Panama or Cayman Islands: where should your business be based?
Panama ranks higher in the index, =15 against 24. 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
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%.
Companies pay no corporate income, capital gains or withholding tax, and no VAT is charged. Individuals pay no income or inheritance tax.
Set-up
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.
Registration costs CI$700 to CI$2,568 by capital band. An express service completes within 24 hours for CI$500 more, and no minimum capital applies.
On the ground
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.
Directors need not live in the islands, but the company must keep a registered office there. Economic substance requirements depend on the activity.
Ownership
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.
Since 28 February 2025 the beneficial ownership register is open only to persons with a legitimate interest, including journalists, at CI$75 an application.
Residence
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.
The Certificate of Direct Investment requires at least CI$1,000,000 invested in a licensed business that generates employment.
Living and working
Currency
The balboa, at par with the US dollar. US dollar notes are used for everyday payments.
Cayman Islands dollar.
Time zone
UTC-5 all year, with no daylight saving.
UTC-5.
Personal tax
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.
There is no income, inheritance, capital gains, gift or property tax, but most real estate sales carry 7.5% stamp duty.
Flights
Tocumen International Airport, the hub of Copa Airlines, has nonstop flights to about 92 destinations in 35 countries.
Services include British Airways to London via Nassau and Delta and JetBlue to New York; there is no Dubai or Singapore service.
Panama vs Cayman Islands: common questions
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 Cayman Islands: Companies pay no corporate income, capital gains or withholding tax, and no VAT is charged. Individuals pay no income or inheritance tax.
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 Cayman Islands: Registration costs CI$700 to CI$2,568 by capital band. An express service completes within 24 hours for CI$500 more, and no minimum capital applies.
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 Cayman Islands: Directors need not live in the islands, but the company must keep a registered office there. Economic substance requirements depend on the activity.
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 Cayman Islands: Since 28 February 2025 the beneficial ownership register is open only to persons with a legitimate interest, including journalists, at CI$75 an application.
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. The Cayman Islands: The Certificate of Direct Investment requires at least CI$1,000,000 invested in a licensed business that generates employment.
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