Legal Forms of Business in Panama: Pick the Right Structure in 2026

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You want a legal home for your business in Panama – for local clients, for holding assets, or for running an international service. This guide compares the main structures in 2026, what each costs, how each is taxed, and when a Panamanian company creates more problems than it solves.

Panama legal forms of business in 2026: the key figures

Is this guide for you?

Read on if you…

• live in Panama, or plan to, and want to invoice or hold assets through a company;
• sell to Panamanian clients and need a local structure;
• are comparing a Panamanian company with one in your home country.

Probably not your case if you…

• live in a high-tax country and want a Panamanian company to avoid tax there – your home rules will usually tax it anyway;
• only freelance for foreign clients from Panama, where staying a sole trader is often simpler.

Which business structures exist in Panama?

Persona natural (sole trader)

You trade in your own name with a tax number (RUC) and, for local activity, a business notice on Panamá Emprende. No company costs. Your Panamanian-source profit is taxed at the personal scale: 0% up to USD 11,000, then 15% and 25%. Liability is unlimited.

Sociedad anónima (SA)

The workhorse. An SA needs at least two subscribers to incorporate, a board of at least three directors and three officers (president, secretary, treasurer). Directors can be any nationality and live anywhere. Shares are registered; bearer shares are effectively abolished.

Sociedad de responsabilidad limitada (SRL)

A limited liability company under Law 4 of 2009. It needs at least two partners and is managed by one or more administrators. It is more flexible than an SA, but less familiar to foreign banks.

Sociedad de emprendimiento (SE)

Created by Law 186 of 2020 for small entrepreneurs. One person can form it, often online through AMPYME, the small business authority. Micro and small companies can benefit from a temporary income tax exemption in their first years.

Branch of a foreign company

A foreign company registers in the Public Registry and appoints a local agent. The branch pays 25% on its Panamanian-source profit, and remittances of profit carry the dividend-style tax.

How do they compare?

Setup costs are market estimates for lawyer and registry fees, not official fees.

What does running a company in Panama really cost each year?

1. Franchise tax of about USD 300, due each year to keep the company in good standing.
2. Registered agent fee, usually USD 250–600 a year.
3. Accounting records, kept and copies delivered to the registered agent under Law 254 of 2021. Even offshore-only companies must comply.
4. Beneficial owner reporting through the registered agent to the private registry created by Law 129 of 2020.
5. Corporate return, due within three months of year end, if the company has Panamanian-source income.

Costs you can deduct are covered in our business expenses in Panama guide. Rates and filing are in our Panama corporate income tax guide.

Where is your company really taxed?

Here's the catch. A Panamanian company is taxed where it is managed and where its people work, not only where it is registered.

If you live in another country and run the SA from your laptop there, that country can treat the company as resident through its place of effective management – basically where key decisions are really made. Your work there can also create a permanent establishment, a taxable presence of the company in that country.

Add controlled foreign company (CFC) rules, and Panama's place on the EU list of non-cooperative jurisdictions, and payments from a Panamanian company can be costly in your home country. A Panamanian company works best when you genuinely live and manage it in Panama.

Planning a structure across countries? Heavnn's business setup service looks at entity, residence and management together.

Common mistakes (and what they cost)

• Running a Panamanian SA from your home country → it can be taxed there as resident, plus penalties for unreported income.
• Ignoring Law 254 accounting records → fines and possible suspension of the company's rights in the Public Registry.
• Opening without a bank plan → many banks take months to onboard new SAs, so invoices sit unpaid.
• Selling to local clients without a business notice → fines from the municipality and the DGI, and taxes on the unregistered income.
• Letting the franchise tax lapse → surcharges and, after repeated non-payment, the company is struck off.

Frequently asked questions

What is the best company type in Panama for a foreigner?

For most foreign founders, the sociedad anónima. It has no minimum paid-in capital, directors can be any nationality, it can be run remotely through a registered agent, and banks know it well. If you only sell locally as one person, a sole trader registration or a sociedad de emprendimiento is cheaper.

Does a Panamanian company pay tax on foreign income?

No. Under the territorial principle, a Panamanian company pays 25% corporate income tax only on Panamanian-source profit. Foreign-source profit is not taxed in Panama. Dividends paid from foreign-source profit carry a 5% dividend tax, and dividends from local-source profit carry 10%.

How long does it take to set up an SA in Panama?

Usually one to three weeks. The registered agent drafts the articles, they are signed before a notary and filed with the Public Registry. Getting a tax number is quick. Opening a bank account is the slow part and can take one to three months, depending on the bank and your profile.

Can a non-resident own and run a Panamanian company?

Yes. There are no nationality or residence requirements for SA shareholders or directors. But if you run it from another country, that country may tax it as resident or through a permanent establishment. Owning a Panamanian company does not make you a Panamanian tax resident.

What are the annual costs of a Panamanian company?

Expect about USD 300 in franchise tax, USD 250 to 600 in registered agent fees, plus accounting. If the company operates locally, add the business notice tax and bookkeeping for the corporate return. All in, a simple SA usually costs USD 1,000 to 3,000 a year.

Is Panama still on tax blacklists?

Panama left the FATF grey list in 2023, but it has remained on the EU list of non-cooperative jurisdictions for tax purposes in recent reviews. That can mean extra reporting or defensive measures on payments to Panamanian companies from EU countries. Check the latest update before choosing a structure.

Related guides

• Panama corporate income taxes
• Business expenses in Panama
• Panama tax landscape overview
• Panama tax incentives for expats and digital nomads
• Legal forms of business in Paraguay
• Legal forms of business in Mexico
• All country tax guides

Sources

• Registro Público de Panamá – Public Registry
• Panamá Emprende – business notice portal
• Dirección General de Ingresos (DGI) – Panama tax authority
• AMPYME – Autoridad de la Micro, Pequeña y Mediana Empresa
• Gaceta Oficial de Panamá – official gazette
• Council of the EU – EU list of non-cooperative jurisdictions
• PwC Worldwide Tax Summaries – Panama (secondary cross-check)

This guide is general information, not personalised tax advice. See how we research and review.