Bahamas or Panama: where should your business be based?
The two share an index score of 76. Which suits you depends on where the owners live, what the company is for and how it will be run.
Pillar by pillar
Doing business, side by side
Tax
There is no corporate income tax. Groups with revenue of EUR 750 million or more pay a 15% Domestic Minimum Top-up Tax, and VAT is 10%.
Corporate income tax is 25% on Panamanian-source profit only. Income from business conducted outside Panama is exempt, though a 5% dividend tax can apply when it is paid out. ITBMS is 7%.
Set-up
The Registrar General's Department registers an IBC in 48 hours, or 1 hour by express service. The government fee is USD 350 for authorised capital up to USD 50,000 and USD 1,000 above.
The deed is notarised and recorded at the Registro Público in about 5 working days. A first tasa única of US$250 is paid at registration, then US$300 a year.
On the ground
An IBC is formed through a licensed financial and corporate service provider, which acts as registered agent with a registered office in The Bahamas. Economic substance rules apply to relevant activities.
Every sociedad anónima needs a resident agent who is a Panamanian lawyer or law firm. Directors need not live in Panama, and an Aviso de Operación is needed only to trade locally.
Ownership
Registered agents file beneficial ownership details to a secure search system run by the Attorney General's Office. Only named authorities can search it.
Resident agents file beneficial owners in a private register run by the Superintendency of Non-Financial Entities under Law 129 of 2020. Only competent authorities can see it.
Residence
Economic permanent residence needs USD 1 million in real estate or Central Bank bonds, held for 10 years. Dependants can apply for an annual permit to reside, and home owners for a home owner resident permit.
Permanent residence is available from US$300,000 in a new property, or US$500,000 in a resale property, securities or a fixed deposit at a state bank.
Living and working
Currency
The Bahamian dollar, pegged at par to the US dollar. US dollars are widely accepted.
The balboa, at par with the US dollar. US dollar notes are used for everyday payments.
Time zone
UTC-5, or UTC-4 in summer, the same as New York.
UTC-5 all year, with no daylight saving.
Personal tax
There is no personal income tax, capital gains tax, inheritance tax or wealth tax. Employees pay 4.65% national insurance up to a wage ceiling of BSD 3,510 a month.
Residents pay 0% up to US$11,000, 15% up to US$50,000 and 25% above that, on Panamanian-source income only. Foreign income is not taxed.
Flights
Lynden Pindling International Airport in Nassau has about 57 scheduled nonstop destinations, including seasonal routes, with direct flights to London Heathrow, Toronto and most large cities on the US east coast.
Tocumen International Airport, the hub of Copa Airlines, has nonstop flights to about 92 destinations in 35 countries.
Bahamas vs Panama: common questions
The Bahamas: There is no corporate income tax. Groups with revenue of EUR 750 million or more pay a 15% Domestic Minimum Top-up Tax, and VAT is 10%. Panama: Corporate income tax is 25% on Panamanian-source profit only. Income from business conducted outside Panama is exempt, though a 5% dividend tax can apply when it is paid out. ITBMS is 7%.
The Bahamas: The Registrar General's Department registers an IBC in 48 hours, or 1 hour by express service. The government fee is USD 350 for authorised capital up to USD 50,000 and USD 1,000 above. Panama: The deed is notarised and recorded at the Registro Público in about 5 working days. A first tasa única of US$250 is paid at registration, then US$300 a year.
The Bahamas: An IBC is formed through a licensed financial and corporate service provider, which acts as registered agent with a registered office in The Bahamas. Economic substance rules apply to relevant activities. Panama: Every sociedad anónima needs a resident agent who is a Panamanian lawyer or law firm. Directors need not live in Panama, and an Aviso de Operación is needed only to trade locally.
The Bahamas: Registered agents file beneficial ownership details to a secure search system run by the Attorney General's Office. Only named authorities can search it. Panama: Resident agents file beneficial owners in a private register run by the Superintendency of Non-Financial Entities under Law 129 of 2020. Only competent authorities can see it.
The Bahamas: Economic permanent residence needs USD 1 million in real estate or Central Bank bonds, held for 10 years. Dependants can apply for an annual permit to reside, and home owners for a home owner resident permit. Panama: Permanent residence is available from US$300,000 in a new property, or US$500,000 in a resale property, securities or a fixed deposit at a state bank.
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