Tax Incentives For Panamanian Companies

Besides the existence of the Colon Free Trade Zone where there are many tax advantages for those who choose to set up their corporation there area also many other tax advantages in existence and on the books to encourage foreign investment in the country of Panama. The Colon Free Trade Zone accounts for a huge percentage of the countries exports and over half of its imports. So the Colon Free Trade Zone is a commercially viable option to save on taxes when setting up a corporation in Panama. For example a company located within the Free Zone and subject to the annual license tax will pay a lesser percentage than outside the Free Zone and the amount of net worth taxed will be a lower.

Corporate Franchise Taxes

Yes there are still some taxes a corporation must pay when they incorporate in Panama however they will generally be less than if that company was incorporated other places in the world. The Annual Corporate Franchise Tax is set quite low as opposed to corporate taxes paid to individual states in the US. The corporate franchise tax in Panama is only $300.00. This must be paid to remain a corporation I good standing in Panama. It must be paid by Panama corporations within fifteen days after the half year in which the corporation was formed. A Panama foundation is subject to the same minimum capital requirement but as with all Panamanian entities tax is only expected on income actually generated in Panama itself.

Other Tax Benefits

There is no business license required in Panama and since many US companies consider a business license as a form of taxation since the US cities or counties are the beneficiaries and it is levied annually so you are saving this tax if you incorporate in Panama. No commercial license is required to do business offshore. There is no income tax in Panama if the income is derived from offshore sources outside of the country of Panama. There are no sales taxes collected for products or services that are sold or conducted offshore and outside of Panama. Nor does it impose any reporting requirements on this income. Also there are no taxes collected when the company incorporates that are levied on shares issued. This includes bearer or nominative shares.

Tax Benefits In The Free Trade Zone

If located in the Free Zone you won’t pay any taxes on any dividends that are created from any external operations or from those operations abroad. There are no Capital Investment Taxes within the Free Zone at all. There are no local or municipal or city or country taxes levied on companies operating in the Free Zone and there are no taxes on shipments to or from the Free Zone from or to anywhere else in the whole world.

Shareholders Taxes

Panama corporations who have non resident offshore shareholders do not have to pay taxes on any dividends on that income that comes from offshore sources outside the country limits of Panama. A Panama foundation has no shareholders by law.