Investors around the World prefer Panamanian corporations as a consequence of the key advantages they provide for investments. The Panamanian corporations represent a significant instrument frequently employed for modern commercial activities such as legal affairs, fiscal issues, insurance matters, etc.
Since the year 1927, the Republic of Panama has a special law regarding corporations. The Panamanian Company Law encompasses all the important aspects pertaining to this type of moral person, without making distinction amid the place were the company carries out its’ activities or amid the source of it’s income, this is to say, the Panamanian Law does not distinguish amongst “in-shore” and “off-shore” companies. Panama has been able to invigorate and to ameliorate the corporation Law throughout time by means of decrees and ordinances; managing to keep intact it’s simplicity. The Panamanian Company Law respects the principle of free will in private matters, and it is materialized in the Articles of Incorporation of each company.
The Panamanian fiscal system is based on the principle of territoriality, this is to say, every company, be it Panamanian or foreign, which carries out activities and/or obtains income from a Panamanian source is subject to every applicable fiscal regulation and to the payment of a fixed annual tax of US$300.00 dollars of the United States of America payable as of the year of its incorporation and of US$300.00 payable as of the second year of its incorporation. On the other hand, those companies which do not carry out activities within the Panamanian territory and which do not obtain income from a Panamanian source, are only subject to the payment of a fixed annual tax of US$300.00 dollars of the United States of America payable as of the year of its incorporation and of US$300.00 payable as of the second year of its incorporation.
It is important to point out that the fees and expenses arising from the incorporation of a Panamanian company and of its further continuation are economical and accessible to everyone and that the registration fees are determined according to the amount of its stock capital.
The Panamanian Company Law is simple and practical, enabling the uncomplicated constitution of a company, its administration and/or its modification. On an equal basis, the Law enables the redomiciliation of a company to or from Panama by means of a simple procedure.
Panama defends the client-attorney privilege as long as the issues arising from each particular case are in accordance with the Law, public order and with the good moral habits. The attorneys are obliged to know their clients and to dispose of sufficient mechanisms to identify them.
Two or more persons, from any nationality, with or without domicile in the Republic of Panama, may create a Panamanian corporation, for the accomplishment of any lawful objective, having to comply solely with the conditions required by the Law. It is important to mention that the constitution of a corporation is a commercial act, reason for which the persons who constitute it (“the subscribers of the Articles of Incorporation”) need to have full legal capacity and they shall be able to dispose liberally of their assets.
The Articles of Incorporation may be subscribed in the Republic of Panama or in any part of the world and said document may be prepared in any language.
The formalities required by the Panamanian Law for the incorporation of a corporation are:
Once all of the above mentioned formalities have been accomplished, the document has to be presented to a Notary Public of the Republic of Panama, who will prepare a Public Deed based on the document, which is afterwards registered in the Panama Public Registry. The corporation will deploy its effects in relation to third parties as of the moment of its registration in the Panama Public Registry.
José Juan Marquez
Juan Pablo Fábrega Polleri