How to Open a Company in Panama: Territorial Tax, Costs and Residence (2026)

Key points

• Panama taxes only income produced in Panama. A company that earns its income abroad pays no Panamanian income tax, while Panama-source profits are taxed at 25%.
• The usual vehicle is the sociedad anónima (S.A.), formed through a Panamanian lawyer acting as resident agent, with an annual franchise tax (tasa única) of US$300.
• Panama uses the U.S. dollar, has a large international banking centre and the Colón Free Zone, and sits between North and South America.
• Since 2026, entities of multinational groups that earn passive foreign income must show local substance or pay 15% on that income.
• Residence is a separate step: the Friendly Nations visa requires US$200,000 in property or a bank deposit, and the Qualified Investor route, revised in September 2026, starts at US$300,000.

How do you open a company in Panama?

How do you open a company in Panama? You instruct a Panamanian law firm to act as resident agent, choose a name, sign the articles of incorporation (pacto social) through the agent, appoint at least three directors and the officers, and the agent registers the company with the Public Registry, usually within one to two weeks. The company then registers its beneficial owners in the private national register, obtains a tax identification number and opens a bank account. The annual tasa única of US$300 keeps it in good standing.

Panama has been a corporate centre since its 1927 company law, and today it combines a dollarised economy, the Panama Canal, the largest free trade zone in the Americas and a territorial tax system. It is a natural base for service businesses that work across Latin America, holding companies and families who also want a residence option in the region.

Why Panama?

• Territorial taxation: income from sources outside Panama is not subject to Panamanian income tax.
• U.S. dollar: the dollar is legal tender, removing currency risk for dollar-based businesses.
• Location and logistics: the Canal, the Colón Free Zone and Tocumen airport connect the Americas, Europe and Asia.
• Banking centre: one of the largest in Latin America, with local and international banks.
• Residence options: Panama has some of the most accessible residence programmes in the region, including for retirees and investors.

Company types

• Sociedad anónima (S.A.): the standard company for holding and operating activities, with shareholders, a board of at least three directors and officers (president, secretary and treasurer).
• Private interest foundation: a separate legal entity, often used for family wealth and succession, similar in function to a trust; see our guide to international trusts.
• Limited liability company (S. de R.L.): available but less used by foreign investors.

Directors and shareholders can be of any nationality and live anywhere. Bearer shares must be immobilised with an authorised custodian, so new companies issue registered shares.

Step by step

• Choose a resident agent: every Panamanian company must have a Panamanian lawyer or law firm as resident agent, which forms the company and keeps the know-your-client file.
• Pass the agent's checks: passports, proof of address, bank or professional references and a description of the activity and source of funds.
• Draft and sign the pacto social, naming the directors, officers and authorised capital.
• Register with the Public Registry; the company exists from registration.
• Register the beneficial owners in the private register under Law 129 of 2020, through the resident agent.
• Obtain the tax identification number (RUC) and, if the company will trade in Panama, a commercial notice of operation.
• Open the bank account, in Panama or abroad.

How a Panamanian company is taxed

Panama's income tax applies only to income produced within the national territory. A company that buys and sells abroad, provides services to clients outside Panama from outside Panama, or holds foreign investments generally pays no Panamanian income tax on that income. Panama-source profits are taxed at 25%, and a separate 5% to 10% tax applies to dividends depending on the source of the profits distributed. Our guide to territorial tax systems explains how source rules work.

Since Law 526 of 28 May 2026, an entity that belongs to a multinational group and earns passive income from abroad, such as dividends, interest or royalties, must show local substance: staff, premises and decisions taken in Panama. Entities that cannot are taxed at 15% on that income. Stand-alone companies of individuals are not groups for this purpose, but the trend towards substance is clear.

Annual obligations

• Tasa única of US$300, due by 15 July for companies incorporated in the first half of the year and by 15 January for those incorporated in the second half; late payment brings surcharges and, eventually, suspension of the company's rights.
• Accounting records and supporting documents kept for at least five years, with the resident agent informed of where they are kept and given copies when required.
• Annual income tax return if the company has Panama-source income; a sworn statement may be required even when it has none.
• Beneficial owner information kept up to date through the resident agent.

Reputation and international lists

Panama left the FATF grey list in 2023 and the European Commission's list of high-risk third countries in 2025. On 9 October 2026, after Panama adopted the substance law, EU finance ministers removed it from the EU list of non-cooperative jurisdictions for tax purposes, where it had been since 2020. Panama moves to the EU's 'grey list' of cooperating jurisdictions with pending commitments, mainly a new review of its exchange of tax information on request, expected in 2027. European counterparties should no longer apply the defensive measures reserved for blacklisted jurisdictions, but some banks and clients may keep extra checks while the review is pending.

Panama residency for company owners

Owning a Panamanian company does not grant residence. The main routes for foreign investors and entrepreneurs are:

• Friendly Nations visa: for citizens of about 50 countries, including the United States, Canada, the United Kingdom, EU countries and Brazil, with a job in Panama, real estate of at least US$200,000 or a three-year fixed-term deposit of US$200,000. It starts with two years of provisional residence before permanent residence.
• Qualified Investor: permanent residence for investment. Executive Decree 17 of September 2026 sets US$300,000 for a new property bought from the developer and US$500,000 for a previously sold property, US$500,000 in Panamanian listed securities or a deposit with a state bank, or US$750,000 in a fixed-term deposit, held for five years.
• Pensionado: for retirees with a lifetime pension of at least US$1,000 a month.

Residence and tax residence are separate: our guide to tax residency explains when moving to Panama changes where you pay tax.

Points of attention

• Banking in Panama is thorough and can be slow; local banks ask for references, a clear activity and often a minimum balance.
• Work performed physically in Panama is Panama-source income, even for foreign clients.
• The owner's country of residence may tax the company's profits under controlled foreign company rules.
• Panama left the EU blacklist in October 2026 but remains on the EU 'grey list' until its 2027 review; some European counterparties may still apply extra checks.

Bottom line

Panama offers a territorial tax system in a dollar economy, a mature legal framework for companies and foundations, and some of the most accessible residence routes in the Americas. It works best for businesses whose income is genuinely earned outside Panama, holding structures and families who want a second base in the region, provided the resident agent, banking and substance rules are handled properly. Our comparison of the best countries to open an offshore company shows how Panama compares.

Our Private Advisory Session designs the Panamanian structure, coordinates the resident agent and banking and, when relevant, the residence application.

Sources

• Dirección General de Ingresos (Panama tax authority)
• Registro Público de Panamá
• Servicio Nacional de Migración de Panamá
• Council of the EU: EU list of non-cooperative jurisdictions
• FATF: Jurisdictions under increased monitoring