FAQ’s

FAQ: Company Formation in Panama

The cost of starting a company in Panama can vary based on the type of company you wish to establish. On average, incorporating a business such as a Sociedad Anónima (S.A.) can range from $1,500 to $3,000 for initial setup, which includes government fees, legal services, and registration costs. Annual maintenance fees for registered agents and taxes typically range between $500 to $1,200 per year.

To establish a company in Panama, the process involves several steps:

  1. Choose the type of company you want to incorporate (e.g., Corporation (S.A.), Limited Liability Company (LLC), or Foundation).
  2. Draft and sign the Articles of Incorporation, which outlines the structure of the company, including shareholders and directors.
  3. Register the company with the Public Registry of Panama.
  4. Obtain a Tax ID (RUC) for tax purposes.
  5. Open a corporate bank account in Panama to manage business finances.


It is recommended to consult a legal advisor or company formation specialist to ensure compliance with local regulations. BOOK A FREE CONSULTATION WITH OUR LOCAL SPECIALIST.

Yes, foreigners can fully own and operate businesses in Panama without needing a local partner. Panama encourages foreign investment, and foreigners enjoy the same rights as Panamanian citizens when it comes to business ownership. However, certain professions, such as law and medicine, are restricted to Panamanian nationals.

Panama is a popular jurisdiction for company formation due to its tax benefits, privacy laws, and strategic location. Some of the main reasons companies choose Panama include:

  • Zero tax on foreign-sourced income: Companies that generate income outside of Panama are exempt from local taxes.
  • Confidentiality: Panama has strict privacy laws that protect the identities of shareholders and directors.
  • Efficient corporate structure: Incorporating a company in Panama is a straightforward process with minimal bureaucracy.
  • Strategic location: As a central hub for trade and shipping, Panama offers excellent logistical advantages for international businesses.

In Panama, the most common types of companies are:

  • Corporation (Sociedad Anónima, S.A.): Ideal for businesses that require limited liability and flexibility in management.
  • Limited Liability Company (LLC): Offers limited liability to its owners and a more flexible structure.
  • Private Interest Foundation: Often used for asset protection and estate planning purposes.

The process of forming a company in Panama is relatively fast. It typically takes between 5 to 10 business days to complete the incorporation process, provided all necessary documents are in order.

No, you do not need to be physically present in Panama to form a company. Most of the process can be handled remotely through a registered agent or legal representative. However, you will need to provide proper identification and documentation.

Panama offers significant tax benefits for businesses:

  • No tax on foreign-sourced income: If your company earns income outside of Panama, it will not be subject to Panamanian taxes.
  • No capital gains tax on shares of a Panamanian company sold by non-residents.
  • Low annual corporate maintenance fees: These are relatively low compared to other jurisdictions.

Yes, Panama is considered one of the best jurisdictions for forming offshore companies due to its flexible corporate laws, tax neutrality on foreign income, and high level of confidentiality. It is a preferred choice for businesses and individuals looking to protect their assets and reduce tax obligations.

FAQ: Opening a Bank Account in Panama

Yes, foreigners can open bank accounts in Panama. However, the process can be more complex than in some other countries due to strict anti-money laundering regulations. To open an account, you will need to provide various documents, such as proof of identity, financial history, and a reference from your home bank. Each bank in Panama may have different requirements, so it’s essential to check with the specific bank you are interested in.

The cost to open a bank account in Panama varies by bank. Typically, there is no opening fee, but most banks require a minimum deposit to open an account, which can range from $300 to $1,500 or more, depending on the type of account. Some banks may also charge monthly maintenance fees, which can range from $5 to $50, depending on the services and balance maintained.

Panama is a popular choice for opening bank accounts due to several factors:

  • Financial privacy: Panama has strong banking secrecy laws, offering account holders a high level of confidentiality.
  • Stable banking system: Panama’s banks are known for their stability, with strict regulatory oversight ensuring that banks operate with low risk.
  • International banking services: Many people open accounts in Panama to access a wide range of international banking services, including multi-currency accounts and wealth management.
  • Tax advantages: While Panama is not a tax haven, it offers certain tax advantages, such as no tax on interest earned from foreign income.

Opening a business bank account in Panama involves several steps, and you will need to gather the required documentation:

  1. Choose a bank: Panama has many local and international banks, so it’s essential to find one that meets your business needs.
  2. Provide company documents: You’ll need to present the company’s Articles of Incorporation, the Tax Identification Number (RUC), and proof of the company’s legal structure.
  3. Submit personal documentation: The business owners or directors will need to submit passports, proof of address, and references from their home bank.
  4. Initial deposit: Most banks require an initial deposit to open the account, typically ranging from $1,000 to $5,000 depending on the bank.
  5. Application review: The bank will review your application, which can take several days to a few weeks, depending on the complexity of the business.

To open a personal bank account, you will generally need the following:

  • Passport (with a valid visa, if applicable)
  • Proof of address (a recent utility bill or lease agreement)
  • Bank reference letter from a bank where you currently hold an account
  • Proof of income or financial statements, such as tax returns or a letter from your employer
  • Personal reference letter (from a Panamanian or a trusted contact)

The process of opening a bank account in Panama can take anywhere from 1 to 4 weeks. This varies depending on the bank’s review process and whether all required documents are submitted correctly. Some banks may expedite the process for higher-value accounts or businesses.

Panama does not impose strict controls on the international transfer of funds. Account holders can transfer money internationally with ease, though some banks may have fees for wire transfers. Additionally, all transfers are subject to international anti-money laundering regulations, meaning banks may request documentation for large transactions.

While some banks may allow remote account opening, many require you to visit Panama in person to complete the process. A physical presence ensures that all required documents are correctly verified and submitted. However, hiring a local attorney or representative can sometimes streamline the process if you’re unable to be present.

FAQ: Why Invest in Panama?

Yes, investing in Panama is considered highly worthwhile by many due to its stable economy, strategic location, and favorable investment climate. The country has shown consistent GDP growth and offers a welcoming environment for foreign investors. Key sectors such as real estate, logistics, tourism, and finance provide strong opportunities for return on investment. Additionally, Panama’s US dollar-based economy and investor-friendly legal framework make it an attractive option for both individuals and businesses seeking a secure and profitable market.

People invest their money in Panama for several reasons:

  • Tax advantages: Panama offers a territorial tax system, meaning only income generated within the country is subject to taxes, while foreign-sourced income is tax-exempt.
  • Financial privacy: Panama’s strict banking confidentiality laws make it a favored destination for individuals and corporations seeking financial privacy.
  • Political and economic stability: Panama’s stable government, low inflation, and growing economy provide a safe and reliable environment for investment.
  • Strategic location: As a global hub with the Panama Canal, the country offers excellent logistics and trade opportunities for businesses looking to expand internationally.

Setting up a company in Panama is attractive for several reasons:

  • Tax efficiency: Companies that generate income outside Panama are not subject to local taxes, making it a tax-efficient jurisdiction for international businesses.
  • Ease of incorporation: The process to incorporate a business in Panama is straightforward, with minimal bureaucratic hurdles, allowing companies to be set up quickly.
  • Confidentiality: Panama’s corporate laws protect the privacy of company directors and shareholders, offering a high degree of anonymity.
  • Global business hub: Due to its central location and international reputation, Panama is a key logistics and trade hub, making it ideal for businesses with global operations.

Buying in Panama, especially in the real estate sector, offers numerous benefits:

  • Growing real estate market: Panama’s real estate market continues to grow, with increasing demand for both residential and commercial properties, offering potential for capital appreciation.
  • Affordable property prices: Compared to other countries in the region, Panama offers relatively affordable property prices, particularly in key areas like Panama City and beachside communities.
  • Retirement haven: Panama is known as a top destination for retirees, offering the Panama Pensionado Program, which provides retirees with various benefits, including discounts on utilities, healthcare, and entertainment.
  • Rental income opportunities: Many foreign investors buy properties in Panama as income-generating assets, particularly in popular tourist areas where demand for short-term rentals is high.

Panama offers lucrative investment opportunities in a variety of sectors:

  • Real Estate: Panama’s real estate market is diverse, with options ranging from beachfront properties to urban condos and commercial real estate.
  • Logistics and Shipping: Thanks to the Panama Canal, the logistics and shipping industry is one of the most critical sectors in the country’s economy.
  • Tourism: With its growing popularity among travelers, Panama’s tourism sector is thriving, making investments in hotels, resorts, and related services profitable.
  • Banking and Finance: Panama is a global financial center with a robust banking sector that attracts international investors.

Like any investment destination, there are risks to consider:

  • Market fluctuations: Although the economy is stable, certain sectors, such as real estate, can experience fluctuations in prices.
  • Regulatory changes: While Panama is known for being investor-friendly, changes in local regulations could impact certain tax or investment benefits.
  • Due diligence: It’s essential to conduct thorough research or work with local experts to navigate the legal and financial systems correctly.

FAQ: Tax Law in Panama

No, foreign-sourced income is not taxed in Panama. The country operates on a territorial tax system, which means that only income earned within Panama is subject to taxation. If you’re a resident or business generating income from outside of Panama, that income is exempt from Panamanian taxes, making it an attractive jurisdiction for expats, retirees, and international businesses.

No, Panama City is not tax free, but Panama does offer various tax benefits for residents and businesses. Panama operates a territorial tax system, meaning only income generated within the country is taxed. However, within Panama City and other parts of the country, there are taxes on income earned locally, property taxes, and VAT (value-added tax) on goods and services. Additionally, certain areas such as special economic zones (e.g., Colón Free Zone) offer tax exemptions or reductions to encourage investment and trade.

Panama has entered into double taxation treaties with various countries to prevent businesses or individuals from being taxed twice on the same income. These treaties ensure that income earned in Panama is not taxed again in the country of residence of the taxpayer, or vice versa, depending on the agreement terms. Panama has tax treaties with countries including the United States, Canada, Mexico, Spain, and others. These agreements cover taxes on income, capital, and in some cases, estate taxes.

The annual tax in Panama varies depending on the type of income and property:

  • Corporate income tax: Companies generating income in Panama are subject to a 25% corporate income tax on local earnings.
  • Personal income tax: For individuals, the income tax rate is progressive, with a maximum rate of 25% on income earned within Panama. However, foreign income is not taxed.
  • Property tax: Property owners in Panama pay property taxes based on the value of the property. There are exemptions for properties valued under $120,000, and rates typically range from 0% to 1% depending on the property’s value.
  • Sales tax (ITBMS): Panama has a 7% value-added tax (VAT), called ITBMS, on most goods and services, with exceptions for certain items like food and medicine.

Yes, Panama is known for its Pensionado Program, which offers retirees significant tax and lifestyle benefits. While foreign income, such as pensions or investments, is not taxed, the Pensionado Visa also grants retirees discounts on healthcare, utilities, entertainment, and other services. Additionally, there are exemptions on import taxes for personal items like household goods.

Capital gains on the sale of real estate in Panama are taxed at a rate of 10%. However, there is also a 3% advance payment on the sale price of the property, which can be deducted from the final capital gains tax. For stock sales, the capital gains tax is 10% of the gain from the sale of shares.

Businesses operating in Panama are subject to:

  • Corporate income tax at a rate of 25% on local income.
  • Dividend tax: A 10% tax on dividends distributed to foreign shareholders and a 5% tax on dividends for domestic shareholders.
  • VAT (ITBMS): Companies are required to collect and remit a 7% VAT on sales of goods and services.

No, Panama does not impose inheritance, estate, or gift taxes. This makes it an attractive destination for wealth planning and asset protection.

FAQ: Immigration Law in Panama

Immigrating to Panama involves meeting certain residency visa requirements, which vary depending on the visa type. Common visas include the Friendly Nations Visa, Pensionado Visa, and Business Investor Visa. General requirements include a valid passport, proof of financial solvency, a criminal background check, and a health certificate. Specific visas may have additional requirements, such as proving a source of income or investment.

To move to Panama permanently, you can apply for permanent residency through one of several visa programs, such as the Friendly Nations Visa, which is popular for individuals from over 50 countries. After living in Panama for 5 years as a permanent resident, you may also apply for Panamanian citizenship. Some investment visas, such as the Business Investor Visa or Real Estate Investor Visa, also provide pathways to permanent residency.

The amount of money required depends on the visa type. For example:

  • The Friendly Nations Visa requires at least $5,000 in a Panamanian bank account.
  • The Pensionado Visa requires proof of a $1,000 monthly pension.
  • The Investor Visa requires a minimum investment of $300,000 in real estate or other government-approved sectors.

Tourists from most countries can stay in Panama for up to 90 days, though citizens from some countries may be eligible for stays of 180 days. For those who wish to stay longer, applying for a residency visa is necessary. Tourists who overstay may face fines or restrictions on future entry.

While Panama offers various residency visas, obtaining citizenship can be more challenging. After holding permanent residency for 5 years, you can apply for naturalization. The process involves proving continuous residence, demonstrating ties to Panama, and passing an interview in Spanish. Dual citizenship may be allowed depending on your home country’s policies.

People invest in Panama due to its favorable tax laws, financial privacy, and political stability. Panama’s territorial tax system exempts foreign-sourced income from local taxes, making it an attractive destination for expats and investors seeking tax efficiency. Additionally, Panama’s banking system provides high levels of confidentiality.

Panama is a prime destination for establishing companies due to its favorable tax system, low bureaucracy, and global business reputation. Businesses that generate income outside of Panama are exempt from local taxes, making it a tax-efficient jurisdiction for international business owners. Panama also offers strong financial privacy laws and access to global markets due to its strategic location.

An expat with a residency visa can stay in Panama indefinitely, as long as they maintain their residency status. Expats with tourist visas can stay for 90 to 180 days, depending on their nationality. For longer stays, applying for a residency visa is essential.

Panama operates a territorial tax system, meaning only income earned within Panama is subject to taxation. Foreigners do not pay taxes on income generated outside of Panama. However, if they generate local income or own property in Panama, they may be subject to income tax (up to 25% for local income) or property tax (0% to 1% depending on the property value).

Yes, Panama is considered a great country to immigrate to due to its high quality of life, affordable cost of living, excellent healthcare, and welcoming expat community. The country’s stable economy, tropical climate, and strategic location make it ideal for retirees, investors, and professionals looking for new opportunities.

Panama is known for its high quality of life, combining modern conveniences with a low cost of living. Expats are attracted to Panama for its affordable healthcare, safe living environment, diverse landscapes (from beaches to mountains), and active expat communities in cities like Panama City and towns like Boquete. Additionally, the country offers numerous benefits for retirees through the Pensionado Program, making it a top destination for long-term living.

FAQ: Government Contracts in Panama

The easiest government contracts to secure in Panama often include small-scale public procurement projects, such as contracts for goods and services like office supplies, maintenance, and IT services. These contracts typically have less competition and lower barriers to entry. Businesses that have pre-established relationships with government agencies or participate in specific minority or local supplier programs may have an advantage when applying for these contracts.

Panama is known for its stable political environment, with a functioning democratic government and regular elections. The current political situation is generally favorable for business and investment, with the government focusing on infrastructure development, trade, and foreign investment. While there are occasional protests related to labor and economic policies, the overall political climate remains conducive to government contracting and business opportunities.

The best place to find government contracts in Panama is through the Panama Compra portal, the official government procurement platform. This platform publishes public tenders, including opportunities for goods, services, and infrastructure projects. Additionally, businesses can network with local government agencies or participate in trade shows and industry events to learn about potential contract opportunities.

Panama is divided into provinces, not states, and the capital city, Panama City, offers the most lucrative and diverse government contracting opportunities due to its status as the political and economic center of the country. Most large-scale infrastructure projects, public services, and governmental operations are based in Panama City. However, there are also opportunities in provinces like Colón and Veraguas, particularly for construction, agriculture, and trade-related projects.

In Panama, the most common types of government contracts are fixed-price contracts. These are typically used for public procurement of goods, services, and construction projects. In a fixed-price contract, the contractor agrees to deliver a product or service for a predetermined price, regardless of the actual costs incurred during the project. This type of contract provides predictability for the government and is straightforward for contractors.

A fixed-price contract can be riskier for contractors, especially if the project’s costs exceed initial estimates. Contractors must absorb any additional expenses, which can impact profitability. Additionally, cost-reimbursable contracts with poorly defined scopes can also carry risk, as contractors may face difficulties in getting reimbursed for unexpected costs, leading to financial instability. It is essential for contractors to carefully assess the scope and terms of the contract before committing.

C-type contracts refer to definitive contracts that are fully described and executed between the contractor and the government. These contracts typically include detailed terms, pricing, and delivery schedules and are often used in the procurement of goods and services. In Panama, C-type contracts might be used for projects like infrastructure development, public services, or purchasing equipment for government use.

  • A BOA (Basic Ordering Agreement) is a written understanding between the government and a contractor that outlines terms and conditions for future orders of goods or services but does not guarantee any specific quantity or obligate funds upfront. It serves as a framework for easier contracting in the future but does not constitute a formal contract until an order is placed.
  • An IDIQ (Indefinite Delivery, Indefinite Quantity) contract is a type of contract that provides for an undefined quantity of goods or services during a specified period. The government can issue multiple task or delivery orders under the IDIQ contract, up to a maximum limit. Unlike a BOA, an IDIQ obligates the government to order a minimum quantity during the contract period, providing more assurance to the contractor.

  • Small businesses can improve their chances of securing government contracts by:

    • Registering with Panama Compra and ensuring all necessary certifications and documentation are up to date.
    • Focusing on niche markets where there may be less competition.
    • Building relationships with government agencies and participating in local supplier programs.
    • Collaborating with larger companies as subcontractors to gain experience in government contracting.

Businesses that win government contracts in Panama may benefit from tax incentives, particularly if the contracts are related to infrastructure development, technology innovation, or export services. Specific tax incentives can include exemptions from import duties on equipment and tax deductions for certain project-related expenses. Contractors should consult with a local tax advisor to fully understand the applicable tax benefits.

FAQ: Real Estate in Panama

Yes, foreigners can buy property in Panama with the same rights as Panamanian citizens. There are no restrictions on foreign ownership, making it an attractive destination for international real estate investors. Foreign buyers are welcomed, and Panama’s property laws are very favorable, providing security and a straightforward process for non-residents to invest in real estate.

Please email us with your specific question or requirements at info@panamalifeinvestment.com and one of our agents will get in touch with you within 24 hours.

Absolutely! Panama is considered one of the best places for real estate investment in Latin America due to its growing economy, stable political climate, and strategic location. Whether you’re looking for residential properties, vacation homes, or rental investments, Panama offers high returns on investment, especially in popular areas like Panama City, Coronado, and Pedasí. Check our listing for options.

Please email us with your specific question or requirements at info@panamalifeinvestment.com and one of our agents will get in touch with you within 24 hours.

While buying property in Panama is generally safe, it’s essential to be aware of potential risks, such as:

  • Unclear Title: Ensure the property title is clear and free from disputes by working with a trusted lawyer or real estate agent.
  • Maintenance and Infrastructure: Some rural areas may have underdeveloped infrastructure, so it’s important to assess the property’s accessibility and maintenance costs.
  • Currency Exchange: Panama uses the US dollar, so fluctuations in foreign exchange rates could impact international buyers from countries with other currencies.


Please email us with your specific question or requirements at info@panamalifeinvestment.com and one of our agents will get in touch with you within 24 hours.

Yes, foreigners can live in Panama either by obtaining residency or through tourist visas. Panama offers several residency programs, including the Friendly Nations Visa and Pensionado Visa, which are especially favorable for retirees and investors. These programs make it easy for foreigners to relocate and enjoy the benefits of living in Panama.

Please email us with your specific question or requirements at info@panamalifeinvestment.com and one of our agents will get in touch with you within 24 hours.

Yes, moving to Panama can be a great decision for those seeking a lower cost of living, a favorable tax environment, and a relaxed lifestyle. Expats enjoy the benefits of Panama’s tropical climate, affordable healthcare, and high-quality real estate market. The Pensionado Visa makes Panama especially attractive for retirees looking to stretch their retirement savings.

Please email us with your specific question or requirements at info@panamalifeinvestment.com and one of our agents will get in touch with you within 24 hours.

In general, Panama is considered safer than Mexico. Panama has a stable government, lower crime rates, and is generally regarded as one of the safest countries in Latin America. However, as with any country, safety can vary by location, so it’s important to research specific areas when considering a move.

Please email us with your specific question or requirements at info@panamalifeinvestment.com and one of our agents will get in touch with you within 24 hours.

Both Costa Rica and Panama offer attractive options for expatriates, but they have some differences:

  • Cost of Living: Panama generally has a lower cost of living than Costa Rica, especially in housing and healthcare.
  • Infrastructure: Panama has more developed infrastructure, especially in Panama City, where modern amenities are widely available.
  • Residency Programs: Panama’s residency programs, like the Friendly Nations Visa, are considered easier to obtain than those in Costa Rica.


Ultimately, the choice depends on your personal preferences and lifestyle.

Please email us with your specific question or requirements at info@panamalifeinvestment.com and one of our agents will get in touch with you within 24 hours.

Yes, Panama is considered a safe destination for retirees. With a low crime rate, stable political environment, and high-quality healthcare, Panama has become one of the top retirement destinations in the world. Additionally, the Pensionado Program offers retirees excellent benefits, including discounts on healthcare, travel, and dining. Check out our retirement programs here!

Please email us with your specific question or requirements at info@panamalifeinvestment.com and one of our agents will get in touch with you within 24 hours.

We offer a wide variety of properties, from beachfront homes to city apartments and luxury villas. You can view our current listings here. For any specific inquiries about a particular property, feel free to contact our specialist or check our list of available properties for more information.

Please email us with your specific question or requirements at info@panamalifeinvestment.com and one of our agents will get in touch with you within 24 hours.

Yes, we have a range of properties available in Pedasí, known for its beautiful beaches and tranquil lifestyle. You can view our listings here.

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Yes, we offer a variety of properties in Coronado, one of Panama’s top coastal destinations for expats and vacationers. You can explore our Coronado listings here, including beachfront homes, luxury villas, and condos.

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Absolutely! Altos del María is known for its stunning mountain views and cooler climate. We have a selection of homes and lots available for purchase in this peaceful, nature-filled area. You can view our Altos del María listings here.

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Yes, San Carlos offers beautiful beachfront properties ideal for both vacation homes and long-term investment. You can browse our San Carlos beachfront listings here to find the perfect spot by the ocean.

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We do! Casco Viejo is a vibrant historical district that blends old-world charm with modern luxury. You can explore our Casco Viejo properties here, from colonial homes to modern apartments.

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Yes, Punta Pacifica is one of the most luxurious areas in Panama City, known for its high-rise condos with stunning ocean views. You can view our available condos in Punta Pacifica here.

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Yes, we feature listings in Playa Caracol, a growing beach destination perfect for vacation homes and investments. Check out our Playa Caracol properties here.

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Certainly! El Valle de Antón is a beautiful mountain town known for its cooler climate and serene environment. We have several El Valle de Antón properties available for sale, ideal for nature lovers and retirees.

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Yes, we offer a variety of properties in Gorgona, ranging from beachfront condos to family homes. Gorgona is a great location for those seeking a more relaxed beach lifestyle near Panama City.

Please email us with your specific question or requirements at info@panamalifeinvestment.com and one of our agents will get in touch with you within 24 hours.

Yes, Clayton is a popular residential area with beautiful homes and proximity to international schools and embassies. You can view our listings in Clayton here.

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