside outside Panama.

Once all information is received,* the Corporation can be set up and fully functional in three to five working days.

In compliance with Panamanian law and for the Corporation’s security, the Articles of Incorporation are public documents filed with Panama’s Public Registry. The Articles must include the name of the Corporation, its duration, its objectives, the names of the officers (President, Vice President & Secretary) and directors, the initial capital, type of shares, and the Resident Agent (Panamanian lawyer). Once filed, the Corporation can open bank accounts, transact business, etc.

Corporate Bylaws are private, and are normally drafted by the owner(s). To insure confidentiality they do not have to be filed in Panama, nor does any other corporate document. Stock can be issued to the bearer, or to named individuals or other corporations. There are no limitations on the number or type of stockholders a Corporation may have.

The Corporation’s initial declared capital does not have to be paid in at the time of incorporation; the Corporation can be capitalized at the shareholder(s)’ convenience.

Once legally registered in Panama’s Public Registry, the Corporation may operate as an ongoing business entity. Bank accounts can be opened, assets and liabilities can be acquired, business can be transacted. Panama places no restrictions on the type of legitimate, lawful business the Corporation may transact, either within or outside the Republic.

Shareholder or Board of Directors meetings may be held by the Corporation in any country, and may be attended in person, by proxy, or electronically. Changes in the Board can be made at any time by a majority of the shareholders, however, any change of corporate officers must be registered in Panama’s Public Registry for the protection of the Corporation. Corporate stock can be freely bought or sold by shareholders.

The Corporation’s duration is perpetual, but can be closed and liquidated at the option of the shareholders.

Panamanian Corporations pay no taxes of any kind on income derived outside the Republic of Panama, even if the business is directed from an office in Panama. Also, there are no taxes levied on interest income from corporate bank accounts within Panama. Additionally, certain types of active income generated within Panama is tax free, such as maritime trade, re-invoicing, selected exports and re-exports. Other income derived from business activities within Panama are taxed at prevailing rates.

The only fees imposed by the Panamanian Government is an initial US$250.00 registration fee and an annual US300.00 corporate fee. The Government also requires a Resident Agent (a Panamanian attorney) to act as representative on behalf of the Corporation.*

The Corporation is not required to file annual tax returns with the Government of Panama, however, the annual corporate fees must be paid through the Resident Agent in a timely manner to maintain good standing.

*See Corporation Requirements Document [+] for further details