Foreign Company Registration as a Local Branch in Panama

It is possible to establish a branch of a foreign company in Panama. The benefits of registering foreign companies are:

1. Keeping and strengthening your brand. For instance, if you have a company incorporated in a foreign country that has developed a brand and image for the product or service offered, registered your company as a local branch will help you to preserve your company's brand and image.
2. In the case of the government's bidding projects, a government prefers to work with history. The government may perceive a company with a background more reputable, and it is more likely that the government will choose this type of company.

The disadvantages of registering a branch of foreign companies in Panama are:

1. The parent company and branch office activities are not differentiated. Thus the parent company is fully liable for the liabilities of the branch.
2. The branches representatives may be held jointly and severally liable for tax debts
3. Banks may prefer dealing with a Panama company rather than a foreign branch.

The requirements to register a branch of a foreign company in Panama according to Article 90 of Law 32 of February 26, 1927, are as follow:

1. Copy of the Article of Incorporation, bylaws, and any modification, duly apostille or legalized by the Consul of Panama.
2. Certificate of existence and incorporation by the laws of the incorporation country duly apostille or legalized by the Consul of Panama. The usual procedure is to obtain a certificate from the competent authorities of the place of registration. Then, the Panamanian Consul, based on the certification, will certify that the corporation is constituted and authorized as per the laws of the country of registration.
3. Copy of the company financial statements duly apostilles or legalized by the Consul of Panama.
4. A statement by the officer of the corporation indicating the part of the capital stock that is used or proposed to be used in businesses in Panamá duly apostilled.
5. A shareholders or board of directors minute authorizing the registration of the company in Panama, designating a legal representative or granting Power of Attorney and indicating who will be the Resident Agent. If LLC, the only member of the LLC, must issue the authorization.
6. List of directors, officers, and a Power of Attorney granted to the person that will represent the company in Panama. The law does not mention this requirement. However, it had been a Panama Public Register's practice to require this document.

Due Diligence: For the faithful compliance with Law 23 of April 27, 2015, which adopts measures to prevent Money Laundering, Financing of Terrorism and Financing of the Proliferation of Weapons of Mass Destruction, we required our client to send us.

1. One (1) Banking reference letter of each director and officer.
2. One (1) commercial reference letter of each director and officer.
3. One (1) personal reference letter of each director and office.
4. Copy of the passport of each director and officer.
5. Second ID of each director and officer.

One (1) banking reference letter, one (1) commercial reference letter, and (1) personal reference letter of the shareholders, and a copy of the passport and a second ID

Procedure: Once you provide the document mentioned above, Lill Martínez Law and Real Estate Office will draft an incorporation act aimed at establishing a branch of your foreign company in Panama. A Public Notary will prepare a deed transcribing the act. The deed will be registered at the Mercantile Section of the Public Records.

Processing Time Frame: It can take between 7 to 10 business days to record the deed after due diligence is completed and the documents are received.

Legal Fee: Our fee is USD 1500 and included

1. Preparation of the Article of Incorporation (AOI).
2. Notary Fee for preparation of AOI deed.
3. Public Records Registration Fee
4. First franchise tax
5. Registration of the AOI at the Public Register.
6. Taxpayer ID (R.U.C) registration
7. Taxpayer Password (NIT) registration
8. Shareholder register book
9. Minutes Book
10. Issuance of Share

Maintenance Fee:

Having a Corporation registered in Panama will cause some fee and taxes, payable to the government or to your Resident Agent, as follow:

To bear in mind:

1. The branch must have the same name as the parent company.
2. The company will be registered in the same category is registered in the incorporation country. Therefore, if the company is a share company, it will be registered as a Share Company in Panama; if it is an LLC, it will be recorded in Panamá as a limited company (SRL).
3. All the documents issued in another country need to be apostille or authenticate by the Panamanian authorities (Consulate) in that country.
4. All the documents in a different langue than Spanish need to be translated by a Panamanian official translator.

For more information email us to lill@kerycruz.com

Disclaimer: The corporation tax information contained on this document is for informational purposes only and should not be relied upon for any offshore tax consulting or otherwise any offshore tax advisory services. A professional offshore tax advisor should be hired for any and all offshore tax advisory or offshore tax consultations on offshore taxes or related issues involving offshore tax planning.