Doing business

Panama

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Setting up a company | FDI in figures | Why you should choose to invest | Procedures relative to foreign investment | Finding assistance for further information

Setting up a company

Types of companies and capital (max/min)	Number of partners/shareholders and liability
Limited Liability Company USD 5,000	Maximum of 25 shareholders Limited to capital
Corporation USD 10,000	No limit Only limited to unpaid subscribed capital.

Business setup procedures

Setting up a company	Panama	Latin America & Caribbean
Procedures (number)	6.0	9.3
Time (days)	9.0	56.7

Source: Doing Business.

For further information: Consult Doing Business Website, to know about procedures to start a Business in Panama.
Trade Register
The competent organization: The Public Registry for incorporations of Companies and Foundations in Panama.

FDI in figures

Foreign Direct Investment	2008	2009	2010
FDI inward flow (millions USD)	2,402	1,773	2,363
FDI stock (millions USD)	16,902.4	18,675.2	20,944.5
Performance Index*, ranking on 141 economies	23	29	-
Potential Index**, ranking on 141 economies	63	-	-
Number of Greenfield investments***	32	46	-
FDI inwards (in % of GFCF****)	43.8	7.2	-
FDI stock (in % of GDP)	73.2	75.9	-

Source:

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk. *** Green field investments are a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. **** Gross fixed capital formation (GFCF) measures the value of additions to fixed assets purchased by business, government and households less disposals of fixed assets sold off or scrapped.

Why you should choose to invest Panama

Strong points: Panama's strong points are:
- Its political stability. The country is "protected" by the United States;
- Its economic stability. Inflation level is maintained at 2% and the country does not carry any devaluation since its currency is in parity to USD;
- Reduced taxes, with a 0% value added tax (VAT) in the real estate sector;
- Credit facilities: Mortgages up to 30 years; credit can be up to 80% of the real estate's value;
- Large development of the real estate sector with new constructions;
- Easy process to develop tourism projects with significant tax exemptions;
- Easy process to create and develop manufacturing industries.
Weak points: Panama has some weak points, especially:
- Irregularities concerning property rights;
- Freedom of non guaranteed work;
- A high level of corruption, notably in the public administration;
- A slow judicial system.
Government measures to motivate or restrict FDI: The Panamanian government and the business milieu actively encourage direct foreign investment. In general, the laws do not make any difference between national and foreign companies. In 1998, the government enacted a law of investment stability, which guarantees foreign investors who invest at least two million dollars in Panama, equal treatment by virtue of the law and not by their domestic competitors. By virtue of law No. 41 of 2007, Panama has encouraged multinational companies to open their regional headquarters on its territory through a variety of different tax incentives.

Procedures relative to foreign investment

Freedom of establishment: Guaranteed
Acquisition of holdings: Majority holding interest in the capital of a company in Panama is legal. However, all foreign investors must obtain a work permit from the Ministry of Employment.
Obligation to declare: The foreign investment promotion agency in the country enables one to be informed of the authorizations required to set up.
Competent organization for the declaration: Panama Chamber of Commerce (Spanish only)
Requests for specific authorizations: Some importation conditions (e.g. imports exempt of custom duty) or certain merchandise requires prior authorization from relevant Ministries. Amongst the merchandise, preliminary formalities specifically relate to equipment for the oil industry, household appliances, cars and naturally, products for human consumption for which one needs to obtain different registrations, in addition to a sanitary registration.

Finding assistance for further information

Investment aid agency: Invest in Panama
Other useful resources