By establishing a company in Panama, founders can use it asit as a base to coordinate sales across Latin America. A single company in Panama can invoice its regional clients and take care of distribution from one location. There may still be market taxes, employment, licensing, or registration requirements in each of the markets you serve.
On October 9th,h 2026, Panama made the news again, as the EU lifted its designation as a non-cooperative tax jurisdiction from Annex I of its list. In a business that is expanding, it’s a question that really matters. Are you looking to save money, time,e or effort on expanding into the region?
It depends on your product, the location where you sell your product, and the number of employees that move with you.
Why Panama company formation suits regional expansion
Panama’s case is on the basis of geographical location, economic connections and taxation that focuses on offshore employment.
A logistics hub between two oceans
According to the Panama Canal Authority, there is an estimated 3% to 5% of world trade that goes through the canal. Port volumes over 7 million 20-foot container units (TEUs) per year are on ProPanama’s agenda for 2024, as stated in its investment guide for the year. There are links to over 85 cities in the Americas and Europe at Tocumen Airport.
That can result in shorter shipping lead times to Central America, the Caribbean, a,n and northern South America (as per routes and schedules, for a distributor or e-commerce brand. Goods are stored in Panama and can be exported to various markets from a single warehouse.
Trade agreements and the US dollar
As of March 2025, Panama has 23 trade agreements in place, offering preferential access to some 59 countries, according to the Ministry of Commerce and Industries. The deal with the U.S. has been on the books since Oct. 31, 2012.
Each agreement has its own preferential tariffs for other products, according to the country of origin. Goods cannot be qualified by storing or re-exporting them via Panama.
The other countries that use the US dollar are: Panama. If you’re already invoicing in dollars, then you won’t add a currency layer to your invoices for the regional client.
Tax built around foreign income
In general, Panama imposes tax on income from Panamanian sources, and the rate is 25% of net taxable income. For instance, goods that are never imported into Panama can be sold to a Panama company, or goods that are sold in a foreign country can be sold directly to a Panama company, and in each case the company does not have to pay Panama income tax on the profit made.
That income could still be subject to income taxes in your home country. If you’re planning to send your regional sales representatives through Panama, make sure you know your own country’s regulations regarding foreign companies and where management is located.
Choosing a structure for Panama company formation
The majority of expansion strategies begin with a normal Panama corporation. Often a special regime is added for larger groups and trading businesses.
A standard corporation or a branch
A Panama company (sociedad anónima) is appropriate for most types of service, trading, and holding companies. All of it can be owned by foreigners,s and the owner need not reside in Panama.
An alternative is to form a branch of an existing foreign company. A branch may or may not be suitable for you because of the liability of the parent company, tax, and registration laws.
Specialists in Panama company formation can set up the corporation first and apply for a special regime later, once your group qualifies.
Special regimes for growing groups
Panama’s government has a number of special investment laws. Three fit regional management, manufacturing services, and distribution:
| Regime | Who it suits | Main benefit |
| Multinational Headquarters (SEM), Law 41 of 2007 | Groups running regional management, finance or support from Panama | 5% income tax on qualifying net taxable service income; five-year renewable visas for eligible executive and administrative staff |
| Multinational Manufacturing Services (EMMA), Law 159 of 2020 | Groups offering manufacturing and assembly services to their own companies | An initial five-year income tax exemption for eligible companies, then 5% on net taxable service income; staff visas |
| Colón Free Zone | Distributors that import, store and re-export goods | No import or re-export duties within the zone; qualifying foreign-operation profits exempt from Panama income tax |
Goods which are exported from the Colón Free Zone are still subject to duties and taxes in the destination country.
A separate licence is required for each regime, and there are individual conditions. It isn’t a company offering one single new start-up that can join SEM and EMMA; it’s a multinational group of companies.
What a regime is worth
Goods which are exported from the Colón Free Zone are still subject to duties and taxes in the destination country.
A separate licence is required for each regime, and there are individual conditions. It isn’t a company offering one single new start-up that can join SEM and EMMA; it’s a multinational group of companies.
The Colón Free Zone works differently. ProPanama describes it as covering about 1,064 hectares, and it suits distributors moving physical goods across the region.
What Panama company formation requires in 2026
It typically takes a few business days or 1-2 weeks to establish the company. It’s not as easy as most founders think to run it properly.
Banking and annual duties
Banking can often be the slowest step. Banks consider your owners, your source of funds, and your business plan, and some require a meeting with you. Please note: Approval is not guaranteed.
Each company has to pay a yearly tax to the tax authority of US$300. In addition, companies that do not have a presence in Panama, or those holding assets but do not run a business there, are required to submit their previous year’s accounting records to the resident agent as well, by the 30th of April. As for the agent, he or she has his or her own filing responsibilities. Even companies that are not active must report.
Substance rules for group companies
Law 526 of 2026 applies from the 2027 fiscal year. It works in accordance with Executive Decree 32 of 2nd September 2026. The law applies to Panama companies in multinational groups that generate foreign passive income (such as dividends, interest, and royalties).
A covered company will need to have sufficient personnel or facilities in Panama, local decision-making, and local operating costs to ensure that such income will not be taxable. If it doesn’t work, Panama taxes such net income at 15%, before any tax credit allowed for foreign taxes.
Requirements are lighter for qualifying holding companies, though if they are to be, they must meet the conditions of the law. Now a regional holding company without any Panamanians has been given a second glance.
When Panama is not the right fit
If you’re an enterprise that sells in multiple countries, Panama is the best option. Four indications lead to another place:
- Most of your sales are domestic (within Panama). The standard rate of 25% is levied on the local profits.
- Wherever you are from, they’re going to tax your profits anyway. The benefit can be negated by taxation of foreign company income by many countries on the income of their residents.
- A bank account is a must within days! Weeks are a long time for onboarding.
- You’ll be serving one country only. It’s easier to deal with a local company in that country.
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Making Panama company formation part of a wider plan
The best Panama structures are based on the expansion plan, not the tax rate. Identify market(s) to be served; where the team will be placed and how the goods/services will flow. Next, select the company, the regime and the bank.
One decision impacts law, tax, immigration,n and banking all together, so that you are able to work with advisers who can take care of the entire set. Bestax Accountants’ Company Formation in Panama handles the incorporation process, resident agent services, setting up bank accounts, and maintaining records.
Panama is a real regional base that receives rewards from businesses that utilize it. First, have a plan, then create the company based on that plan.
