Different Types Of Companies In Panama

• Published date: 03 August 2023
• Law Firm: Biz Latin Hub Group
• Author: Biz Latin Hub Group

Panama, despite being one of the smallest countries in Latin America, presents a plethora of opportunities and benefits for companies. Indeed, these benefits vary depending on the different types of legal structures in Panama. Its' appeal in attracting Foreign Direct Investment (FDI) is significant. Firstly, the nation maintains political stability, boasts a robust and expanding economy, and its strategic location is ideal for trade. The Panama Canal enhances access not only to Latin American markets but also to global markets at large. Now, lets learn about the different types of legal structures in Panama.

Different types of legal structures in Panama - Learn some economic data of the country if you are thinking of incorporating a company in Panama.

There are many different types of legal structures in Panama which serve diverse purposes, including facilitating international trade, establishing trusts and foundations, setting up offshore banking and investment accounts, holding real estate and intellectual property, and managing various assets. It is noteworthy that Panama's territorial tax system ensures that income generated outside of Panama remains untaxed, even if the business conducts operations within the country. This advantageous tax framework exempts businesses from taxation unless their income arises from activities carried out within Panama. An important aspect of effective tax planning involves the default residency of Panama corporations in the Republic of Panama, which can be further reinforced by engaging local professional directors and obtaining local/municipal business licenses. This approach reduces the likelihood of legal disputes regarding the company's residency, distinguishing Panama from traditional International Business Company (IBC) jurisdictions. This, however, varies based on the different types of companies in Panama.

Furthermore, Panama's service sector, encompassing legal, banking, and financial services, holds a prominent position and makes a significant contribution of around 75% to the country's GDP. These contributions are distributed amongst the different types of legal structures in Panama. Additionally, Panama presents enticing opportunities for foreign investors due to its trade liberalization policies, a multitude of Free Trade Agreements (FTAs), and the presence of Free Trade Zones (FTZs). The Colón Free Trade Zone stands as the world's second-largest, while Panama has successfully negotiated FTAs with...