PANAMA S.A.
One of the World's Most Powerful Corporate Structures.
The Panama Sociedad Anónima has been the foundation of international corporate planning for nearly a century. Zero tax on foreign-sourced income. Complete ownership flexibility. No minimum capital requirement. Incorporated in days.
What It Is
The Panama Sociedad Anónima, abbreviated S.A., is a corporation governed by Law 32 of 1927, one of the oldest and most sophisticated corporate frameworks in the world, modeled after Delaware corporation law. It is the most commonly used legal structure for international business formation in Panama and is the vehicle of choice for international traders, holding companies, asset protection structures, and globally mobile entrepreneurs.
Panama now hosts over 400,000 registered businesses, and after being removed from the FATF grey list in October 2023 and the EU's list of high-risk countries in March 2024, Panama enters 2026 as a fully compliant, internationally recognized offshore jurisdiction combining its traditional tax advantages with modern regulatory credibility.
The Core Advantages
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Panama taxes only income earned within its borders. If your company generates revenue entirely from activities outside Panama, that income is exempt from local corporate tax. The only mandatory annual payment for a purely offshore company is the Annual Franchise Tax of USD 300 to the General Directorate of Revenue.
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You can appoint corporations as directors, hold meetings anywhere, and design share classes however you like. No local directors or shareholders are required, so you maintain complete control.
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There is no requirement to deposit capital at the time of formation. The company can be formed and fully operational without parking funds in Panama.
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Beneficial owner details stay with your registered agent rather than appearing in public records. Panama's legal framework supports reasonable confidentiality balanced with modern KYC and AML standards.
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Panama doesn't require a physical office, local employees, or in-country operations. Your company can exist purely as an international vehicle while maintaining full legal standing.
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Panama uses the US dollar as legal tender, which eliminates currency risk for dollar-based transactions.
The Structure
A Panama S.A. requires a minimum of three directors, who can be of any nationality, individual or corporate, and need not reside in Panama. One shareholder is required, with no nationality restrictions. A licensed Panamanian registered agent is mandatory. Bearer shares must now be immobilized with a custodian for AML compliance, consistent with international standards.
Ongoing Compliance
Annual obligations include a USD 300 franchise tax, maintenance of accounting records for a minimum of five years per Law 254 of 2021, and updating the Ultimate Beneficial Owner registry. Penalties for non-compliance under Law 254 of 2021 start at USD 5,000 and can reach USD 1,000,000. Advisory No.9 manages all ongoing compliance as part of its annual registered agent service.
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US citizens and residents forming Panama companies remain subject to US reporting obligations including Form 5471 for controlled foreign corporations, FBAR for foreign bank accounts exceeding USD 10,000, and Form 8938 under FATCA. A Panama S.A. that is not properly reported in the US can create significant tax exposure rather than solving it. Advisory No.9° coordinates with US-qualified tax professionals as part of every corporate engagement involving American clients.
Advisory No.9 acts as a coordination servicae and is not authorised to practise law or provide legal, tax, or financial advice. The contents of this website are for informational purposes only and do not constitute advice of any kind.