Although there are obstacles in establishing a business in Panamá, you can benefit from the country’s favorable business environment, tax advantages, and solid infrastructure once you overcome them. It is advisable to obtain expert guidance and learn more about how to establish a company in Panama, from setting up the company to recognizing legal obligations and successfully navigating the Panamanian business environment.
Business structures in Panamá
There are numerous business structures to choose from:
- Corporations (Anonymous Society)
- Limited Liability Company
- Limited Liability Entrepreneurship Company
These companies have unique advantages, including protection against personal litigation, banking protection provided by the country’s financial system, efficient incorporation process, and shareholder privacy.
The nature of your business operations and financial needs will determine the optimal corporate structure.
Commercial registration in Panamá
To legally conduct business within the territory of Panamá, companies or natural persons must acquire a business license, also known as a Notice of Operations, issued by the Ministry of Commerce and Industries.
Some commercial activities are exempt from commercial registration, such as:
- Agricultural exploitation activities, livestock, beekeeping, poultry, aquaculture, agroforestry, or similar activities.
- The manufacture and sale of handicrafts and other manual or homemade industries, provided that the activity requires a maximum of five salaried workers.
- The exercise of non-profit activities.
- The exercise of activities that are not acts of commerce, nor industrial activities carried out by natural persons or civil societies.
- The exercise of liberal professions, individually or through civil societies, since they are not considered an act of commerce.
Commercial activities that must be sure to comply with the legal requirements and previous regulations of their activity are:
- Occasional accommodation establishments, dating or second-hand houses, nightclubs, boîtes, and lounges.
- The selling of alcoholic beverages.
- Those activities derived from State administrative concession contracts or local authorities.
- Regulated activities such as banking, trust companies, insurance, reinsurance, real estate, pawnshops, money remittance houses, financial companies, securities houses, investment advisors, stock exchanges, and securities exchanges.
- Stock firms, investment advisors, stock exchanges and security exchanges.
- Pharmaceutical establishments.
- Hospitals, health care institutions, and clinics.
- The selling of arms, ammunition, equipment and related materials, as well as private security agencies
- Activities related to admission, transport, and mail delivery.
- Activities related to high public risk due to their consequences in health, the environment or national security.
Registration with the Social Security Fund
In Panamá, all companies must register with the Social Security Fund. This registration ensures that the organization meets its responsibilities related to its employees´ health insurance and social security.
The assistance of an experienced law professional can facilitate a smooth navigation of this process.
Tax policy in Panamá
Tax compliance is a critical component in establishing a thriving business in Panamá. Business organizations must obtain a tax identification number known as Unique Taxpayer Registry (RUC) to keep a register of their payments.
Most Panamanian businesses are subject to income and property taxes. Keeping accurate financial records and filing timely tax returns is critical. Consulting a professional is advantageous to ensure that your organization adheres to all tax rules and regulations.
Labor Laws and Regulations
In Panamá, labor laws define the rights and responsibilities of employers and employees. It also regulates the minimum wage, working hours, and safety standards. Understanding and complying with these regulations helps to avoid disputes and potential legal obstacles.
Do not hesitate to contact us! We can advise you on how to establish a company in Panama that will allow you to create opportunities, attract investors, facilitate partnerships and grow the business.