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Contents of this guide
What an offshore company in Panama is and what it is not
An offshore company in Panama is a corporation incorporated under Law 32 of 1927 whose operations, assets and clients are located outside Panamanian territory. The law does not distinguish between “local” and “offshore” companies: it is the same legal vehicle, and what changes is where it generates its income. If the activity takes place outside Panama, that income is not taxed in the country.
The firm Legal Solutions Panamá, which incorporates companies for foreign clients, defines it as a “company incorporated in Panama that can be used for international activities, investment, e-commerce, digital services or wealth structures outside Panamanian territory”. That definition matches the criterion of the Directorate General of Revenue: the company exists in Panama, but its business does not.
What a Panamanian offshore company is not: it is not a bank account (opening an account is a separate procedure and is not guaranteed), it is not a secret vehicle (since 2020 beneficial owners are registered with the Superintendency of Non-Financial Subjects) and it is not a way to evade taxes in the owner’s country of residence, who remains obliged to declare under their own laws.
Why Panama is still chosen
Panama keeps four structural advantages, on top of an expanding economy: the country closed 2025 with more than three million visitors and double-digit tourism growth, as reported in Radar Panamá’s analysis of tourism. Those advantages explain why, according to the Public Registry, there are more than 200,000 registered companies in the country and in 2024 alone 7,697 corporations and general partnerships were registered. None of those advantages depends on a sales pitch: they are in the law.
Territorial system
Article 694 of the Tax Code taxes only income produced within Panamanian territory. Foreign-source income pays no income tax in Panama.
Dollarised economy
Panama has used the US dollar as legal tender since 1904. There is no exchange risk or exchange control for operating internationally.
No minimum paid-in capital
The standard authorised capital is 10,000 dollars in 10,000 shares, and Law 32 does not require it to be paid in on incorporation.
Remote incorporation
Subscribers and directors can be of any nationality and do not need to reside in Panama. The resident agent handles registration without the owner travelling.
Legal Solutions Panamá sums up the practical reasons its clients choose this structure in four points: international operations with no local activity, separation of personal and business assets, incorporation without travelling and operations in dollars. The same firm warns, however, that “tax convenience depends on the individual assessment of each case”, a nuance worth keeping in mind before taking any saving for granted.
Legal requirements under Law 32 of 1927
Law 32 of 26 February 1927 remains in force almost a century later and sets simple requirements: two or more adult subscribers, articles of incorporation with the minimum content the law demands, three directors, three officers and a resident agent. The company takes effect against third parties only from its registration at the Public Registry.
| Requirement | What the law demands | Practical detail |
|---|---|---|
| Subscribers | Two or more adults, of any nationality, domiciled in Panama or not | In practice they are usually two lawyers from the firm who then transfer the shares to the real owner |
| Directors | At least three, of any nationality | Their names appear in the Public Registry and are publicly searchable |
| Officers | President, secretary and treasurer | The positions can be held by the same person |
| Resident agent | A lawyer or law firm licensed in Panama | Mandatory. Responsible for due diligence and the beneficial ownership records |
| Articles of incorporation | Name, purpose, capital, shares, domicile, directors and resident agent | The name must carry S.A., Inc., Corp. or an equivalent and not match another registered company |
| Authorised capital | Free. Standard of 10,000 dollars in 10,000 shares of 1 dollar | It does not need to be paid in |
| Registration | Articles notarised and registered at the Public Registry | Without registration, the company does not exist against third parties |
Step by step to incorporate it
The process is always led by the resident agent, because the law reserves that role for Panamanian lawyers. The timeframe depends, according to Legal Solutions Panamá, “on the documentation available, the review of the case and the services included”. With complete documentation, the procedure at the Public Registry is usually resolved in days, not weeks.
- Client due diligence. The resident agent collects identification, proof of address, source of funds and a description of the activity. It is a prior legal requirement, not a formality.
- Name check. Availability is checked at the Public Registry. The name must include an ending that indicates a corporation.
- Drafting of the articles of incorporation. They define purpose, capital, shares, directors, officers and resident agent. Most firms use a broad purpose that allows any lawful activity.
- Notarisation and registration. The articles are raised to a public deed and registered at the Public Registry of Panama. From that moment the company exists.
- Issue of shares and corporate books. Share certificates are issued and the share register and minute book are opened.
- Registration of the beneficial owner. The resident agent has 15 working days from registration to record the beneficial owner in the system of the Superintendency of Non-Financial Subjects.
- Bank account opening, if applicable. It is an independent procedure. Legal Solutions Panamá makes it clear in its own guide: account opening “is not guaranteed and depends on each bank’s due diligence”.
Obligations many people ignore
Incorporation is the easy part. Since 2016 Panama has added transparency obligations that turn the company into a structure with real annual maintenance. Anyone who ignores them is exposed to fines, suspension of corporate rights and, in the worst case, dissolution.
| Obligation | Rule | Deadline | Penalty for non-compliance |
|---|---|---|---|
| Flat annual fee to the State | Tax Code (Law 61 of 2002) | Every year, according to registration date | Surcharges and, with prolonged arrears, suspension of corporate rights |
| Beneficial ownership registry | Law 129 of 2020 | 15 working days from incorporation or change of agent | 1,000 to 5,000 balboas to the resident agent for an omitted or late registration |
| Accounting records and supporting documentation | Law 52 of 2016 and Law 254 of 2021 | Delivery to the resident agent every 30 April, as of the previous 31 December | 5,000 to 1,000,000 balboas and possible suspension of corporate rights |
| Resident agent in place | Law 32 of 1927 and Law 23 of 2015 | Permanent | Without an agent, the company becomes inactive and may be dissolved |
| Economic substance for multinationals | 2026 legislation (15% minimum tax) | Applies to multinational groups with high consolidated revenue | Global minimum taxation in Panama |
Law 254 of 2021 was the most demanding change: it requires the accounting records of every Panamanian company, whether or not it operates in the country, to be delivered annually to the resident agent, who must keep them confidentially and make them available to the authority on request. A “dormant” company with no accounts is no longer a legal option.
Panama before the FATF, the EU and the OECD: what changed between 2023 and 2026
The jurisdiction’s reputation weighs as much as the law, because banks and counterparties decide who they deal with according to the international lists. The picture changed substantially in three years: Panama left the grey list of the Financial Action Task Force in October 2023, holds an overall “partially compliant” rating from the OECD Global Forum (second round, 2019), and, since October 9, 2026, is no longer on Annex I of the European Union’s tax list (EU Delegation to Panama).
| Body | List | Panama’s status | Date |
|---|---|---|---|
| FATF | Jurisdictions under increased monitoring (grey list) | Off | 27 October 2023 |
| European Union | List of high-risk countries for money laundering | Off | 2023 |
| European Union | Annex I of non-cooperative jurisdictions for tax purposes | Off | October 9, 2026 |
| OECD, Global Forum | Exchange of information on request | Partially compliant | Second round of review, 2019 |
Felipe Chapman, Minister of Economy and Finance of Panama, on the economic substance and minimum tax law for multinationals (2026)
In May 2026 Panama approved a 15% minimum tax on multinational groups, aligned with the OECD’s Pillar Two, as the centrepiece of its plan to leave the European list. For the typical offshore company, owned by an individual or an SME, that rule does not change taxation, but it does improve the jurisdiction’s standing with banks and business partners.
Common mistakes when incorporating an offshore company in Panama
- Confusing “no taxes in Panama” with “no taxes”. The owner remains obliged to declare in their country of tax residence. Panama has exchanged information automatically under the OECD’s CRS standard since 2018.
- Taking the bank account for granted. Panamanian banks apply strict due diligence and reject structures with no demonstrable activity.
- Forgetting the accounting records. It is the most expensive penalty in the table above and the one most companies breach out of ignorance.
- Confusing a company with an operating business. Anyone who will sell inside Panama needs a Notice of Operation and a RUC, a different process explained in Radar Panamá’s guide to opening a company in Panama; and anyone seeking incentives for international activity with a physical presence should compare the country’s special regimes.
- Choosing the resident agent on price alone. The agent answers to the Superintendency and holds sensitive information. An agent who disappears leaves the company in limbo.
- Using nominee directors without a clear contract. Directors appear in the Public Registry and have legal responsibilities. A written agreement on their powers is advisable.
- Not reviewing the corporate purpose. A purpose that is too narrow forces an amendment to the articles for new activities, at a cost in money and time.
- Not planning for annual maintenance. More guides on incorporation, compliance and legal services in Radar Panamá’s Professional Services & Technology section.
Frequently asked questions about setting up an offshore company in Panama
Does an offshore company in Panama pay taxes?
It pays no income tax in Panama on foreign-source income, under article 694 of the Tax Code. It does pay the flat annual fee to the State and must meet transparency obligations. If it generates income inside Panama, that part is taxed normally.
Is it necessary to travel to Panama to incorporate it?
No. Law 32 of 1927 allows subscribers, directors and shareholders to be non-resident foreigners. The resident agent handles registration at the Public Registry with documentation sent remotely.
How many directors does a Panamanian corporation need?
At least three directors and three officers (president, secretary and treasurer), of any nationality. The same person can hold several positions.
Are the owners of a Panamanian offshore company public?
Shareholders are not recorded in the Public Registry, but since Law 129 of 2020 the beneficial owner must be registered with the Superintendency of Non-Financial Subjects, with access for the competent authorities. Directors are publicly searchable.
What is the resident agent and why is it mandatory?
It is the Panamanian lawyer or firm that represents the company before the State, carries out client due diligence, registers the beneficial owner and keeps the accounting records. Without a resident agent the company cannot be registered or kept active.
Is Panama still on any international list?
It left the FATF grey list in October 2023 and the European high-risk money laundering list. On October 9, 2026, EU finance ministers removed it from Annex I of the European Union’s tax list.
Can a bank account be opened with the company?
It is possible, but it is a separate procedure that each bank approves according to its own due diligence. No firm can guarantee it. Real activity, contracts and a documented source of funds help.
What happens if the accounting records are not delivered?
Law 254 of 2021 provides for fines of 5,000 to 1,000,000 balboas and the possible suspension of the company’s corporate rights. Delivery to the resident agent is due every 30 April.
Need legal support to incorporate the company?
Legal Solutions Panamá, a law firm based in Panama City led by Kathia Rivera, with more than ten years of experience and clients from more than 55 nationalities, advises on the incorporation of companies for international operations and acts as resident agent.
Sources
- Law 32 of 1927 on Corporations, Judicial Branch of Panama.
- Tax Code of Panama, article 694, territoriality principle.
- Law 129 of 2020, beneficial ownership registry, Ministry of Economy and Finance.
- Law 254 of 2021, accounting records, analysis by Icaza, González-Ruiz & Alemán.
- Directorate General of Revenue, questions on the resident agent.
- EU list of non-cooperative jurisdictions for tax purposes, Council of the European Union.
- Jurisdictions under increased monitoring: Panama’s removal from the grey list, Financial Action Task Force (FATF), 27 October 2023.
- OECD Global Forum, Panama review 2019.
- Panamá aplica impuesto del 15 % a multinacionales, Forbes Centroamérica, May 2026.
- Companies registered at the Public Registry, La Estrella de Panamá.
- Crear empresa offshore en Panamá, Legal Solutions Panamá.
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