Panamanian corporations thus serve businessmen, investors, or foreign companies for making savings on tax payments.
An offshore corporation may open bank accounts in or outside Panama and own property located outside Panama without having to pay taxes in Panama for this.
BENEFITS AND ADVANTAGES OF PANAMANIAN OFFSHORE CORPORATIONS
▪No obligation to pay income tax when its income is obtained from a source outside Panama. So, no income tax will be paid for offshore operations or activities.
According to Panama Tax Laws, no income tax is paid for the following corporate activities:
a. Invoicing the sale of goods and merchandise through a Corporation’s office in Panama at a price greater than the one invoiced to the corporation in Panama for the same goods or merchandise, as long as those products or goods stay out of Panama;
b. Directing, through a Corporation in Panama, transactions that will become effective, consummate or perfect outside Panama; and
c. Distributing dividends and participations from Panamanian Corporations or other juridical persons when income is not produced in Panama, including the above mentioned situations.
▪Maintenance costs, including annual corporate taxes and resident agent fees are only USD 550.00
▪Stockholders may be Panamanians or foreigners and may even be Panamanian or foreign corporations
▪No nationality or residence requirement for the Panamanian corporations’ Directors and Dignitaries
▪Meetings of the stockholders assembly or the Board of Directors may be held anywhere in the world and can be held via telephone, fax, email or any other electronic method
▪Corporate assets or capital of a Panamanian corporation may be kept outside Panama
▪Panamanian corporations may have any licit objectives and carry out any commercial or industrial activity. Corporate objectives do not need to be explicitly expressed in the Articles of Incorporation, while Panamanian Law on Corporations allows having general corporate objectives.
▪One person alone can be owner of 100% of the corporate stocks comprising the entire corporate capital of a Panamanian offshore corporation, after its incorporation and registration.
INCORPORATION OF PANAMANIAN CORPORATIONS
Panamanian corporations may be incorporated in just three days.
For the incorporation of a Panamanian corporation, Law 32 of 1927 requires the celebration of an agreement between two or more persons of legal age, who are required to subscribe at least one corporate stock, each, without consideration to their nationality or domicile. This agreement, called Articles of Incorporation, must be done before a Notary Public in Panama, who transcribes it in a Public Deed. The Deed must then be inscribed or registered in the Public Registry.
To facilitate this incorporation process, usually two persons from our Law Firm in Panama would sign the required agreement and after registering the corporation, these two persons issue and sign a resignation to all their rights and interests in the corporation as subscribers of the Articles of Incorporation.
The Articles of Incorporation will reflect the terms and conditions agreed and, after its registration in the Mercantile Section of the Public Registry, this document will be effective against third parties as well. Law No. 32 of 1927 on Corporations, in many aspects, works only as a secondary source of rules.
As ordered by law, the Articles of Incorporation must, at least, contain the following information:
▪Name of the Corporation
▪Name and domicile of the subscribers of the corporation
▪Corporate Capital (a description of the amount, if the corporation has par value or non par value stocks, number of stocks, distribution, classes, etc.)
▪Duration of the corporation, which can be perpetual
▪Name and complete address of directors and dignitaries
▪Name and address of the Resident agent
CORPORATE CAPITAL OF PANAMANIAN CORPORATIONS
Panamanian corporations are not required to have a paid capital to be valid after its incorporation and these corporations may issue nominative or bearer stocks. When corporate stocks are issued to the bearer, share in the corporate capital corresponding to those stocks issued to the bearer is presumed paid.
Any kind of person, a natural person or other corporation or company, can become a holder or owner of the corporate stocks, with no need for having legal residence or being present in the Republic of Panama. Any nominative stock may be issued in favor of more than one person.
TAX BENEFITS OF PANAMANIAN CORPORATIONS
Panamanian Corporations are subjected to a territorial tax system, a regime that only requires payment of taxes for operations done or considered done within the territory of the Republic of Panama. Under Panamanian Tax Law, commercial operations executed, taking place, or taking effects outside Panama will be considered offshore and are not taxable, without considering that these operations may be managed or directed from an office located in Panama. Except for the annual corporate tax in the amount of USD 300.00 that all corporations and private interest foundations must pay, there would be no other tax obligations for Panamanian offshore corporations.
CORPORATE ANNUAL TAX IN PANAMA
Panamanian corporations have the obligation to pay annual corporate taxes in the amount of USD 300.00, while only the first annual tax is USD 250.00.
For corporations registered between January and June, June 30 of each year, will be the deadline for the annual tax payment, while for corporations registered between July and December, December 31 will be the deadline for paying annual corporate taxes. For this purpose, registration date is that of the inscription in the Public Registry, as written in the stamped seal at the end of the Articles of Incorporation.
Corporate taxes not paid on time will have a USD 50.00 overcharge for each year due and a USD 300.00 fine for delays of two or more annual tax payments.
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