Panama Offshore Company

Published on 18 April 2006
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Because it’s possible to have nominee directors and shareholders of a Panamanian company it is possible to achieve the tax saving advantages offered to non-residents by a Panama offshore company provided the company is established, structured and managed properly.

A Panama offshore company that has no business interests within Panama is 100% free of all local taxes apart from an annual franchise tax of USD150 which makes Panama an interesting jurisdiction for many seeking a stable political and economic environment in which to incorporate.

Although the laws in Panama are actually based on the Spanish Civil Code, company law has been derived from Delaware’s corporation law therefore those who have read up about Delaware offshore company formation already will understand the basis on which a Panamanian equivalent will be established and structured.

In Panama it’s important to note that the business languages are both Spanish and English so all company documentation must be presented in both languages – worth noting as some people require key documents translating which can slow the incorporation process down a little. 

As mentioned a company that has no business interests within Panama will legally avoid all forms of local taxation bar the franchise tax.  However, the majority of onshore countries in the world such as the UK or US have taxation laws that encompass offshore companies where onshore citizens are directors of such companies and the laws make such entities tax resident.  Therefore those who are directors of offshore companies can find that they miss any of the tax saving advantages of incorporating in a tax friendly jurisdiction if this happens.  This is why many offshore company formation service providers offer the use of nominee directors and shareholders.  Such a provision is possible in Panama.

A Panama offshore company has to have a minimum of one shareholder, their name/s appear in public records, it must also have a minimum of one director whose name/s appears in the public records as well.  The director has to appoint a president, secretary and a treasurer although the director can also fill these roles.  As stated it is possible to have both nominee directors and shareholders in Panama.

And finally, the majority of offshore company formation service providers can incorporate a new company in Panama within 48 hours and for this service alone a basic fee of around USD750 will be charged; nominee service charges start from USD1000 a year and the majority of service providers also offer bank accounts so you can have a Panama IBC and offshore banking.  Trust services, correspondence addresses in Panama together with remote office and re-mailing facilities are also usually available to make a whole offshore business package possible in Panama. 

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