Comparison
| Criterion | Corporation (S.A.) | Limited liability company (S.R.L.) | Private interest foundation |
|---|---|---|---|
| Law | Law 32 of 1927 | Law 4 of 2009 | Law 25 of 1995 |
| Who forms it | Two or more persons at incorporation; in practice it can end up with a single shareholder | Two or more partners, natural or legal persons | One or more founders |
| Governing body | Minimum three directors and officers president, secretary and treasurer; one person may hold several posts | At least one administrator | Foundation council of three members, or one legal entity; optional protector |
| Capital or endowment | No paid-in minimum; standard practice of 10,000 dollars authorised | Participation quotas with no legal minimum | Initial endowment of at least 10,000 dollars |
| Securities | Registered shares; bearer shares must be held in custody since Law 47 of 2013 | Participation quotas; transfer per the articles | No shares; beneficiaries designated in a private regulation |
| May trade | Yes | Yes | Not habitually; may own shares and assets |
| Annual flat fee | 300 balboas | 300 balboas | 350 on registration and 400 in following years |
| Privacy | Shareholders not in the Public Registry; beneficial owner in a private register | Partners appear in the Public Registry | Beneficiaries in an unregistered private regulation |
| Typical use | Holding, business with investors, international structure | Local operating SME, joint venture with few partners | Succession, asset protection, holding shares |
What all three share
- Mandatory resident agent, who must be a lawyer or law firm in Panama, whose address appears in the articles or foundation charter.
- Accounting records kept for five years and delivered each year to the resident agent by 30 April, under Law 52 of 2016 as amended by Law 254 of 2021, with fines of 5,000 to 1,000,000 dollars for non-compliance.
- Beneficial owner registered by the resident agent in the private system of the Superintendency of Non-Financial Subjects, under Law 129 of 2020, with suspension of corporate rights if not done.
- Registration in the Public Registry in one to two weeks, per the official incorporation procedure for companies and foundations.
- Territorial taxation: only income produced in Panama pays income tax, at 25% for legal entities; a company with no local operations pays no income tax, but does pay the flat fee, the resident agent and record-keeping.
When each one suits
Corporation
It is the default vehicle for anyone operating in Panama with investors, for holding a property or account in an entity’s name and for structures receiving dividends from abroad. Its three directors can be the same person in different posts or nominee directors from the firm. To operate locally it also needs the operating notice, obtained online for 55 balboas and paying an annual tax of 2% of capital, minimum 100 balboas. Panamanian-source dividends carry a 10% withholding and foreign-source ones 5%.
Limited liability company
It suits when partners are few, know each other and want to avoid a board structure. Partners and their quotas appear in the Public Registry, which gives transparency towards banks and counterparties at the cost of less privacy. Transferring quotas usually requires the other partners’ consent, which makes it impractical if investors are expected to join.
Private interest foundation
It is not for invoicing; it is for passing assets, whether company shares, real estate or accounts, to beneficiaries according to a private regulation, without probate. The founder can also be a beneficiary and reserve powers; the protector oversees the council. Its assets outside Panama are exempt from Panamanian taxes. The usual “foundation owning a company” combination is what many families use to separate operations from wealth.
The vehicle that does not exist and the one that does
Panama has no single-member company and no simplified joint-stock company. The closest is the entrepreneurship company under Law 186 of 2020, amended by Law 451 of 2024: between two and ten resident natural persons, standardised articles, exemption from the flat fee and income tax for two years, and a revenue cap of one million balboas a year. It is a vehicle to start a local business, not to structure wealth nor for non-resident foreigners.
Choosing badly is costly: a foundation that invoices loses its nature, an S.R.L. that wants investors must convert and a forgotten corporation accumulates fees, fines and suspension. Corporation registrations fell 38% between 2018 and 2024 according to the Public Registry, partly due to higher compliance costs. A firm that forms all three vehicles for international clients, such as Legal Solutions Panamá, explains on its company formation page which documents the foreign partner provides and which annual obligations they take on from year one.
What nobody has answered yet
- How many companies were registered in 2025? The statistics institute publishes monthly advances; the annual close was not accessible when this guide was written.
- How many active foundations are there? No public figure exists separate from companies.
- What is the minimum official registration cost? The Public Registry publishes online only the upper bands of its capital-based tariff; the base band for 10,000 dollars is not in an official online source.
Frequently asked questions
What is the difference between a corporation and an S.R.L. in Panama?
The corporation has three directors, shares and shareholders who do not appear in the Public Registry; the S.R.L. has at least one administrator, participation quotas and partners registered in the Public Registry. Both pay a 300 balboa annual flat fee.
What is a private interest foundation for?
To hold assets and plan succession without trading: it can own shares, real estate and accounts, and transfers them to beneficiaries under a private regulation. It requires 10,000 dollars of initial endowment and pays 400 balboas a year.
Does a Panamanian company with no operations in Panama pay tax?
It pays no income tax, because the system is territorial, but it does pay the annual flat fee, must have a resident agent, keep accounting records and register its beneficial owner.
Is there a single-member company in Panama?
No. The entrepreneurship company requires at least two resident natural-person partners. A single person can operate with a personal operating notice or form a corporation that later ends up with one shareholder.
Related articles
- How to open a company in Panama
- Offshore company in Panama: requirements and steps
- Private interest foundations: webinar takeaways
- Taxes a company pays in Panama
Sources
- Judicial Branch, Law 32 of 1927 on corporations.
- Justia, Law 4 of 2009 on limited liability companies.
- Justia, Law 25 of 1995 on private interest foundations.
- Judicial Branch, Law 47 of 2013 on custody of bearer shares.
- Fiscal Code, article 318-A on the flat fee.
- Ministry of Economy and Finance, Law 52 of 2016 on accounting records.
- Ministry of Economy and Finance, Law 129 of 2020 on beneficial owners.
- Panamá Digital, incorporation procedure for companies and foundations.
- Official Gazette 25709, Law 5 of 2007 on the operating notice.
- Directorate General of Revenue, dividend tax.
- Official Gazette 30152-A, Law 451 of 2024 on entrepreneurship companies.
- Panamá América, decline in corporation registrations.
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