Anonymous Society (Corporation) (SA)
Sociedad Anónima
Company formation in Panama
The SA is best suited for: International holding structures for assets outside Panama, Latin American trading companies with foreign-source income, Real estate holding (both Panamanian and international property), Companies seeking territorial tax efficiency on foreign-source income, Investment vehicles and family wealth structures, Intercompany trading structures across Latin America. Panama operates a territorial tax system — only income sourced from within Panama is subject to Panamanian income tax at 25%. Foreign-source income (income earned from activities conducted entirely outside Panama) is completely exempt, regardless of whether the funds are remitted to Panama. There is no capital gains tax on foreign-source gains. Dividends paid from foreign-source income are subject to a reduced 5% withholding tax (10% if from domestic-source income). VAT (ITBMS) applies at 7% on domestic goods and services. There is an annual franchise tax (Tasa Única) of $300 for all corporations.
- International holding structures for assets outside Panama
- Latin American trading companies with foreign-source income
- Real estate holding (both Panamanian and international property)
- Companies seeking territorial tax efficiency on foreign-source income
- Investment vehicles and family wealth structures
- Intercompany trading structures across Latin America
Key Facts
Step-by-Step Formation Process
Engage a Panamanian law firm or registered agent
Panama SAs must be formed through a local law firm. The firm acts as the registered agent, prepares the Articles of Incorporation (Pacto Social), and handles all Public Registry filings. Choose a firm with experience in international structures and English-language capability.
Provide KYC documentation and company details
Submit passport copies, proof of address, source-of-funds documentation, and details of the proposed company (name, directors, shareholders, business activities). Panama has strengthened its AML/KYC requirements significantly since the 2016 Panama Papers reforms.
Name search and reservation
The law firm searches the Public Registry (Registro Público) for name availability. The company name must end with "SA", "S.A.", "Corp.", "Inc.", or a similar designation indicating limited liability. Names must be in Spanish or Latin characters.
Draft and notarise the Articles of Incorporation
The Articles of Incorporation (Pacto Social) are prepared by the law firm and notarised before a Panamanian notary public. The document sets out the company name, objectives, authorised capital, board composition, and registered agent. Three directors (minimum) and three officers (President, Secretary, Treasurer) must be named.
File with the Public Registry
The notarised Articles of Incorporation are filed with the Registro Público de Panamá. The Registry assigns a registration number (ficha) and microfilm (rollo) reference. Once registered, the company is legally incorporated.
Obtain the Notice of Operations and tax registration
If the company will conduct business in Panama, it must obtain a Notice of Operations (Aviso de Operaciones) from the Ministry of Commerce and Industry (MICI) and register with the DGI (Dirección General de Ingresos) for tax purposes. Companies operating exclusively outside Panama may not need these registrations.
Required Documents
- Certified passport copy of each director, officer, and shareholder
- Proof of residential address for each individual (utility bill or bank statement, not older than 3 months)
- Source-of-funds documentation
- Professional reference letter (from a lawyer, accountant, or banker)
- Bank reference letter
- Description of intended business activities
- Power of Attorney if formation is handled by a representative
Cost Overview
Tax Treatment
Panama operates a territorial tax system — only income sourced from within Panama is subject to Panamanian income tax at 25%. Foreign-source income (income earned from activities conducted entirely outside Panama) is completely exempt, regardless of whether the funds are remitted to Panama. There is no capital gains tax on foreign-source gains. Dividends paid from foreign-source income are subject to a reduced 5% withholding tax (10% if from domestic-source income). VAT (ITBMS) applies at 7% on domestic goods and services. There is an annual franchise tax (Tasa Única) of $300 for all corporations.
Pros & Cons
- Territorial tax system — 0% tax on all foreign-source income (dividends, interest, royalties, trading profits earned outside Panama)
- No minimum paid-up capital requirement
- US dollar economy — no currency risk for USD-denominated businesses
- Fast formation (3–5 days) and relatively low costs
- Panama is a major regional financial centre with a deep banking sector
- Strong privacy protections — beneficial ownership information is not publicly available (though registered with agents)
- Strategic geographic position for Latin American and Caribbean operations
- Panama is on various EU and OECD grey lists — this creates additional scrutiny from correspondent banks
- Banking for newly formed companies without local substance has become significantly harder post-Panama Papers
- Requires 3 directors and 3 officers (President, Secretary, Treasurer) — adds structural complexity
- Bearer shares are now immobilised with authorised custodians — no longer usable for anonymous ownership
- Domestic income taxed at 25% — the territorial system only benefits foreign-source income
- Professional and banking services increasingly require detailed due diligence on company activities
Other Structures in Panama
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Get StartedThis content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.