Starting a Business in Panama The following is an outline of the pre-requisites to obtain a commercial license for your Panamanian Corporation.the information provided may not be the latest available information regarding a subject, and should not be relied on as legal advice.This information has been provided to help you stay informed, and is not intended to replace legal or professional advice.  While we make every effort to make sure that the information provided is accurate and useful, we recommend that you consult a lawyer or law firm if you want professional assurance that this information, and your interpretation of it, is appropriate to your particular situation. Hire a registered agent Time to complete: 1 day Cost to complete: USD 250 Comment: Fees may vary from firm to firm Notarize articles of incorporation Time to complete: 1 day Cost to complete: USD 75 Comment: The articles of incorporation to be notarized must include (a) the name and domicile of each subscriber to the articles of incorporation; (b) the domicile of the company and of the resident agent, who must be a lawyer or law firm in Panama; (c) the names and addresses of the directors and the officers; (d) the name of the corporation, set out in such a way to distinguish it from other registered names already registered with the Public Register; (e) the company purpose or general objectives; (f) the name of at least the president, the secretary, and the treasurer, who may or may not be the same as the directors and need not to be shareholders and who may hold more than one office or title; (g) details about the capital and the type and number of shares into which it is divided; (h) the company duration, which may be perpetual; and (i) any other provision the subscribers may wish to include. Register at the Mercantile Division of the Public Registry Time to complete: 7 days Cost to complete: USD 175 Comment: Registration fee schedule: – First USD 10,000: fee is USD 60. – Each USD 1,000 up to USD 100,000: USD 0.90. – Each USD 1,000 from USD 100,000 to USD 1,000,000: USD 0.60. – Each USD 1,000 above 1,000,000: USD 0.12. Procedure 4. Obtain a notice of operation (“aviso de operación”) through the “Panama Emprende” website Time to complete: 1 day Cost to complete: between USD 250-750 Comment: The Law 5 of January 11, 2007 established a new on-line system called “Panama Emprende” which facilitates the creation of companies. The new system replaces the obtainment of commercial licenses for the obtainment of a notice of operation. Register for taxes Time to complete: 10 days Cost to complete: USD 350, Corporation’s Annual License tax Comment: Panamanian companies operating off-shore pay only an annual license tax of USD 350, but companies operating in the territory of the Republic of Panama are subject to income tax on profits derived from Panamanian sources. Some exceptions may apply. Among other issues, Law 6 of 2005 modifies Article 318-A of the Fiscal Code, on annual tax payment for corporations (sociedades anónimas) and private interest foundations. The law was published in the Official Gazette and became effective on February 3, 2005. Under the new system: 1. After a corporation or private foundation is registered, the first annual tax installment of USD 250 will be paid with the registration fees. 2. The second and subsequent annual tax installment will be USD 300. This represents an increase of USD 50 over the former annual tax of USD 250. The increase to USD 300 for the second and subsequent annual taxes came into force January 1, 2006 Register with municipality; get a “paz y salvo municipal” or Cerificate Of Good Standing Time to complete: 1 day Cost to complete: USD 5 Comment: All business in Panama City pay a certain amount of municipal tax on a monthly basis (and then a second type of tax on a yearly basis - which is for signage).  This tax is set by the City Council, and depends upon the size of the offices, the amount of employees, and the type of business operation.  After you have registered with the Ministry of Commerce you have 20 days in which to present the registration papers to the City Council.  For this purpose, the Commercial License has to be registered at the Panama Municipality.Following submission of the registration papers, inspectors will visit your offices to verify the location and the type of business. At this stage they will set the monthly/yearly municipal taxes. Procedure 7.Request an employers’ inscription number from the Social Security Administration Time to complete: 1 day Cost to complete: no charge Comment: If you intend on applying for either of the following immigration programs: Immigrant Investor or Micro  Investor, you will need to have at least 3 Panamanian employees on the payroll.  It is necessary to register all employees with the Social Security Board, as well as making the statutory Social Security contributions and deducting their quota from their wages before paying them.  We would be more than happy to help you with filling in the application forms for registering the company and the employees.  What is necessary to do here is to actually provide the Ministry of Labour with copies of the employment contracts of your employees. When you hire an employee, three originals of the Labour Contract should be made - one for the business, one for the employee, and one for the Ministry of Labour.  If you need assistance with drafting the Labour Contracts (which must be in Spanish - although you can make them bi-lingual), please do not hesitate to let us know.Just a word of caution:  When someone resigns - please make sure that their resignation letter is actually stamped by the Ministry of Labour (the employee should personally take their resignation letter to the Ministry of Labour and have it stamped BEFORE they deliver it to you).  Information provided by Gray & Co. and doingbusiness.org