Set up a company in Panama.
The Hub of the Americas. US Dollar economy. Panama Canal — ~6% of world trade transits annually. World’s second-largest free trade zone (Colón). SEM Multinational HQ regime (Law 41/2007) at 5% CIT — anchored by P&G, 3M, Dell, Heineken, Maersk, Mitsubishi, Nestlé, Roche, Samsung. Territorial tax system: 25% CIT on Panama-source income only; foreign-source income exempt. Substance reforms underway 2026.
The dominant Panamanian structure is the Sociedad Anónima (S.A.) — Panama’s historic and still most-used corporate form. The Sociedad de Responsabilidad Limitada (S.R.L.) is the less common LLC alternative. For multinationals establishing a regional headquarters, the SEM (Sede de Empresa Multinacional, Law 41/2007) designation sits on top of an S.A. and reduces CIT to 5%. For multinational manufacturing, the EMMA designation (Law 159/2020) provides equivalent treatment.
You execute the bylaws (pacto social) before a Panamanian notary, register with the Public Registry (Registro Público), obtain the corporate identity number (RUC) from DGI (Dirección General de Ingresos), file UBO data with the RUB (Registro Único de Beneficiarios Finales), register for ITBMS where applicable, and complete CSS social security and municipal registrations. Standard S.A. formation runs 2 to 4 weeks — Panama is one of the faster LatAm formation jurisdictions. SEM or EMMA qualification adds 6 to 12 weeks.
Grant & Graham coordinates Panamanian formations through our São Paulo office (our LatAm regional hub, opened 2026) working with senior Panama City counsel — structure selection, notarial deed, Public Registry, DGI/RUC, RUB/UBO compliance, banking, SEM or EMMA qualification where applicable, sector and municipal licensing, and ongoing tax and statutory work. Increasingly, the conversation begins with substance — how the operation will actually run on the ground — given the EU non-cooperative-jurisdiction listing and the substance reforms underway in 2026.
Territorial system. 25% CIT on Panama-source income only. 5% under SEM regime. Substance is now the defining test.
Panama operates a territorial tax system — only Panama-source income is taxed; foreign-source income is generally exempt. Standard corporate income tax: 25%. Where taxable profit exceeds USD 1.5m, the CAIR alternative minimum applies at 4.67% of gross taxable income (the higher of net or CAIR is paid). ITBMS (VAT): 7% standard (10% alcohol/hotels, 15% tobacco). Non-resident WHT: 15% flat on Panama-source income. Annual Franchise Tax (Tasa Única): USD 300/year per entity. 17 double taxation treaties including UK, Spain, France, Netherlands, Luxembourg, Mexico, Singapore, Israel, UAE. The Mulino government is implementing economic substance requirements for multinational passive income and tightening UBO registration during 2026, with the goal of EU non-cooperative-jurisdiction list removal in late 2026 or early 2027.
Other notable items: Personal income tax progressive 0–25%, with USD 11,000 personal allowance. Annual Franchise Tax (Tasa Única) USD 300/year per company payable to Public Registry. No capital gains tax at standard rates — specific rules apply (10% on asset sales, 5% WHT on securities, 3% WHT on real estate). Property transfer tax 2%. RUB (Registro Único de Beneficiarios Finales) mandatory UBO registration. Listing position: removed from FATF grey list October 2023, removed from EU AML/CFT high-risk list March 2024, currently on EU non-cooperative jurisdictions for tax purposes list (Feb 2026 update) — Mulino government targeting removal late 2026/early 2027 via substance reforms.
Nine reasons businesses choose Panama.
Genuine structural advantages — the Canal, the US Dollar economy, hub geography, banking centre, world-class free zones, and the SEM multinational headquarters regime — have anchored a serious operating ecosystem. We build Panama for groups setting up genuine operations with real substance. The 2026 reforms align Panama with the modern compliance environment, and the EU non-cooperative-jurisdiction listing makes substance more important than ever — not less.
The Panama Canal — logistics centrality
The Panama Canal is one of the world’s critical trade arteries — approximately 6% of global trade volume transits annually. Expansion (2016) accommodates Neopanamax vessels. This single structural advantage anchors logistics, shipping, oil/gas, agricultural commodities, and consumer goods supply chains across the hemisphere. No other Central American jurisdiction comes close on this dimension.
US Dollar economy
Panama uses the US Dollar as its circulating currency (the Balboa is legal but exists as coinage at 1:1). There is uniquely no central bank monetary policy. The result: zero FX exposure for USD-denominated operations, no devaluation risk, free convertibility by definition, and a banking system priced and structured in USD. Materially simpler than any other regional jurisdiction for groups doing USD business.
SEM Multinational HQ regime
Sede de Empresa Multinacional (Law 41/2007) provides a 5% reduced CIT rate for qualifying multinational regional headquarters serving 2+ countries. VAT exemption for services exported abroad. Special visa programs for executives. Major take-up across decades: Procter & Gamble, 3M, Adidas, Dell, Heineken, Hyundai, Maersk, Mitsubishi, Nestlé, Roche, Samsung, SAB Miller, Tetra Pak. Real substance required — this is not a paper structure.
Colón Free Zone — world’s #2
The Colón Free Zone (ZLC), established 1948, is the second-largest free trade zone in the world after Hong Kong. Caribbean-side location with port access. Approximately 2,500 companies operating across logistics, re-export, distribution, and trading. Tax exemptions for export operations. The natural distribution hub for goods entering Latin America from Asia, Europe, and the US.
Panama Pacifico & City of Knowledge
Panama Pacífico (former Howard AFB, 2004) is a modern industrial and logistics special economic area with tax incentives, served by adjacent airport and Pacific port facilities. City of Knowledge (Ciudad del Saber, former US Clayton base) is the dedicated technology, research and innovation hub with educational anchors. Both attract sophisticated international occupiers and offer specific incentive packages.
Tocumen — Hub of the Americas
Tocumen International Airport is the largest hub airport in Central America and one of the most important regional connectors in the Americas. 90+ direct destinations across North, South, and Central America and Europe. Copa Airlines operates one of the most extensive hemispheric route networks from here. Materially valuable for service businesses, corporate functions, and regional sales coverage.
International banking centre
Panama’s international banking centre (established 1970) hosts approximately 50 banks operating in USD, serving as a regional financial services hub. Robust private banking infrastructure. The post-Papers reforms (UBO registry, transparency exchange agreements, beneficial ownership disclosure) have substantially upgraded the regulatory framework. Account opening for legitimate substance-based operations is achievable but requires proper documentation.
Fast incorporation, low entity cost
Standard S.A. formation runs 2 to 4 weeks — among the fastest in Latin America. Public Registry processes are efficient. Notary-led structure rather than court-based. Annual Franchise Tax just USD 300 per company. For groups establishing a legitimate operational presence, Panama’s administrative cost base for entity maintenance is one of the lowest in the region.
Compliance reforms aligning with global standards
Substantial work since the Panama Papers era. Removed from FATF grey list October 2023. Removed from EU AML/CFT high-risk list March 2024. Bearer shares prohibited since 2015. UBO/RUB registry implemented. Mulino government’s 2026 substance reforms targeting EU non-cooperative-jurisdictions removal late 2026 / early 2027. The direction of travel is clear — the regulatory environment for substance-based operations has materially improved.
Six legal structures — one usually fits.
For most foreign investors, the practical default is a Sociedad Anónima (S.A.). Multinational regional headquarters typically qualify for the SEM regime on top of an S.A. (5% CIT). Multinational manufacturing groups use EMMA (also 5% CIT). Free zone operations use a standard S.A. registered within Colón FZ or Panama Pacífico. The Private Interest Foundation serves wealth/succession purposes distinct from operating companies. The S.R.L. and the branch serve specific narrow use cases.
Sociedad Anónima
The dominant Panamanian corporate form — the standard for both foreign investment and domestic business. Minimum 2 incorporators (can consolidate to 1 shareholder afterwards). Bearer shares prohibited since 2015. Mandatory board (President, Secretary, Treasurer minimum). Resident agent (typically the law firm) required. Used for operating businesses, holding structures, joint ventures, and as the underlying entity for SEM/EMMA/Free Zone applications.
SEM (Regional HQ)
Special licence on top of an S.A. for multinational groups establishing a regional headquarters serving 2+ countries. 5% CIT (vs 25%). VAT exemption for services exported abroad. Special executive visa programs. Import-tariff exemption on capital goods. Requires real substance: physical office, local staff, decision-making functions. Anchors: P&G, 3M, Dell, Heineken, Maersk, Mitsubishi, Nestlé, Roche, Samsung, Tetra Pak. Qualification 6–12 weeks.
EMMA (Manufacturing HQ)
Special licence for multinational manufacturing operations. 5% CIT. Equivalent exemption package to SEM (VAT, customs, visa programs). Targets the multinational manufacturing footprint that SEM was less optimal for. Real substance required. Qualification process via SEM/EMMA Commission. Particularly attractive for medical devices, electronics, automotive parts, pharmaceutical manufacturing operations serving the wider Americas region. Qualification 6–12 weeks.
Colón FZ / Panama Pacífico Entity
S.A. registered as a Free Trade Zone user in the Colón Free Zone (logistics/re-export, Caribbean side), Panama Pacífico (modern industrial/logistics SEZ, Pacific side near Canal), or City of Knowledge (tech/innovation). Each zone has specific tax incentive packages: CIT exemptions on export income, ITBMS exemptions, customs/import benefits, special visa programs. Use case: logistics, re-export, manufacturing, services exported abroad, technology operations.
Sociedad de Responsabilidad Limitada
The Panamanian LLC. Less commonly used than the S.A. and rarely chosen by foreign investors. Member-based structure (quotas rather than shares). Used by some closely-held local businesses and certain partnership-style structures. For most foreign-invested operations the S.A. is preferable — broader recognition, established practice, simpler precedent on cross-border treatment.
Sucursal de Sociedad Extranjera
Foreign company conducting business in Panama through a registered branch. Public Registry registration. Resident agent required. Taxed at 25% CIT on Panama-source income only (territorial system). Used where parent-level booking is structurally necessary — for most foreign investors, an S.A. subsidiary is preferable due to simplified governance and clearer separation.
Private Interest Foundation
Hybrid trust/foundation vehicle — not an operating company. Used for wealth management, succession planning, asset protection, family office structures. No share-based ownership; managed by a Foundation Council per the foundational charter (estatuto). Subject to UBO disclosure and substance scrutiny. Specialist vehicle — not used for operating businesses. We coordinate via specialist counsel where the use case is appropriate.
Talk to us first
S.A. for almost all foreign-invested operating businesses. SEM regime where the group is establishing a real regional headquarters with substance. EMMA for multinational manufacturing operations. Free Trade Zone entity for logistics, re-export, or tech operations. Foundation only for wealth management with appropriate substance — never for paper holdings. Branch only where parent-level booking is necessary.
Book a call →From decision to live entity.
The end-to-end registration sequence for an S.A. in Panama City, coordinated through our São Paulo office and senior Panama City counsel. Standard timeline 2 to 4 weeks end-to-end for a basic S.A. — Panama is structurally efficient for incorporation. SEM/EMMA qualification adds 6 to 12 weeks. Free Trade Zone qualification adds 4 to 10 weeks depending on the zone.
Structure decision & substance scoping
S.A. (default), S.R.L., Foundation (wealth only), Branch. Special regime layer: SEM (regional HQ, 5% CIT), EMMA (manufacturing HQ, 5% CIT), Free Trade Zone (Colón/Panama Pacífico/City of Knowledge). Substance scoping: physical office, local staff, decision-making functions, accounting locus. Substance is the defining test in 2026.
Foreign shareholder documents & resident agent
Foreign corporate shareholder documents (certificate of incorporation, articles, board resolutions, signatory powers of attorney) must be apostilled in country of origin and officially translated into Spanish by a Panamanian-certified translator. A Panamanian resident agent (typically a Panamanian-registered law firm) is mandatory for every S.A. — this is built into the structure.
Bylaws drafting (pacto social)
Draft the pacto social (bylaws) in Spanish defining corporate purpose (objeto), authorised capital, share structure, governance (President, Secretary, Treasurer minimum), registered office, fiscal year. Bearer shares prohibited since 2015 — all shares registered with UBO disclosure. For SEM/EMMA-bound entities, the corporate purpose is drafted with the special regime activities in mind.
Notarial deed & Public Registry filing
Execute the bylaws as an escritura pública before a Panamanian notary public, who then files the deed with the Registro Público de Panamá (Public Registry). The Registry issues the corporate registration confirmation. Typical timing: 1 to 2 weeks. Public Registry online portal provides good visibility on filing status.
Registro Público →DGI registration, RUC & e-invoicing
Register with the Dirección General de Ingresos (DGI). Obtain the RUC (Registro Único de Contribuyente) corporate tax ID. Register applicable activities. Authorise electronic invoicing — mandatory for Panamanian taxpayers via the SFEP (Sistema de Facturación Electrónica de Panamá). Register for ITBMS where annual revenue thresholds are exceeded.
DGI →RUB — UBO registration
File ultimate beneficial owner data with the RUB (Registro Único de Beneficiarios Finales) via the resident agent system. Mandatory since Law 129 of 2020. Updates required within 15 days of material ownership changes. Non-compliance triggers fines from USD 1,000 to USD 50,000 and the resident agent has personal exposure — the regulatory pressure on resident agents drives strong compliance.
SEM / EMMA / Free Zone qualification (if applicable)
For SEM (Law 41/2007): file with the SEM & EMMA Commission via Ministry of Commerce. Demonstrate multinational status, services to 2+ countries, substance plan. For EMMA (Law 159/2020): equivalent process through same Commission. For Free Trade Zone: application via Colón FZ Administration / Panama Pacífico Agency / City of Knowledge Foundation. Each adds 4 to 12 weeks.
Bank account opening
Open the corporate bank account at a Panamanian bank (Banistmo, Banco General, BAC International, Banco Nacional de Panamá, Multibank, Global Bank). KYC including beneficial ownership disclosure, apostilled and translated foreign shareholder documents, RUC, RUB confirmation, substance documentation (office lease, staff arrangements). USD operating account. Typically 2 to 5 weeks — commonly the longest single step.
Social security & labour registrations
Register with the Caja de Seguro Social (CSS) for social security. Workplace risk insurance. Panama Labour Code applies. Employer social charges approximately 12.25% of gross salary (CSS) plus other contributions. Mandatory 13th-month payment (Décimo Tercer Mes) split in three instalments. Strict labour-code compliance required.
Ongoing tax, statutory & compliance
Annual income tax return due 31 March (calendar tax year). Monthly ITBMS returns (D-15). Monthly CSS payroll filings. Annual Franchise Tax (Tasa Única) USD 300 due in two semesters. Annual UBO/RUB refresh. Annual sworn declaration of net worth. Mandatory e-invoicing. Transfer pricing for cross-border related-party transactions. Substance documentation maintained current. Pillar 2 monitoring for in-scope MNEs.
What it costs to incorporate & run.
All figures are indicative for a standard S.A. in Panama City with one foreign corporate shareholder. Panama is one of the more cost-efficient LatAm formation jurisdictions for the entity itself. SEM/EMMA qualification adds substantial application and substance-build work; Free Trade Zone entities sit between the two.
One-time setup
SEM entity: add €4,500–7,500 for Commission application, substance plan, executive visa coordination — total €8,000–14,000. EMMA equivalent. Free Trade Zone entity: add €2,500–5,000 for zone administration & qualification — total €6,000–11,500. Branch setup €4,000–6,500.
Ongoing monthly / annual
SEM/EMMA entities: additional Commission compliance, executive visa renewals, substance reporting. Free Trade Zone entities: zone administrator fees, annual compliance reporting. Transfer pricing documentation mandatory above thresholds. Pillar 2 monitoring for in-scope MNE groups (€750m+ consolidated revenue).
Get an estimate in 30 seconds.
Three quick questions. We will give you a realistic cost range and timeline for your situation, and route the answers straight into a fixed-price quote request from our São Paulo office.
Which company structure are you considering?
How is the shareholding structured?
What do you need from us?
The legal framework to know.
A summary of the core legislation governing companies in Panama. Substantive work delivered through Grant & Graham’s São Paulo office and senior Panama City legal, tax and accounting counsel.
Corporate Law
- Law 32 of 1927 (S.A. framework)
- Law 4 of 2009 (S.R.L. framework)
- Law 25 of 1995 (Private Interest Foundation)
- Bearer shares prohibited (2015 reform)
Tax Law
- Código Fiscal (Fiscal Code)
- Territorial taxation system
- SEM Law Ley 41 (2007)
- EMMA Law Ley 159 (2020)
Labour Law
- Código de Trabajo (Labour Code)
- Décimo Tercer Mes (13th-month pay)
- CSS social security framework
- Workplace risk insurance
AML / Transparency
- Law 23 of 2015 (AML/CFT)
- RUB beneficial ownership Ley 129 (2020)
- Accounting records Ley 52 (2016)
- Removed FATF grey list (Oct 2023)
Foreign Investment & Banking
- National treatment framework
- Banking Law Ley 9 of 1998
- Superintendencia de Bancos (SBP)
- ProPanama (FDI promotion)
Intellectual Property
- Industrial Property Law Ley 35 of 1996
- Copyright Law Ley 64 of 2012
- DIGERPI (industrial property)
- WIPO & Berne Convention member
Panama, answered.
Four steps from enquiry to live entity.
Discovery call
30-minute conversation to understand your business, sector, substance plan, SEM/EMMA/Free Zone eligibility, EU listing implications for your counterparty footprint, Pillar 2 impact if in-scope. Honest assessment of fit — not all use cases are right for Panama in 2026.
Recommendation
Senior advisory on structure, SEM vs EMMA vs Free Trade Zone vs standard S.A., resident agent arrangements, banking partner, sector licensing, substance design, Pillar 2 modelling. Fixed quote in EUR or USD.
End-to-end formation
Bylaws, notarial deed, Public Registry, DGI/RUC, RUB/UBO, CSS, banking, SEM/EMMA/Free Zone qualification where relevant, sector licensing. São Paulo-coordinated, executed through senior Panama City counsel.
Ongoing support
Retained accounting, monthly ITBMS, payroll/CSS, annual income tax, Tasa Única, UBO refresh, substance documentation, transfer pricing, Pillar 2 monitoring, SEM/EMMA Commission compliance, sector reporting.
Ready to incorporate in Panama?
Tell us in 25 minutes what you need. We will tell you honestly whether Panama is the right fit, which structure makes sense (S.A., SEM, EMMA, Free Trade Zone, Branch), how the EU listing affects your specific counterparty footprint, and what substance the operation needs to be properly defensible — then handle the setup end-to-end through our São Paulo office and senior Panama City counsel.