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Panama is a Central American isthmus, linking the Atlantic Ocean with the Pacific. It is a country relatively known for the interoceanic boat channel called the Panama Canal.

This country has been listed as a transit area, which encourages commercial and economic exchange in the Central American region and boosts world trade.

It is also a focus nation for investment, due to its stability in social, political, labor and economic matters. And what makes it even more attractive is that for over a hundred years it has been considered a tax haven, although in 2018 the European Union removed it from the black list of tax havens, there is still some esteem in that appearance.

Before wanting to invest in Panama, consider these data regarding your current economy:

First of all, it should be mentioned that in Panama the Balboa is used as the official currency. But at the same time the US dollar is used as well. Both currencies are of legal circulation in the country, and have the same commercial and monetary value.

Having as official currency the US dollar is quite advantageous to invest. Because if you invest in this currency it will not be devalued.

In reference to the inflation rate it was estimated for the first half of the year 2019 at -0.3%. For 2018, inflation was set at 0.8%.

Regarding the CPI Consumer Price Index, it is -0.6% for the first half of 2019. In 2018 it was 0.8%.

In consideration of the Gross Domestic Product, GDP was spared at 2.9% quarterly so far in 2019. For the year 2018, it closed at a rate of 3.7%.

This information can be found at the National Institute of Statistics and Census of Panama, where they publish these figures periodically.

The aforementioned economic data represent quite favorable financial indicators. Because inflation is negative, that is to say that the economy is quite moved and healthy in terms of investments, imports, exports, expenses in the items and services. The rates in reference to the CPI and GDP are low and even negative, which indicates that the economic capacity of the inhabitants and companies is quite good.

But we must bear in mind that based on these figures of economic indicators, Panama is in the process of deflation, very different from the inflation term. Deflation is a phenomenon that occurs when demand contracts and there is an excess of productive capacities. This indicates that there is a lot of business competitiveness in Panama.

So if you are going to invest in Panama, let it be in an innovative business and that you are willing to make yourself noticed above the competition.

What types of businesses are profitable in Panama?

Panama is a country that is characterized by offering multiple business opportunities to foreigners, in banking and real estate. It also provides the opportunity to make offshore investments (tax-free abroad) in bank deposits, gold and partnerships.

These are the investments you can make in Panama:

  • In real estate: it is the quintessential business in this country, whether it is for rent, construction and sale of homes, buildings or commercial premises. In relation to the rent it is quite attractive to buy a property in Panama, whether for commercial or tourist purposes and renting that property will generate substantial dividends. Under construction there is a shortage of homes near the new city, the project called Panama Pacifico is currently under construction located near the Panama Canal Zone, which provides investment opportunities.
  • Bank investments: these are characterized by providing bank accounts to foreigners, where they can deposit their savings, and the banking entities offer the service of certificates of deposits where the client can earn up to 5% interest. Also in Panama there are credit cooperatives, which function as lenders and can generate up to 8% interest on profits.
  • Invest in tourism: Panama, being a privileged country because of its location, has tourism for all tastes. Based on that you can invest in lines of taxis and buses that make tours, you can also make investments in hotels and specialized tourist services.
  • Place a translation or language learning agency: this country is a contrast of world cultures and as business is done internationally, the translation service is very required. In addition, people come to this country to relate business and learn other languages.
  • Invest in reforestation in Panama: this type of business gives profits of 23% annually, and is a business where few invest, also enjoys tax benefits. Reforestation consists of planting trees and flowers on uncultivated land, whether for a commercial, tourism, agroforestry, crop, or simply to improve the environment.
  • Wholesale clothing sales: people who visit Panama have the perception that clothing is cheaper there, because of the fluctuating trade and people also seek to place clothing stores, so you can be a wholesale clothing distributor. Keep in mind that it is quality clothing and recognized brands, which is what sells the most.
  • Agricultural investments: this is a little exploited business in Panama, generates profits of up to 8% per year and the government encourages this type of investment.
  • Opening of bars, clubs and restaurants: Panama, as it is a transit country, people who visit it often go to bars, discos and restaurants, and nightlife in Panama is quite busy.

Incentives to encourage foreign investment in Panama.

In Panama, foreign investment is legally protected, since it represents 90% of its current economy.

That is why in Panamanian laws such as The Civil Code of Panama, its Constitution and its Foreign Investment Law, they provide a guarantee for foreigners to have equal rights to Panamanian citizens in terms of ownership of property, investments and commerce.

In addition, foreigners have the right to repatriate their capital, dividends, interest and profits produced by their investments and the right to market their products.

The foreign investment laws are:

  • Law 54 which aims to encourage and guarantee national and foreign investment to promote the growth and economic development of the country.
  • Law 41 is responsible for granting Multinational Company Headquarters Licenses and a special regime for the establishment and operation of Multinational Company Headquarters (SEM). It also typifies the types of foreign investment in Panama in the sectors of:
    • Tourist
    • Industrial
    • Agricultural Export
    • Agroforestry
    • Mining
    • Export Processing Zones
    • Commercial and Petroleum Free Zones
    • Telecommunications
    • Constructions
    • Port and railroad developments
    • Electric Power Generation
    • Irrigation projects and efficient use of water resources
    • Any activity approved by the Cabinet Council upon recommendation of the Ministry of Commerce and Industries

The advantages in banking are:

Panama is an International Banking Center that allows the opening of a foreign or local bank account, easily and securely.

Bank accounts are an indispensable tool to carry out financial operations in an offshore structure of fiscal planning (only taxes generated in activities within Panamanian territory) or asset protection are paid and declared. Thanks to the Banking Secret Law in Panama.

The tax incentives are:

Direct tax rates in Panama are lower than in North America and Europe, so this country provides a territory-based tax system.

In this way, companies and individuals are subject to the regulation of the territorial tax, the only taxable income being obtained within the territory of Panama. This applies to both personal income and business income, taxes are not collected for profits earned abroad.

Therefore, if a company does not generate income from Panamanian economic and commercial activities, it will be exempt from taxes.

On the other hand, industrial companies that dedicate their total production to the export of goods, enjoy tax exemptions for introduction taxes, contributions, levies and customs duties.

With regard to the import of machinery, equipment and spare parts necessary for the production of goods that are exported in their entirety, there are considerable reductions in:

  • Income tax with respect to earnings.
  • Sales taxes.
  • Production taxes.
  • Taxes that tax the capital or assets of the company.

In the tourism sector, the following taxes are exempted:

  • The income tax for a period of 15 years.
  • The property tax for a period of 20 years.
  • Import tax for materials and furnishings.
  • The tax on the use of docks and airports built by the investment company for 20 years.
  • The income tax as a result of the interests that creditors can generate in tourism investment operations, to mention some tax incentives.

In reference to the export of non-traditional Panamanian products, there are the Tax Credit Certificates (CAT).

With regard to reforestation, there are tax incentives that benefit both domestic and foreign investors. They also benefit banks and other financial institutions that provide reforestation loans.

Other economic sectors benefit from significant tax incentives are export processing zones, such as the Colon Free Zone and tourism activity.
It is important to mention that, like the rest of Latin America, in regards to corporate tax in European companies, in Panama it is called Income Tax, and is applicable to companies and individuals.

If you want to expand this information, you can enter the web portal of the Ministry of Commerce and Industry of Panama.

The visa in Panama.

Business visas must be requested personally in this country before the National Migration Service of Panama. Depending on the type of investment you are going to make in Panama there is a different visa.

But it is important to mention that these visa procedures take some time, so that you can reside and carry out commercial procedures legally in Panama while these visas are approved, you can apply for the Provisional Residence Permit. Which is valid for three months and is renewable for the same period up to one year.

All foreigners who have the provisional permit card must apply for a multiple entry and exit visa if they wish to leave Panama and re-enter during the time it takes to obtain their visa approval. The rate set by the government for this procedure is fifty US dollars.

It is important to mention that there are five visas that can be processed online at the Panama Digital Migration portal, which are:

  • The visas for sailors: they are for the captains of ships that cross the Panama Canal or who want to disembark temporarily on Panamanian coasts such as cruise ships.
  • Printed visas for people from Cuba, Venezuela, China and India. The application is made online and the visa reaches the consulate of those countries stamped in the passport, these visas are mostly for tourist and commercial purposes.

Now, to invest in Panama you need these visas:

  • Visas from Friendly Countries of Panama: there is a list of 50 friendly countries from Panama, mostly from North America and Europe. Where residents of these countries can apply for this visa to establish professional and economic relations. To start a new business, acquire an existing business or be hired to work in a Panamanian company.
  • Economic Self Solvency Visa: this is applicable for foreigners who invest a minimum sum of three hundred thousand US dollars. Through the acquisition of real estate property (without mortgage), or through a certificate of deposit in a Bank of Panama, or that the combination of both achieves the aforementioned amount.
  • Visa for Investor in Agriculture: this is granted to foreign investors who invest a minimum amount of sixty thousand dollars in a personal capacity or through a legal entity, in the agricultural sector of Panama, or in the Aquaculture business.
  • Small Business Investor Visa: to obtain this visa the foreigner will need to invest a minimum amount of one hundred sixty thousand dollars in any legitimate new business or in the establishment of a new company.
  • Visa for Investor in the Tax Free Processing Zone: this visa is given to the foreigner on condition that he rents a plot of land, an office, or a building within one of Panama’s new tax-free zones. In order to operate a business in Panama that exports its products.
  • Reforestation Visa: this is granted to foreigners who invest on their own account or through any legal entity in activities of reforestation or authorized forest plantation, of at least five hectares, and who invest a minimum amount of eighty thousand US dollars.

If you require more information about visa procedures you can check in Panama Offshore Services.

Types of companies that you can open in Panama.

  • Individual Company
  • Business Society:
    • Panamanian General Association
    • Panamanian Limited Liability Company
    • Panamanian Civil Society
  • Anonymous society
  • Foreign Corporation
  • Simple Partnership
  • Limited Partnership by Shares

Those are all types of companies in Panama, but foreigners often prefer to open the following:

  • Business Society: is a company formed by one or more people to start a new business. There are three types of business partnership in Panama:
    • Panamanian General Association: it is where the partners have criminal and civil responsibilities, if one of them is fraudulent during the execution of business on behalf of the company.
    • Panamanian Limited Liability Company: it can be made up of two to 20 members from any country. The capital can range from USD 2,000 to USD 50,000.
  • Public Limited Company or Offshore Corporation: it is a company of two or more persons, which must be legally registered in the Public Registry of the government. In addition, is required to issue corporate shares, and keep a board of directors of at least three executives. These companies are exempt from the payment of interest income tax or capital gain in the transactions of purchase and sale of securities. These must be constituted with capital exceeding USD 10,000.
  • Foreign Public Limited Company: it is for foreign companies that want a headquarters in Panama, these must be registered in the Commercial Registry of Panama. Which must present:
    • A certificate of constitution authenticated by the Consul of Panama or apostilled.
    • Protocolized deed of the charter.
    • The copy of the last financial balance and certification of the capital that will be used in Panama.

It is worth mentioning that foreigners cannot become medical doctors or veterinarians, lawyers, engineers, architects, or open a retail business.

Similarly, foreigners are requested to be legal residents for at least ten years before becoming real estate agents or insurance brokers.

You can also buy and invest in companies already established and operating in Panama. For this you must get a good seller, an excellent lawyer and a notary public, all from Panama.

Steps to open a company in Panama.

  1. Hire a recognized law firm in Panama.
  2. The law firm must be responsible for drafting the articles of incorporation of the company, which contains the following aspects:
    • The name of the Public Limited Company
    • Name and address of subscribers
    • Object of the company’s activity
    • Initial share capital, amount, distribution and classes of the shares, among others.
    • Expected duration of the company
    • Name and address of directors and delegates
    • Name and address of the resident agent
  3. Make the registration before the notary public and the Public Registry of the government, this will issue a certificate with a serial number.
  4. Obtain the Commercial License from the Ministry of Commerce and Industry of Panama, or notice of operations. Corporations or offshore corporations that do not promote their industrial or commercial activity within Panama, are not required to obtain commercial licenses to act outside the country.
  5. Register the company in the single RUC Taxpayer Registry, before the General Directorate of Revenue.
  6. Open the corporate bank account in Panama.
  7. Enroll the company in the Ministry of Labor and Labor Development and workers in Social Security.
  8. AMPYME Registry: it consists in certifying a document that expresses the corporate benefits of the company, in relation to taxes with business projects. This registration is made with a payment of approximately USD 150,000, which allows businesses to enjoy a tax exemption in the first two months.

If you wish to expand this information, you can consult the Ministry of Commerce and Industry of Panama.

The taxes in Panama.

First in Panama, taxes must be declared and paid at the General Directorate of Revenue. According to the periodicity, rates and conditions required by taxation in this country.

Among the taxes we have:

  1. Direct taxes:
    • Income tax: is the one where the only taxable income is that derived within the territory of Panama, for the calculation there are factors such as deductions, the complementary tax, the single rate and the operation notice. Which determine the final amount of this tax.
    • Dividend or profit distribution tax: when the company wants to distribute the profits, the General Directorate of Income retains them between 10% or 20%, depending on the type of shares held by the company.
    • Capital gains tax (capital gains): the standard rate of this tax is 10% of the gain from the sale.
    • Real estate taxes: Applies to the value of the land and all the improvements recorded. The standard property tax rate starts at a value of USD 30,000 to USD 50,000 with a rate of 1.75% between USD 50,000 and USD 75,000 the rate is 1.95%, and all valued at more than USD 75,000 at a rate of 2.1%.
  2. Indirect taxes:
    • Tax on the transfer of movable and service goods (ITBMS): it is paid monthly and its rate is 7%.
    • Remittance tax: when making remittance transfers abroad, where income was received in Panama, the rate is 50%. There are specific cases in the Tax Code, which are exempted from this tax.
  3. Municipal Taxes: rates and fees, as well as taxable income, depend on each jurisdiction in Panama. It is paid to the Municipal Treasurer on a monthly basis.
  4. Label Tax: this tax is annual and is paid within the first three months of the year and can be up to USD 30, depending on the economic activity of the company.

In conclusion Panama is a country that offers many possibilities to invest, only you must have a high amount of money for investment. But profits are beneficial in the short term.

I recommend that you advise in depth with Panamanian law firms and that you personally attend the procedures, since this country is sometimes characterized by fraud and scams.


So Dare to Invest in Panama.


I hope it has been very useful.
Atte .: Mariajosé.
If you liked this post and want to support me you can do it through my PayPal link: paypal.me/cheche17.

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The Financial Freedom Online Forums Dare to invest in Panama -how to open a company

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    Mariajosé Bravo
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