What You Should Know on How to Register an Onshore Business in Panama
Panama is becoming increasing famous for its business potential throughout the world for the tax benefits it provides. Many big corporates are establishing headquarters in Panama which thus is making Panama the best onshore hub. The banking systems of Panama are intact thus providing effective investment solutions to the foreign investors. Know how to register an onshore business in Panama in easy ways.
The tourism of Panama is growing continuously as more and more businessmen are taking interest in expanding their business in Panama, which is also giving rise to the service sector in this region. Panama has around 500,000 corporate foundations which makes it the world’s second largest jurisdiction of the world, the first being the Hong Kong.
The Panama Canal has contributed widely to the export trade in South America as the ports have access to two big oceans; the Pacific Ocean and the Atlantic Ocean. Panama is a country with full of potential yet a small population of around 4 million, exporting a business of USD 8.8 billion where USA, Japan, Venezuela and Ecuador and Guatemala being the major beneficiaries of export business of Panama. These countries have contributed to a wide list of export items such as passenger and cargo ships, chemical compounds such as sulphonamides and oxygen compounds and some percentage of packed medicines.
The other business prospects apart from the export business in Panama include the fast-growing tourism industry along with the abundance of natural resources available throughout the region. The major centre of attraction of Panama is the America’s largest mall, Albrook mall which is located in Panama boast about the availability of the natural resources in the retail sector.
With growing interest of foreigners in the land of Panama to expand their business, registering an onshore business in Panama is not tough. Following is a list of steps that can guide you to register the business:
Structuring the company and designing a company’s name
Registering a business in Latin America requires a company’s name and legally structuring the company. There are basically two types under which a company can register itself:
- Joint Stock or Corporation Company: The most common category under which the company’s register itself. It is a type of a company where the stalk holders or the share holders take the responsibility of their own investment.
- A Limited liability Company: It is also known as Sociedad de Responsabilidad Limitada S.R.L. protects or insulates you as an investor and thus it will not make you responsible about the company’s debts.
The legal structure of the company must be thoroughly thought about before getting into the registration process as changing the structure of the company, once it has been registered is a time-consuming process.
Deciding the Constitution of the Company
The next process after deciding a company’s name is proper documentation about the company so that there is a written proof about the structure of the company, the address, the board of directors etc. The documents must essentially have the following details:
- Time and frequency of the board meetings
- Agenda or objective of the company
- Record keeping
Drafting the constitution of the company including signing bylaws where it becomes important to share all the information about to the company with the shareholders. As per Panama’s jurisdiction, a new company that is being formed should have at least 2 shareholders, out of which one must be a resident of Panama or should hold Panama’s nationality. Since, every company has a legal representative, a company based out of Panama should have a legal representative from Panama who has all the knowledge about Panama and its legal laws. Finding a right legal representative is an important task which can be accomplished by hiring a local agent who can assist you correctly.
Formal Registration of the company
A formal registration of the company is required so that the company can be verified by the government of the Panama. Registration of the company will make the company to be registered with the tax authorities so that the company can reap the tax benefits of the Panama region. Registering a company in Panama include the following steps:
- It is important to present a copy of the bylaw of the company before the Public Notary so that the company receive a deed. This process may take two to three weeks.
- This company deed which is received must be registered before the Panama’s Public Registry. This registration process can take two to three weeks’ time again.
- The company must further submit the registered documents before the General office of taxation, District of Municipality and to the Ministry of Commerce so that the company can begin its operation. This process may also take up to 2-3 weeks of time.
- The last step in the formal registration of the company is to register the company in the Ministry of the Labour so that the company can receive the security fund of Panama which is important for the employment of the workforce in the near future. This process may take a month.
- The complete registration process of the company is a time-consuming process and it doesn’t require you to be physically present in the Panama.
Opening a bank account in Panama
The last step of the registration process of the company in Panama is opening a corporate bank account which involves the following procedure:
- Get assistance from a local group in Panama
- Choose a bank who can meet all your company’s requirements
- Complete the necessary documentation procedure of the bank
There are around 40+ top Central American bank in Panama offering plenty of investment security and attractive loan opportunities. Some of these banks include Banco General, Bancolombia Panama and Bladex.
The territory system of Taxation in Panama has offered excellent opportunities to the investors as the income generated in Panama will only be taxed.