Form a Panamanian IBC Introduction
A Panama IBC is popular with foreigners. The Republic of Panama enacted its corporation law in 1927 which governs the formation and activities of Panama International Business Companies.
Background
Panama is a Central American country. Its official name is the “Republic of Panama”. It is bordered by Colombia (in South America) to the southeast, Costa Rica to the west, the Pacific Ocean to the south and the Atlantic Ocean & Caribbean Sea to the north. Its total land area is 28,600 square miles (74,100 square kilometers). Panama City is its capital and largest city is home to nearly half of the country’s 4.2 million people.
With help from the U. S., Panama seceded from Colombia in 1903. The Panama Canal was built by the U.S. Army Corps of Engineers between 1904 and 1914. In 1977 an agreement was signed for the total transfer of the Canal from the United States to Panama by the end of the 20th century, which culminated on 31 December 1999.
Panama is an independent, sovereign state, run by an elected presidential government. Globally, it has earned the reputation as being one of the best business and financial centers in the world. The economy in Panama is both growing quickly and currently boasts of having the biggest income per capita found in Central America.
Panama Corporation Benefits
Panama corporation has some benefits including:
- Tax Free Income: Panama is a territorial tax country where only income and profits earned doing business within its territory are subject to corporate and income taxes. However, U.S. citizens and others residing in countries who tax worldwide income are required to declare all income to their tax authorities.
- Privacy: Panama does not list the names of shareholders or owners in its public records.
- Bearer Shares: For additional privacy, Panama corporations can issue bearer shares to further protect the identity of their shareholders. Bearer shares only have the name “Bearer” on the stock certificates which makes the real owner anonymous. However, in 2013, Panama enacted a law requiring all bearer shares to be held by an authorized custodian which could be a bank, an attorney, a brokerage firm, or a fiduciary on behalf of the actual owner.
- World’s Second Most Popular Offshore Corporation Location: Panama has more than 500,000 corporations, making it the second most popular location to incorporate in the world after Hong Kong.
- One Shareholder: Only one shareholder is required to incorporate in Panama.
- No Annual Meetings: No annual general meeting is required for corporations formed in Panama.
- No Minimum Authorized Share Capital: Panama corporations are not required to have a minimum authorized share capital.
- No Reporting: Offshore corporations are not required to submit corporate reports to the Panamanian Government. Furthermore, the records the corporation maintains can be kept anywhere in the world. There is also no formal record keeping requirement.
- U.S. Dollar: Ever since Panama’s independence in 1903, the U.S. Dollar has been its official currency.
- Low Renewal Fees: The $300 USD annual renewal fee for Panamanian corporations is one of the most affordable in the world. In addition there will be a registered agent fee.
- Banking Secrecy: It is a criminal offense (a felony) for any bank employee to disclose any type of information of bank account holders including verifying someone has an account.
- Fast Incorporation: When all required documents are filed, it typically takes five business days to be registered as a corporation. However, for an extra $250 USD, this process can take one day.
- Easy Permanent Residency: Citizens of 50 countries considered “friendly” can obtain fast track permanent residency leading to citizenship for the immediate family.
Panamanian Law
Panama corporations must select a unique name, in any language, that does not match the names of any already existing corporations. This name needs to also end with Corporation, Incorporated, Sociedad Anonima, Corp., Inc., or S.A.
Office Address and Local Agent
A Panama corporation can have a corporate address anywhere in the world. However, the corporation must have both a registered office address located in Panama, as well as an approved agent residing in Panama for process service and official notices.
Shareholders
Panama corporations are required to have at least one shareholder. Nominee shareholders are allowed for privacy, and shares can be held by either private individuals or legal entities. There are no residency requirements.
Directors and Officers
Panama corporations are required to have three directors/officers (President, Secretary and Treasurer). The directors/officers can be either persons or legal entities. The directors and officers can be the same three persons or legal entities. Panama corporations’ directors, officers and shareholders may be residents of any country. The directors’ names must be filed in the public registry when the corporation is formed. However, nominee directors are permitted for privacy.
Authorized Capital
Panama corporations are not required to have a minimum authorized share capital.
Panama Tax Haven Benefits
One of the reasons corporations in Panama are so popular for both offshore business operations and global asset protection is because Panama does not require them to pay income, dividend, or capital gains tax on money earned outside of Panama. However, U.S. citizens and others residing in countries taxing worldwide income are required to declare all income to their tax authorities. One of the important tips to note is that U.S. people are taxed on worldwide income. So, even if there are no taxes in Panama, a U.S. person is expected to report the income.
Renewal Fees
Corporations in Panama are required to pay annual renewal fees which cost $300 USD plus the company service and registered agent fees.
Public Records
The Public Registry Office does not require corporations to file the names of shareholders and owners, so this information never becomes available to the public. However, the Articles of Incorporation do require names and addresses of the directors to be listed, so this information is open to public record. However, nominee directors are permitted in Panama for privacy.
Accounting and Auditing Requirements
There are no statutory requirements of accounting and audits for Panama corporations. It’s totally up to the corporate directors, what kind of records they would like to keep.
Annual General Meeting
No annual general meeting is required for corporations formed in Panama.
Time Required for Incorporation
When all required documents are filed, it typically takes five business days to be registered as a corporation. However, for an extra $250 USD, this process can take one day.
Shelf Corporations
Purchasing a shelf company for faster incorporation is allowed in Panama.
Conclusion
Panama offers many benefits to its corporations including: tax free income for doing business outside its borders, privacy for owners and shareholders from public records, bearer shares for additional privacy to shareholders, only one shareholder required to incorporate, no annual meetings, no authorized share capital, no reporting or submitting records to the government, U.S. Dollar economy, low annual renewal fees, banking secrecy, fast incorporation, easy permanent residency for citizens of 50 nations, the world’s 2nd most popular offshore corporation jurisdiction.
