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Overview
Panama has been seen for years as one of the most popular offshore jurisdictions, nonetheless we think this jurisdiction needs a careful consideration to make sure it meets the Clients' needs
From the past few years, Panama has changed its legal framework to meet international standards.
At a Glance
Legal System
Civil Law
Taxation
0% on Foreign-Sourced Income
Privacy Level
Mid level. Not totally private.
Shareholders
2 Minimum
Currency
USD
FAFT List
Not on the List
Remote Opening
Yes
Economic Substance
Required to certain companies
Taxation of a Panama Offshore Company
0% Income Tax on Foreign Sourced Income: Panama has a territorial tax system, hence Foreign Sourced Income is not subject to taxes in Panama, unless that foreign sourced income is earned by Panamanian Multinational Company earning Passive Income that does not have Economic Substance in Panama.
If the Multinational company earning passive income does not comply with its Economic Substance Requirement, it will be deemed a Non Qualifying Company and will pay taxes on this foreign sourced income at a 15% tax rate.
Local Sourced Income: the tax rate on local sourced income is 25%
Economic Substance Requirement
Effective January 1st 2027, Multinational Panamanian companies will be subject to economic substance requirements. This new ESR was set under Law 526 of May 28th, 2026
The law applies only to those companies that meet the following three requirements:
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Companies incorporated or domiciled in Panama;
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That belong to a multinational group; and
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That receive foreign-source passive income.
Purely domestic Panamanian companies are generally unaffected.
Requirements to Open a Panamanian Company
Corporate Considerations
All Offshore Companies in Panama are created by a Public Deed signed before a Notary Public and registered in the Public Registry.
A minimum of 2 shareholders are required to open a Company
Bearer shares: allowed under custody.
Remote opening:
Opening a Panamanian Offshore Company can be done remotely via two ways, either through a Power of Attorney, or by opening the company initially under the name of the third parties.
KYC/AML
Owners and company officials must provide certified passport copies and proof of address, along with their Resumé (CV) and proof of source of wealth, as part of the KYC/AML procedure.
Privacy of a Panama Offshore Company
Panama Offshore Company privacy is a key element when choosing an offshore jurisdiction. Panama has implemented global transparency standards to have a better international reputation, making some information like the Constitution Deed, Directors, Officers (President, Secretary, Treasurer) accesible to the public for free and online, while other information like the UBO is only accessible to authorized governmental institutions.
Check out our full Privacy Insight on Panama Offshore Companies
Who should Open an Offshore Company in Panama?
A Panama Offshore Company is a good option for those looking to form an active trading company without being too careful or worried about corporate structure privacy.
A Panama company can be used by any entrepreneur, digital nomad, professional services provider, crypto companies, real estate holding companies, shipping businesses, investment holding companies,etc.
Nonetheless, the option to open a Panama Company has to be well assessed having in consideration the specific business line and operations, tax situation, banking and privacy needs of the owner.
For example, Panama has been marketed for many years as a good option for holding companies (holding shares of subsidiaries), but now these companies in Panama are required to have a minimum level of Economic Substance in Panama, in addition Privacy to having to add extra layers to protect the officers privacy from public records (hence, a higher expense), that’s why a Panama Company viability has to be assessed on a case-by-case basis.
Free Zone Company in Panama instead of an Offshore Company
If you want to establish presence in Panama and profit from the local and international economy, and/or move your tax residency to Panama, a Panama Free Zone Company can be a better option instead of a Panama Offshore Company.
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Export.
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Digital businesses and professional services
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Consulting Services.
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Better Banking Access
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Real Office in Panama
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Moving your tax personal tax residency in Panama.
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Residency visa for the Owner and Family Members
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Providing services inside or outside of Panama.
