Panama allows incorporation of a company in 5-7 working days with zero residency requirements. A Panama IBC requires a minimum of 3 directors (nominees available if needed) and a single shareholder. Business owners can incorporate a company without depositing any paid-up capital. The amount is standard at US$10,000 but it can be increased to any value.
Territorial Tax System
Panama operates a pure territorial tax system. Provided your business activities and management take place outside the country, your company will be classified as an International Business Company (IBC). Your IBC is exempt from all forms of local taxation—including 0% corporate tax, 0% capital gains tax, 0% withholding tax on dividends, and 0% stamp duty on asset transfers.
High Privacy
Panama remains a premier choice for founders who prioritize commercial discretion. Under the Law 32 of 1927, your company’s Shareholders and Beneficial Owners are not part of the public record. It cannot be searched by competitors, or the general public. Directors are publicdomain, but using a nominee director is a common solution to retain privacy.
Legal Fortress
Panama doesn't have treaties to recognize foreign court judgments with most countries. Therefore, the Panamanian Judicial Code states that a foreign judgment is not enforceable in Panama unless it goes through a process called Exequatur. This means that anybody taking legal action against your company will be obliged to do it within Panama territory.
Low Maintenance
As long as your company’s income is foreign-sourced, you are exempt from filing annual tax returns or audited accounts. Your only obligation is to maintain accounting records with your registered agent to satisfy local compliance. P&L and Balance Sheet are to be provided once a year (by the end of April), while bookkeeping and supporting documents stay with you.
Absence of Exchange Controls
Panama doesn't have a central bank, it recognizes the USD as legal tender. A Panama IBC acts as a global liquidity hub by default. The government cannot impose exchange controls, nor force a currency conversion for funds rendered in the country. Panama has also been removed from the FATF Grey List, finally ending the stigma it carried for many years.
Why entrepreneurs love Korporatio
The team at Korporatio is always helpful and replies in a very clear and swift manner. They take away the headaches of running a business!Philip De Smedt, Founder at Arkadiko Inc
Have been working with Korporatio for a number of years. The service rendered is very professional and top of the class. We are glad to partner with Korporatio in our corporate administration and I foresee many years of partnership ahead!PNYX Technologies Inc
Korporatio provides a high quality service to set-up your business abroad. You'll be surrended by experts and advisors in their field to help you set-up everything properly.Jordan Ietri, CEO at Revomon
Incorporating a company is normally a painful process. Korporatio is very efficient and responsive. Thanks team, keep up the good work!Timothy McCann, Founder at Metamasters DAO Corporation
Setting up a corporation can be confusing, complicated and expensive. We interviewed many service providers and finally decided to use Korporatio. They were efficient and completed the work in the timeframes agreed, guiding us through the process each step of the way. Mitch Rankin, Founder at Forward Protocol Corp
The team at Korporatio has brought high standards into the company incorporation business. They incorporate entities in multiple jurisdictions always with top quality and efficiency.Jake Choi, Owner of Choice Investment Management Ltd.
Korporatio's experience is among the highest in the industry yet they make you feel like you're chatting with a good friend. This is a company that really puts the client at the center. Gilad Cohen Aviram, Co-founder of Polychron Corp.
Best v. Worst Company to Incorporate in Panama
Smart Move: Web3 Company
Panama is the best place in the world for web3 companies due to its lack of VASP rules and simple accounting requirements. Here’s why it’s a great choice:
1. No VASP
Panama doesn't recognize crypto as a commodity or as an asset. This means you are free to record crypto without any special rules.
As one of the few places left without VASP rules, it ensures that entrepreneurs are free to launch any type of web3 company (as long as no Fiat is involved) without any special approval, license, or permissions. Incorporating the IBC is the only requirement.
2. Legal recognition for smart contracts
Influenced by bill 247, the latest legal updates explicitly recognize Smart Contracts as legally enforceable agreements.
Web3 founders now have a level of 'legal certainty' that their code-based agreements will actually hold up in a Panamanian court.
Once two individuals sign a Tx using their wallets, the features of the smart contracts become legally binding.
3. Perfect wrapper for DAOs
The combination of Panama IBC and a Private Limited Foundation creates the perfect structure for DAOs.
Companies and DAOs can stake their treasury and earn yields which are entirely under the 0% territorial tax system.
Foundations ensure the ultimate fortress because the funds cannot be seized to pay for foreign debts. Anything that is deposited in a foundation stays in it for as long as the beneficiaries want it.
Conclusion
With its business-friendly policies and innovative solutions, Panama offers an ideal environment for web3 and crypto companies. The lack of VASP rules, strong privacy, and ultimate protection offered by the private foundations make it a prime destination for anybody looking to launch and grow a project in the web3 space.
Bad Idea: EU Based SMEs
If you and your clients live in one of the EU countries, having an entity in Panama might not be the best idea. Here's why:
1. DAC6 Mandatory Reporting
Panama remains on the EU List of Non-Cooperative Jurisdictions for Tax Purposes as of 2026. Dealing with a Panama company makes any individual a target for tax audits.
Under the EU rules, any "aggressive tax planning" involving a blacklisted country must be automatically reported to the tax authorities by lawyers or accountants.
2. EU "Anti-Tax Avoidance" Laws
Local tax officers may look through the Panama IBC and tax its 0% profits at full personal income tax rate in the EU, even if no money are withdrawn.
Many EU countries apply a higher Withholding Tax (25-35%) on any interest, royalties, or dividends paid to a company in Panama.
If an EU-based company pays your Panama IBC for services, the local tax authority may refuse to deduct that expense.
3. Limited Payment Solutions
Popular options like Stripe and Square do not provide accounts for entities in Panama. Solutions like Paypal and Payoneer are available but require additional compliance steps.
Transactions in stable-coins are allowed but limit the potential market size.
Sending funds to Panama from an EU bank account can be challenging. Many banks will block these transactions entirely.
Conclusion
Unless the company is selling to clients with several commercial relationships worldwide and the owners have a clear distinction between who executes the work and where those individuals are located, several problems can be avoided by incorporating in other countries instead.
Fill out the online form and complete the KYC process.
Keep these points in mind: every individual must provide a copy of Passport, a valid copy of Proof of Address in English or Spanish and not older than 3 months. Clients from sanctioned-countries will also need to provide a legal reference letter. We can help to translate the documents.
Sit Tight
Once you submit the form, we will review them and start the incorporation process.
Keep these points in mind: once the company has been created you will need to sign some documents fully prepared by us. E-Sign solutions are allowed. To avoid penalties, all documents must be sent back within 21 days from the incorporation date.
Build Your Empire
You're all set! Focus on growing your business while we handle the admin work.
Keep these points in mind: If you need any directors to sign any resolutions or private documents, just text us. You will be in direct contact with the team for as long as your company is live. We are available via email, Telegram, Whatsapp, Discord, and Signal.
Incorporating a company in Panama can be worth it!
A numerical example
Let’s explore how big a financial burden it can be to incorporate a company in California compared to forming a company in Panama with a profit per year of $560,000.
The figures presented in the example above are average figures and can differ a lot in individual scenarios. These figures are used solely and exclusively for content purposes and in no way shall they be taken as tax or financial advice. Do make sure to consult a registered tax advisor before making any decisions. Your nationality, country of residency, family situation, scope of your company’s business, laws of the country where your company is incorporated, etc., are all factors that can drastically change your costs and taxes. In conclusion, make sure to speak with a professional who understands your situation in detail before making any decisions.
What would you do with an extra $169,904?
An Extra Hire
Those funds would allow your business to hire a developer in a foreign country. You would be able to clear those old backlogs once and for all.
A Marketing Machine
Digital marketing, PPC, EDM, etc., whatever your goal is to grow the business, you can now deploy capital into the strategy you choose.
A Deserved Dividend
All those years of sacrifice and lost sleep to chase an idea. You have done so much, and you absolutely deserve to reward yourself - now you can.
In case you wish to learn more about setting up a company in Panama:
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