Starting a Business in Panama as a Foreigner

Panama's Código Fiscal taxes "la renta gravable que se produzca, de cualquier fuente, dentro del territorio de la República de Panamá," taxable income produced, from any source, within Panamanian territory, regardless of where it is received. That is Article 694, and understanding it properly is what separates the people who genuinely benefit from Panama's territorial system from the people who are surprised by their first tax bill. The rule is about where the income is produced, not where the client sits. Get on the right side of it and the system is generous. Assume the wrong side and it is expensive.

That distinction is the single most useful thing to know before you register anything, so this guide starts there, then works through what a Sociedad Anónima actually requires, what it costs to register and keep, and the one business-linked route to residency that Migración publishes directly.

Key takeaways

• Panama taxes income produced within the territory. Código Fiscal, Article 694, Parágrafo 1. The foreign-source exemption in Parágrafo 2 is a short, named list, mainly re-invoicing merchandise that never touches Panama and directing transactions that close abroad. Checked against the Código Fiscal text, August 2026.
• The standard corporate tax rate on Panama-source income is a flat 30%, Código Fiscal Article 699. A blended rate using the personal income-tax table exists, but only for a defined micro, small, or medium enterprise with annual gross revenue under B/.200,000 and shareholders who are natural persons, Article 699-a.
• Dividend withholding is 10%, Article 701(f) and Article 733. The company withholds it and remits it; you do not additionally declare the dividend as personal income.
• A Sociedad Anónima needs a minimum of three directors and a resident agent who must be a Panama-licensed lawyer or law firm. Ley 32 de 1927, Article 2, and Decreto 127 de 1966. There is no minimum capital requirement in the law and no requirement that a director, officer, or shareholder be Panamanian or resident. Foreign, non-domiciled people can form an SA outright, Article 1.
• The annual Tasa Única is a flat B/.300 for a corporation, due 15 July or 15 January depending on when you registered, with a B/.50 late surcharge and, after three years unpaid, suspension and a B/.1,000 reinstatement fine. Direct from DGI's published guidance, checked August 2026.
• Registro Público estimates 1 to 2 weeks to register the company itself, and that estimate covers the registration step alone, before the lawyer's drafting time, the RUC, and the bank account.

The short answer: where your business lands

Two of those rows share a practical consequence worth flagging early: the moment you take an office and put people in it, you have almost certainly created Panama-source income and you definitely need an aviso de operación. That is not a bad outcome. It is simply the version of the plan that comes with premises to rent, staff to hire, and a tax return to file.

What DGI taxes, and what it does not

Article 694 sets the general rule: income produced within Panama is taxable, wherever it is paid or received. Parágrafo 2 then lists what is not considered produced within Panama:

• Invoicing, from a Panama office, the sale of merchandise for more than it was invoiced against that office, provided the merchandise only ever moves outside Panama. This is the re-invoicing exemption that built Panama's trading-company business, goods bought and sold on paper through a Panama entity but never entering the country.
• Directing, from a Panama office, transactions that are completed, consummated, or take effect abroad.
• Distributing dividends from profits produced by either of the above.

That is the exemption in full. It was written for merchandise trading and for transactions closed and executed outside Panama, the classic offshore-intermediary structure, and it is genuinely valuable if that is your business. Trading companies, licensing structures and holding vehicles have used it for decades, openly and legally.

Where people get caught out is the assumption that a foreign client is the qualifying fact. It is not. If a digital agency, a software company, or a consulting practice has its staff sitting in a Panama City office and delivering work from there, the income-producing activity, the labour and the deliverable, happens inside Panama. Article 694's general rule taxes income produced within Panama's territory regardless of who pays for it or from where. Panamanian tax practitioners apply the same test: what matters is where the economic activity generating the income actually occurs.

One caveat to hold onto. We did not find a published DGI ruling addressing this exact fact pattern, a remote-services company operating from Panama with entirely foreign clients, so treat the reading above as informed interpretation of the statute rather than a settled DGI position. If your business sits close to that line, get a written opinion from a Panamanian tax attorney before you build a model on it.

When income is Panama-source, the standard rate is a flat 30% under Article 699. The progressive personal-income table only applies to a company's tax bill if it qualifies as a micro, small, or medium enterprise under Article 699-a: annual gross revenue under B/.200,000, shareholders who are natural persons rather than other companies, and not a subsidiary or fragment of a larger business. That blend applies personal rates to the first B/.100,000 of net taxable income and the corporate rate to the rest, up to the B/.200,000 revenue ceiling. Above that, it is 30% flat.

What it costs to keep the company alive

The spread between the floor and the cap on the aviso de operación tax is the thing to notice. It scales with declared capital, which means the capital figure you put in your founding charter has a running annual cost attached to it, not just a one-off registration fee. Talk that number through with your lawyer before it is filed rather than after.

Registering a Sociedad Anónima: what the law requires

Most foreign-owned Panama companies are Sociedades Anónimas (SA), governed by Ley 32 de 1927. The law's real requirements are short:

• Minimum three directors, named with their addresses in the pacto social, the founding charter. Article 2(9).
• A resident agent, named in the pacto social, whose domicile is on file with Registro Público. Article 2(7). A 1966 decree (Decreto 127) restricts that role to a lawyer or law firm licensed to practise in Panama, which is why every incorporation service is, structurally, a law firm.
• A stated capital amount and share structure, but no legal floor on the amount. Article 2(4) requires the pacto social to state the capital and the number and value of shares, not any minimum. The $10,000 figure you see quoted everywhere is a market convention, chosen because it sits inside Registro Público's lowest registration-fee bracket.
• No nationality or residency requirement for directors, officers, or shareholders. Article 1 explicitly allows people not domiciled in the Republic to form an SA. We found no statutory requirement that any director or shareholder be Panamanian or resident, in Ley 32 or elsewhere.

Registro Público's registration fee is tiered by declared capital: B/.50 minimum on the first B/.10,000, then B/.0.75 per B/.1,000 up to B/.100,000, B/.0.60 per B/.1,000 up to B/.1,000,000, and B/.0.12 per B/.1,000 above that (Resolution 212 of 18 April 2013). A company incorporated with the conventional $10,000 nominal capital pays the B/.50 minimum.

Registro Público's own trámite listing puts registration itself at 1 to 2 weeks, depending on the registry's workload. That is the filing-to-certificate step. It does not include the time your lawyer spends drafting and notarising the pacto social, or the separate steps of getting a tax ID and opening a bank account, all of which run afterward. Plan your arrival around a company that becomes fully operational some weeks after the certificate, and treat any end-to-end promise as an estimate; no government source publishes one.

The Tasa Única, and what happens if you skip it

Once registered, an SA owes an annual Tasa Única of B/.300 to keep its Registro Público entry active, due 15 July for companies registered January through June, or 15 January for companies registered July through December. DGI's published guidance is direct about the penalty ladder: a B/.50 surcharge for late payment, and after three consecutive years unpaid, suspension of the company's corporate rights plus a B/.1,000 rehabilitation fine to restore it. This is a flat fee whether or not the company earned a dollar that year.

Separately, since Ley 254 de 2021 and Decreto Ejecutivo 177 de 2024, your resident agent has an annual filing obligation to DGI: a sworn declaration of accounting records, required in particular for companies that do not operate within Panama or that only hold assets. DGI describes this as a personal, non-delegable obligation of the resident agent. If yours has never raised it with you, ask.

The aviso de operación

A Sociedad Anónima and a business licence are two different registrations. The SA is a legal entity, filed with Registro Público. Actually operating a commercial, industrial, or service activity inside Panama requires a separate notice, the aviso de operación, filed with the Ministerio de Comercio e Industrias (MICI) through its Panamá Emprende platform, under Ley 5 de 2007.

The filing fee is B/.55 for a legal entity. Beyond that, the aviso carries its own annual tax: 2% of the company's declared capital, with a floor of B/.100 and a cap of B/.60,000. That is separate from, and in addition to, the Tasa Única.

Ley 5 de 2007 applies to activities carried out within Panamanian territory, and the application asks for the physical address of the commercial establishment in Panama. A company that exists purely as a Panama SA, with a resident agent's address as its registered domicile and no staff, office, or clients inside the country, sits in unclear territory here; we could not find a MICI ruling on that specific case and will not guess at one. The other direction is clear. If you have a Panama office, staff, or premises, you need the aviso, and that same physical presence is what tends to make your income Panama-source under the territorial test above. Both questions point at the same underlying fact: whether the business really operates inside Panama.

If you want residency through the business itself

The one business-linked residency route Servicio Nacional de Migración publishes directly is the Inversionista de la Macro-Empresa permit, and its requirement sheet sets a specific bar:

• Minimum capital of B/.160,000 per applicant, held as fully paid, nominative shares in the company, with the applicant as a registered shareholder and dignatario.
• A minimum of five Panamanian employees on payroll, earning at least the applicable minimum wage, evidenced by a Caja de Seguro Social payroll filing from within the three months before you apply. If you are budgeting for that payroll, confirm current employer and employee contribution percentages directly with the Caja; we have not verified a current rate here.
• Proof the business exists and operates somewhere: a lease or comparable evidence of physical premises, plus a current aviso de operación.
• A two-year provisional permit first, with permanent residency as a second application (Migración, PPT-IME / PRP-IME requirement sheet).

The legal basis is Decreto Ley 3 de 22 de febrero de 2008 and Articles 185 through 190 of Decreto Ejecutivo 320 de 2008, as modified by Decreto Ejecutivo 26 de 2009. That is a real capital and hiring commitment, and it suits people whose Panama business is the main event. If residency is the actual goal and the business is secondary, our residency guide covers Pensionado, Friendly Nations, and Qualified Investor, none of which depend on running a company or hiring Panamanian staff. A lower-threshold "small business investor" visa is sometimes mentioned in circulation; we searched Migración's own requirement-sheet index and could not confirm it exists, so we are not quoting a figure for it.

Opening a business bank account

Once the company exists, a business account works the way our banking guide describes for individuals: the documentary gate matters more than any deposit minimum. A newly incorporated Panama SA gives you one of the things banks look for as a vínculo con Panamá, a demonstrable link to the country, alongside your incorporation certificate, RUC, and passport. It does not exempt you from the bank's due-diligence questions about the source of funds and the nature of the business, and Banco General's public account pages still list separate documentation for foreign applicants whether the applicant is a person or a company they own.

Which route fits you

• Your business genuinely runs from Panama, with an office and staff. Budget for 30% on Panama-source income, an aviso de operación, and a lease. Then get the premises search started early, because the right commercial space in Costa del Este or Obarrio moves faster than the paperwork does.
• Your business is merchandise trading or transactions that close abroad. You are in the fact pattern Parágrafo 2 was written for. An SA, a resident agent, and the B/.300 Tasa Única may be the whole of your Panama footprint.
• You want the corporate wrapper but will operate from outside Panama. Price the whole picture first: the Tasa Única and a resident agent's annual fee are real costs, and they should be buying you something a company in your home jurisdiction was not already doing.
• Your revenue is under B/.200,000 and the shareholders are individuals. Ask your accountant specifically about Article 699-a before defaulting to the flat 30% in your projections.
• Residency matters more than the company. Start with the residency guide. Friendly Nations and Qualified Investor get you the same right to live here without five employees on payroll.

Whichever row is yours, the sequence is the same: settle where the income is produced, choose the capital figure with its annual cost in mind, and get an independent Panamanian lawyer, not just an incorporation package, reading your specific structure.

Your next step

Almost nobody sets up a company here in isolation. You need somewhere to work, and usually somewhere to live, and those two decisions shape the tax question more than the paperwork does, because premises inside Panama are exactly what makes income Panama-source. Tell us what the business does, roughly when you want to be operating, and whether you are looking for an office, a home, or both. We will come back with the areas that fit, what is actually available, and the questions worth putting to a Panamanian lawyer before you file. That is what the form below is for, and it costs nothing to ask. If your route to living here does not run through the company at all, our residency guide is the better place to start.

Frequently asked questions