A Wealth Of Services, Sectors And Opportunities

• Published date: 14 September 2023
• Subject Matter: Corporate/Commercial Law, Tax, Corporate and Company Law, Income Tax, Sales Taxes: VAT, GST, Tax Authorities, Shareholders
• Law Firm: TMF Group BV
• Author: Ms Nedelka Quintero

Panama is an appealing country for investment in broad range of sectors, including financial services, logistics, tourism, communications, technology and manufacturing. It boasts free trade zones and has a tax structure that attracts international investment. What's more, its pivotal geographical location makes it a global transport and trade hub. Here we examine five areas of operation that you need to know about when doing business in the country.

In recent years, Panama has become a leading country for international business due to the sustained growth of its economy and its prime location in the Latin American region. It is perfectly positioned as a geographical link between North America, the Caribbean and South America. The Panama Canal is one of the most important commercial bases in the world and serves as a commercial and transportation link for the Americas. Not only is it a hub for air and sea transport but also a focal point for international trade and services.

According to TMF Group's 2023 Global Business Complexity Index, Panama ranks as the 27th most complex business environment out of 78. It is a member of the World Trade Organisation (WTO) and the International Monetary Fund (IMF).

It has a population of 4.38 million, GDP of US$63,610 million and GNI per capita standing at $14,010 (World Bank, 2021). Key sectors of the economy include services (75% of GDP), construction, and beer and cement production.

So, what should you know about setting up and running a business in Panama?

1. Company incorporation

To establish a company in Panama, the required procedures are fairly straightforward and will take about five days to complete.

The first step is to hire an authorised agent to prepare the bylaws. You must then register the company in a public notary's office and with the Public Registry Commercial Office of Panama, which includes paying the annual corporate tax. Once this done, you will need to obtain a notice of operation on the Panama Emprende website, request an employer registration number and register your employees with Social Security (Caja de Seguro Social).

On 9 March 2018, Resolution 201-1254 established a new process that requires companies to register in the Single Taxpayer Registry before the Panamanian Tax Authority to obtain a tax identification number.

Corporations are the most common type of legal entity in Panama. They are governed by the Corporations Act and the Commercial Code, and they can issue shares.

Corporations...