Panama has one of the most modern and flexible corporate laws in Latin America.

Below are some of the advantages offered by Panamanian corporate law:

1. Two or more persons of any nationality, even though not domiciled in Panama, may
Organize a corporation for any lawful purpose. The articles of incorporation may be
executed anywhere, even outside of Panama, and in any language.
2. There are no requirements regarding the amount paid in capital.
3. Ownership of a Panamanian corporation may reside in a single individual or corporation and no part of the capital needs to be held by a Panamanian.
4. There are no nationality or residence requirements for shareholders.
5. Neither the directors nor the officers are required to be shareholders.
6. The Board of Directors must be composed of at least three directors, but one person may hold more than one position.
7. Meetings of shareholders or directors may be held outside of Panama. Proxies may be
used by shareholders/directors. In order to form a corporation in Panama, the client must furnish the following information:
1. The name of the corporation. It may be in any language, but it must terminate in a word or abbreviation indicating that it is a corporation.
2. The objectives and purposes of the corporation.
3. The amount of the authorized capital. Usually the authorized capital will consist of US$ 18 of 74 10,000 divided into 100 shares of US$ 100 each. Shares may be nominative or bearer shares.
4. Duration of the corporation, usually perpetual.
5. The full names and addresses of three or more directors and/or officers.
6. The domicile of the corporation.
The time period usually involved in setting up a corporation is from 15 days to two months. Attorney fees usually range from US$ 600 to US$ 1,500 per corporation.
In order to engage in commercial or industrial activities, all corporations, partnerships or
individuals must obtain proper authorization from the Ministry of Commerce and Industry. There are three basic types of licenses involved:
a) Commercial License Class A is required for wholesale operations, commercial and
mortgage banks, financial companies, international financial brokers, insurance and
reinsurance companies, international transportation companies, mutual funds, public
utilities, and high-technology service companies.
b) Commercial License Class B is required for retail businesses, including representation
agencies, service companies, bars, restaurants, drugstores, real estate agents, gas stations,
local transportation, distributors and others. This license is only granted to Panamanians
or corporations owned solely by Panamanians.
c) An Industrial License is required for extractive and manufacturing industries, as well as construction companies. Exemptions for business license requirements are granted to persons or legal entities engaged exclusively in agriculture, cattle, bee, or poultry raising, or in the manufacturing and sale of handicrafts, provided that the work is not performed by hired workers. Licenses must be kept at all times in a visible and accessible place.

The cost for obtaining a license ranges from US$ 250 to US$ 750. Also, an annual tax is levied based on the net worth of the company, as stated in the Panama's tax system promotes savings and investment by giving a wide variety of incentives, deductions, and allowances, which result in very low effective rates of taxation. The maximum personal income tax rate is 33% and the maximum corporate rate is 30% of domestically produced earnings.