Starting a business in Panama
- Rank of 25
- =15
- Index score of 100
- 76
The case for Panama
Panama is a good place to establish a holding company, a trading company that buys and sells outside Panama, or a vehicle for family wealth. The country taxes on a territorial basis: a company pays 25% corporate income tax only on profit earned from activity in Panama, and income from business conducted outside Panama is exempt from income tax. The standard vehicle is the sociedad anónima. Its deed is signed before a notary and recorded at the Registro Público in about 5 working days. Every company must have a resident agent, who is a Panamanian lawyer or law firm, and pays an annual tasa única of US$300.
Panama suits less well a business that will make most of its sales inside Panama, as that profit is taxed at 25% and 7% ITBMS applies to local sales. From fiscal year 2027, a company in a multinational group that earns foreign passive income such as dividends, interest or royalties must show real substance in Panama or pay 15% on it. The main drawback is banking: Panamanian banks carry out detailed due diligence, and opening an account for a company with no local activity can take time.
How a company is taxed
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%. 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.
Setting up and running a company
About 5 working days
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.
Resident agent required
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.
Not public
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.
Qualified Investor
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.
Fees shown are government registry fees only. Agent, licence, office, audit and professional costs are additional and usually make up most of the cost of setting up.
Life in Panama City
- Flights
- Tocumen International Airport, the hub of Copa Airlines, has nonstop flights to about 92 destinations in 35 countries.
- Population
- About 1.9 million people lived in the four districts around Panama City (Panamá, San Miguelito, Arraiján and La Chorrera) at the 2023 census.
Wealth, inheritance and a family home
- Inheritance and gift tax
- Panama has no inheritance, estate or gift tax.
- Wealth tax
- There is no net wealth tax, though owners of real estate pay an annual immovable property tax that depends on the value and use of the property.
- Capital gains
- Gains on Panamanian shares and property are taxed at 10%, with a 5% withholding on share sales and a 3% advance payment on property sales, while gains on foreign assets fall outside the territorial system.
- Personal income tax
- Residents pay up to 25% on Panamanian-source income only, so foreign salaries, dividends and investment income are not taxed in Panama.
- Tax information exchange
- Panama exchanges financial account information with other countries under the OECD Common Reporting Standard and reports to the US under a FATCA agreement.
- Buying a home
- A resale purchase carries a 2% transfer tax and a 3% income tax advance paid by the seller, and a new home bought for at least US$300,000 can qualify the buyer for Qualified Investor permanent residence.
The Panama dossier
About 30 pages on business and life there, with official sources.
Questions people ask about Panama
Corporate income tax is 25%, charged only on Panamanian-source profit. Larger companies with taxable income above US$1.5 million pay the greater of normal tax and 4.67% of gross taxable income, unless the tax authority agrees otherwise.
Panama taxes income according to where it is earned. Profit from business conducted in Panama is taxed, while income from operations carried out outside Panama is exempt from income tax, whether the company is resident or not.
Foreign-source income is exempt from income tax, but a 5% dividend tax can apply when a company with mixed income distributes it. From fiscal year 2027, group companies earning foreign passive income without substance in Panama pay 15% on it.
The sociedad anónima, governed by Law 32 of 1927. It needs at least three directors and three officers (president, secretary and treasurer), who need not be shareholders or live in Panama.
Yes. Every company must appoint a resident agent, who must be a Panamanian lawyer or law firm. The agent keeps the company's records and files its beneficial owners.
Every corporation pays an annual tasa única of US$300. The first payment, of US$250, is made at registration. Later payments are due by 15 July or 15 January, depending on the month of incorporation.
No. Under Law 129 of 2020, resident agents file beneficial owners in a private system run by the Superintendency of Non-Financial Entities. Only competent authorities, such as the financial intelligence unit and prosecutors, have access.
Panama left the FATF grey list in October 2023 and the EU high-risk list in 2025. On 9 October 2026 the EU removed it from its list of non-cooperative tax jurisdictions and placed it on the Annex II watch list pending a Global Forum review.
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