How to start a business in Panama: Requirements and steps

Panama isn’t just a country with a famous canal. It is, for thousands of entrepreneurs and foreign investors, one of the most attractive business platforms across Latin America. Its dollarised economy removes currency risk from day one. Its territorial tax system means income earned outside the country is not taxed locally. Moreover, its geographical position makes it a natural bridge between the Atlantic and Pacific.

In this article, you’ll find everything you need to make an informed decision: How much it costs to open a company in Panama, which legal structures exist for foreigners, which requirements you must meet, how the tax system works, and the exact step-by-step process to get your company up and running. If you’re considering relocating your business or starting a new one in Panama, keep reading.

How Much Does It Cost To Open a Company in Panama?

One of the first questions any foreign entrepreneur asks is how much money they need before registering a company. The good news is that Panama does not require a minimum share capital to incorporate a company: The share capital is declared but does not need to be deposited or proven at incorporation.

That said, there are real costs you must consider from the start.

Company incorporation

The total cost of registering a Panama corporation typically ranges between $800 and $2,100 (€690–1,810), depending on the company type, the lawyer you hire, and the services included in the package. The usual breakdown is as follows:

• Notarial fees: Between $150 and $250 (€130–215) for drafting and signing the Articles of Incorporation.
• Public Registry: Registration fees range from $250 to $400 (€215–345) depending on declared authorised capital. The standard practice is to declare $10,000 (€8,600) in share capital.
• Annual Single Tax: $300 (€260) in the first year, payable to the Panama Public Registry to keep the company active. If not paid on time, a $50 (€43) penalty applies. From the second consecutive missed period, an additional penalty and reactivation fee may exceed $1,000 (€860).
• Registered agent fees: Legally required. The first year is usually included in incorporation packages. From the second year, annual fees range between $300 and $800 (€260–690) depending on the firm.
• Business Notice (MICI): Base fee is approximately $55 (€47) via the Panama Emprende platform.

If you hire a specialised law firm

Hiring a Panamanian law firm to handle the entire process usually costs between $1,500 and $2,100 (€1,290–1,810) for the first year. This includes notary services, Public Registry fees, corporate documents, apostilles, and registered agent management. For offshore companies, some packages start from $1,700 (€1,460) including ITBMS.

Annual recurring costs

Once incorporated, minimum annual costs for a small company range between $1,500 and $3,000 (€1,290–2,580). This includes the Annual Single Tax ($300 / €260), registered agent (from $300 / €260), basic accounting ($100 to $500 monthly / €86–430 depending on transactions), and Business Notice Tax (2% of net capital, minimum $100 / €86 and maximum $60,000 / €51,600).

Optional services

If you prefer not to appear publicly as a director, you can hire nominee directors, with an extra cost of $300 to $500 (€260–430) per year per director. You may also set up a General Power of Attorney, costing around $100 to $450 (€86–390) if apostille is required.

What Types of Companies Can You Open in Panama?

Panama’s legal framework is considered one of the most flexible in Latin America for setting up legal entities. Foreigners can open a company in Panama without a local partner and without residing in the country. They can also own 100% of the shares.

Corporation

This is the most popular structure among foreigners and the most versatile in the Panamanian system. It operates as a legal entity fully separate from its owners. It can own assets, sign contracts, open bank accounts, and operate locally or internationally. One key advantage is shareholder privacy, since names aren’t publicly listed in the Public Registry.

It requires at least one shareholder (individual or legal entity, any nationality) and three directors (President, Secretary and Treasurer), who can be the same person and don’t need to reside in Panama. It’s widely used for local businesses, holding structures, and asset protection. Under Panamanian law, a corporation can exist indefinitely even if shareholders or directors change.

Limited liability company

This structure is less common than a corporation, but it suits smaller businesses, family companies, or professionals operating locally. Partners have limited liability up to their contribution. It can include between 2 and 20 partners, with no nationality or residency restrictions. Share capital usually ranges between $2,000 and $5,000 (€1,720–4,300), and all partners’ names are registered publicly.

Individual limited liability company (E.I.R.L.)

This structure is designed for entrepreneurs who want to operate as a single legal entity. It separates personal assets from business assets, although it offers less flexibility than a corporation for future partners or investors.

Foreign company branch

If you already have a company in your home country and want to expand into Panama, you can register a branch. You must submit a Spanish translation of the Articles of Incorporation, notarised by a professional notary, along with a board resolution authorising operations in Panama. Liability remains with the parent company.

Corporation as a holding or offshore structure

A Panamanian corporation is also widely used for international holding structures: It can hold assets in other countries, manage investments, and act as a parent company for a corporate group. These structures don’t require a Business Notice if no local commercial activity is carried out, and tax obligations are minimal.

Requirements To Open a Company in Panama

You don’t need to be a Panamanian resident to open a company in Panama. You also don’t need a local partner. The process is open to foreigners of any nationality and can often be completed entirely from abroad without travelling. The law requires the following:

• Personal documentation: Valid passports for all shareholders and directors. Law 23 of 2015 also requires Know Your Customer (KYC) checks to verify identity and source of funds.
• Company name: It must be unique and checked in the Public Registry before drafting the Articles of Incorporation.
• Articles of Incorporation: Founding document including company name, activity, capital, and directors. It must be notarised and filed in the Public Registry.
• Registered agent: A Panamanian lawyer or law firm required by law. It acts as the official representative before authorities, not as a shareholder.
• Registered address: A legal address in Panama. If you don’t have a physical office, you can hire a virtual address service.
• Tax ID (RUC): Tax identification number issued by the DGI. It’s required to invoice and file taxes.
• Business Notice: Commercial licence issued via Panama Emprende. Without it, you cannot operate legally, even if the company is already registered.
• Ultimate Beneficial Owner (UBO): Mandatory registration in the central system. Failure to comply may lead to suspension or dissolution.
• Corporate bank account: Opening may take one to three months due to strict due diligence procedures applied by banks.

Taxes For Opening a Company in Panama

Panama applies the territorial principle. Only income generated within the country is taxed locally. If your company operates from Panama but invoices clients abroad, that income is not subject to local tax.

For companies operating in the local market, the main taxes include:

• Corporate income tax (ISR): 25% on net income for companies earning under $1,500,000 (€1,290,000). For higher revenues, a presumed income method applies (25% on 4.67% of gross income if higher). Annual filing deadline is 31 March.
• VAT (ITBMS): Standard rate of 7%. It increases to 10% for alcohol and hospitality, and 15% for tobacco. Exempt for food, medicines, and public utilities. Mandatory once annual income exceeds $36,000 (€31,000). Monthly filing is due by the 15th.
• Annual Single Tax: Fixed $300 (€260) paid to the Public Registry. It applies to all companies without exception. Business Notice Tax: 2% of net capital, minimum $100 (€86) and maximum $60,000 (€51,600). Exempt if invested capital is under $10,000 (€8,600).
• Dividends: 10% for local-source income, 5% for foreign-source income.
• Social Security (CSS): Employers contribute 12.25% of monthly payroll if they hire staff in Panama.

For offshore companies: Only the Annual Single Tax of USD 300 applies, along with the registered agent requirement. No income tax or VAT filings are required, but basic accounting records must still be maintained.

Steps to Open a Company in Panama

The process to incorporate a company in Panama is clearly defined by law. With proper legal support, it is faster than many expect. In most cases, a company can be registered in the Public Registry in under one week. Here is the complete step-by-step:

Step 1: Choose the company type and define business activity

Before starting any process, you must choose the legal structure that best fits your business model. For most foreigners, a corporation is the preferred option due to its flexibility, shareholder privacy, and asset protection. You must also define your main business activity, since this determines future licences and whether you operate locally, internationally, or both.

Step 2: Hire a Panamanian lawyer and draft the Articles of Incorporation

A licensed Panamanian lawyer drafts the Articles of Incorporation, which is the founding document of the company. It includes the company name, directors, authorised capital, activity, and operating rules.

The Articles of Incorporation must be signed before a notary public. If you cannot travel to Panama, the lawyer can appoint nominee directors and issue a notarised Power of Attorney so you can operate the company remotely.

Step 3: Register the company in the Public Registry of Panama

Once signed and notarised, the lawyer submits the documents to the Public Registry along with the required payments, including registration fees and the $300 (€260) Annual Single Tax. The Registry then issues the Certificate of Incorporation.

This process usually takes 1 to 2 weeks, depending on workload. However, experienced firms can complete it in 3 to 5 working days.

Step 4: Obtain the Tax ID (RUC) from the DGI

After incorporation, you must obtain the Tax ID (RUC) from the Directorate General of Revenue (DGI). This number is required to issue invoices and file taxes. It usually matches the Public Registry registration number.

Step 5: Apply for the Business Notice on Panama Emprende

If your company operates in Panama, you need a Business Notice: The commercial licence that authorises activity. You apply via Panama Emprende under the Ministry of Commerce and Industries.

The process is mainly online. You must provide the company name, registry number, business activity, and pay the $55 (€47) base fee for legal entities.

Step 6: Open a corporate bank account

A corporate bank account is essential for formal operations. Banks apply strict due diligence and usually request the Articles of Incorporation, certificate of good standing, RUC, passports of shareholders and directors, bank references, and a business plan. The process may take one to three months.

Step 7: Register with the Social Security Fund (CSS) if you hire employees

If you hire employees in Panama, you must register as an employer with the CSS before starting any employment relationship. Failure to do so may result in fines and legal liability.

Step 8: Obtain sector-specific licences if required

Depending on your industry, you may need additional permits such as health licences, financial regulatory authorisations, or approvals from sector-specific authorities.

Internet for Business Trips to Panama

When you travel to Panama to handle company procedures, meet lawyers, or explore business opportunities, you cannot afford to lose internet access at the wrong moment. Traditional roaming plans are expensive and often unpredictable. Buying a local SIM every time you travel also wastes time and creates unnecessary hassle.

The monthly plans from Holafly solve this problem from the start. Holafly offers a subscription eSIM that you install once on your phone. It works in more than 160 destinations without swapping SIM cards or scanning new QR codes. You arrive in Panama or any other country and instantly get mobile data. There are no setup delays and no surprise charges.

There are two plans available:

• Light Plan: 25 GB of monthly data from $50.10 (€45.95) per month. It includes hotspot sharing for other devices.
• Unlimited Plan: Unlimited high-speed data from $65.35 (€59.95) per month. It also includes a phone number (US, UK or Canada) to receive SMS and VOIP calls useful for bank verifications and access to corporate platforms from abroad.

Both plans include Always On. Even if you cancel or your billing cycle ends, you still get 1 GB of free monthly data. This ensures you never fully disconnect. You always stay online for emails, maps, or urgent logins while you reactivate your plan or continue travelling.

Frequently Asked Questions About Opening a Company in Panama

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