{"id":123502,"date":"2026-01-12T09:37:17","date_gmt":"2026-01-12T09:37:17","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=123502"},"modified":"2026-01-12T09:37:17","modified_gmt":"2026-01-12T09:37:17","slug":"panama-investing-in","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/panama-investing-in\/","title":{"rendered":"Panama: Investing In"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-123502","comparative_guide","type-comparative_guide","status-publish","hentry","guides-investing-in","jurisdictions-panama"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">BDO Legal<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/12\/Logo-BDO-Full-Color-2.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">BDO Legal<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/12\/Logo-BDO-Full-Color-2.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Investing In laws and regulations applicable in Panama<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please briefly describe the current investment climate in the country and the average volume of foreign direct investments (by value in US dollars and by deal number) over the last three years.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Panama is a country with a growing economy due to significant foreign and domestic investment. It is considered a HUB in various sectors such as logistics, aviation, maritime, and banking. According to preliminary public figures published by the National Institute of Statistics and Census of the Republic of Panama, foreign direct investment in 2022 was approximately US$2.113 billion. In 2023, this investment experienced a slight decline, totaling approximately US$2.070 billion. However, in 2024, this figure surpassed previous years, reaching approximately US$2.454 billion. The foregoing reflects the confidence in foreign investment and Panama\u2019s strong positioning in the global economy.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the typical forms of Foreign Direct Investments (FDI) in the country: a) greenfield or brownfield projects to build new facilities by foreign companies, b) acquisition of businesses (in asset or stock transactions), c) acquisition of minority interests in existing companies, d) joint ventures, e) other?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Panama, due to its location and the currency it uses, receives various forms of Foreign Direct Investment (FDI). On a day-to-day basis, one of the most common and preferred forms of foreign investment is undoubtedly through the establishment of branches of multinational companies in Panamanian territory.<\/p>\n<p>In recent years, Panama has become highly attractive for the establishment of branches of multinational companies thanks to the special regimes that have been implemented. These special regimes provide companies with tax, labor, immigration, and customs benefits depending on the type of activity they carry out. Among the most notable special regimes by sector are:<\/p>\n<p>a) Panama Pacific Special Economic Area: Companies in logistics, airport services, call centers, and various services.<\/p>\n<p>b) Special Regime for Headquarters of Multinational Companies (SEM): Regional support services for the parent company.<\/p>\n<p>c) Special Regime for Multinational Companies Providing Services Related to Manufacturing (EMMA): Multinational companies that wish to establish a base in Panama to provide services related to manufacturing, assembly, remanufacturing, conditioning, maintenance, and product repair.<\/p>\n<p>d) City of Knowledge: Technology companies, educational institutions, and non-governmental organizations focused on innovation.<\/p>\n<p>e) Col\u00f3n Free Zone: Companies engaged in wholesale trade and import\/export services.<\/p>\n<p>Each of these special regimes contributes to the daily growth of Panama\u2019s economy and reinforces Panama\u2019s position as an attractive destination for investment due to its geographic location, business benefits, and the Panama Canal.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are foreign investors allowed to own 100% of a domestic company or business? If not, what is the maximum percentage that a foreign investor can own?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is allowed for a foreign investor to own 100% of a company or domestic business in the Republic of Panama.<\/p>\n<p>Although a foreigner may own 100% of a business, it is important to note that the Political Constitution of the Republic of Panama restricts retail trade to foreigners or to legal entities whose shareholders are foreigners. Retail trade is understood as the sale to consumers or the representation or agency of manufacturing or commercial companies, or any other activity that the law classifies as belonging to such trade.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are foreign investors allowed to invest and hold the same class of stock or other equity securities as domestic shareholders? Is it true for both public and private companies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Panama is a country with a significant percentage of foreign investment, and therefore, generally, foreign investors may invest and hold the same class of shares in a company as domestic shareholders.<\/p>\n<p>Notwithstanding the foregoing, the Political Constitution of Panama establishes certain restrictions for foreign investors, such as:<\/p>\n<p>a) Foreign individuals or legal entities, as well as nationals whose capital is foreign, may not acquire ownership of national or private lands located less than ten (10) kilometers from the borders.<\/p>\n<p>b) Foreigners (natural persons or legal entities) may not engage in retail trade.<\/p>\n<p>c) The majority of the capital of private public utility companies must be Panamanian.<\/p>\n<p>d) No foreign government nor any foreign official or semi-official entity or institution may acquire ownership of any part of the national territory except when it is the site of embassies.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are domestic businesses organized and managed through domestic companies or primarily offshore companies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, companies can be organized and managed either through domestic companies or through offshore companies. The choice between the options depends solely and exclusively on the client\u2019s preferences, their business structure, and the type of business.<\/p>\n<p>Although it is common for domestic companies to be managed under any of the types of entities mentioned above, in many cases companies prefer to use an offshore company.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the forms of domestic companies? Briefly describe the differences.   Which form is preferred by domestic shareholders? Which form is preferred by foreign investors\/shareholders? What are the reasons for foreign shareholders preferring one form over the other?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, the different forms of domestic companies are:<\/p>\n<p>a) Corporation (in Spanish, \u201cSociedad An\u00f3nima\u201d):<\/p>\n<ul>\n<li>Governed by Law No. 32 of February 26, 1927.<\/li>\n<li>May be composed of one (1) or more shareholders, whether natural persons or legal entities, domestic or foreign.<\/li>\n<li>Its name or corporate denomination must include the initials: S.A., Inc., or Corp.<\/li>\n<li>Use the figure of a Legal Representative to act before third parties.<\/li>\n<li>Use shares.<\/li>\n<li>Its shareholders are not publicly disclosed.<\/li>\n<\/ul>\n<p>b) Limited Liability Company (in Spanish, \u201cSociedad de Responsabilidad Limitada\u201d):<\/p>\n<ul>\n<li>Governed by Law No. 4 of January 9, 2009.<\/li>\n<li>May be composed of two (2) or more partners, whether natural persons or legal entities, domestic or foreign.<\/li>\n<li>Its name or corporate denomination must include the phrase \u201cSociedad de Responsabilidad Limitada\u201d or the initials S. de R.L.<\/li>\n<li>Use the figure of an Administrator to act before third parties.<\/li>\n<li>Use participation quotas.<\/li>\n<li>Its partners are public and must be registered in the Public Registry of Panama.<\/li>\n<\/ul>\n<p>Domestic shareholders prefer the use of corporations because they are often utilized for estate planning purposes, and in such cases, they prefer not to disclose the shareholders or owners. Likewise, corporations use shares instead of participation quotas, which provides greater flexibility when transferring ownership.<\/p>\n<p>The preference of foreign investors\/shareholders among the forms of domestic companies will depend on the purpose for which the company is incorporated and the jurisdiction from which the shareholder originates. The latter point is relevant because if the foreign shareholder intends to use the Panamanian company abroad in accordance with the requirements or practices of that other jurisdiction, a particular type of entity may work better. Notwithstanding the foregoing, there is a noticeable trend that foreign investors prefer corporations due to their privacy and the fact that they may have only one (1) shareholder.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the requirements for forming a company? Which governmental entities have to give approvals? What is the process for forming\/incorporating a domestic company? What is a required capitalization for forming\/incorporating a company? How long does it take to form a domestic company? How many shareholders is the company required to have? Is the list of shareholders publicly available?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>According to current corporate legislation, two or more individuals of legal age, of any nationality, may incorporate a company in accordance with the parameters established by law.<\/p>\n<p>The process of incorporating a company is as follows:<\/p>\n<ul>\n<li>The company\u2019s articles of incorporation (in Spanish, \u201cpacto social\u201d) are drafted and signed. This document contains the rules and general information of the company (e.g., name, purpose, share capital, number and classes of shares, board of directors and officers, domicile, duration, among others).<\/li>\n<li>The articles of incorporation are notarized and converted into a public deed.<\/li>\n<li>The public deed of the company is registered with the Public Registry of Panama.<\/li>\n<li>Once the public deed is registered, the company must be registered with the General Directorate of Revenue (Panama\u2019s Tax Authority), where it will obtain its tax identification number for payment of the corresponding taxes.<\/li>\n<\/ul>\n<p>The steps mentioned above correspond to the standard process for incorporating a non-operating company and may take approximately ten (10) business days from the moment the resident agent has all the required information and due diligence documentation for the company.<\/p>\n<p>If the company will be operational, additional steps must be taken, such as:<\/p>\n<ul>\n<li>Obtaining the commercial license from the Ministry of Commerce and Industries.<\/li>\n<li>Registering the company with the corresponding City Hall.<\/li>\n<li>Registering the company with the Social Security Fund as an employer.<\/li>\n<li>Depending on the type of commercial activity (tourism, healthcare, construction, among others), the company must request additional permits from the relevant authorities<\/li>\n<\/ul>\n<p>Panamanian legislation does not establish a minimum or maximum share capital for incorporating a company. However, the standard share capital in Panama is US$10,000.00 (legal tender of the United States of America), and it does not need to be deposited with any competent authority or in a bank account. The company must pay the Public Registry of Panama a registration fee proportional to the share capital stated in the articles of incorporation.<\/p>\n<p>Companies in Panama may be composed of one or more shareholders. The shareholders may be natural persons or legal entities of any nationality. Although the resident agent is required to register the list of shareholders of all companies under their responsibility with the Superintendence of Non-Financial Entities (SSNF), such shareholder registry is not public and may only be accessed by competent authorities in the exercise of their functions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the requirements and necessary governmental approvals for a foreign investor acquiring shares in a private company? What about for an acquisition of assets?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, a foreign investor may acquire shares in a private company without the need for government approval. Notwithstanding the foregoing, the transfer of shares in the Republic of Panama entails payment to the Panamanian Tax Authority of five percent (5%) of the total value of the transfer as an advance on income tax for capital gains.<\/p>\n<p>In the case of acquiring real estate in the Republic of Panama, government approval is also not required. However, the limitation on the purchase of land mentioned in the answer to question 4 still applies.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does a foreign investor need approval to acquire shares in a public company on a domestic stock market? What about acquiring shares of a public company in a direct (private) transaction from another shareholder?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, foreign investors do not require prior special authorization due to their foreign status to acquire shares in a Panamanian company listed on the Panama Stock Exchange, nor to acquire shares in a corporation through a direct (private) transaction with another shareholder.<\/p>\n<p>The foreign investor is subject to the same requirements and obligations as any domestic investor and must comply with the regulations applicable to the Panamanian securities market.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a requirement for a mandatory tender offer if an investor acquired a certain percentage of shares of a public company?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, the Superintendency of the Securities Market is the authority responsible for regulating and supervising the securities market and its behavior. According to Panamanian securities legislation (Executive Decree Law No. 1 of July 8, 1999, and its amendments), any offer to purchase registered shares of an issuer amounting to twenty-five percent (25%) or more of the issued and outstanding capital of such issuer, or any number of shares that would result in the purchaser acquiring more than fifty percent (50%) of the issued and outstanding capital of such issuer, must be notified to the Superintendency of the Securities Market. The notification must be made to the Superintendency at the time the purchaser makes the public tender offer or earlier, and a copy must be delivered to the issuer and to the stock exchanges in the Republic of Panama where the shares subject to the offer are listed.<\/p>\n<p>Public tender offers for shares may not have an acceptance period shorter than thirty (30) calendar days from the date the offer is presented. Likewise, the offer must be made to all holders of the shares on equal terms and conditions, and the same purchase price must be paid to all holders of such shares who accept the offer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the approval process for building a new facility in the country (in a greenfield or brownfield project)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For the construction of a new project in Panama City, Republic of Panama, the authority responsible for centralizing and managing the approval process is the Directorate of Works and Construction of the Municipality of Panama.<\/p>\n<p>It is important to mention that, in recent years, the process for approving new projects has been digitized, which has resulted in increased transparency and faster processing of the required approvals.<\/p>\n<p>The approval process for new projects involves multiple steps and various authorities, as follows:<\/p>\n<p>a) Directorate of Works and Construction of the Municipality of Panama (in Spanish \u201cDirecci\u00f3n de Obras y Construcciones del Municipio de Panam\u00e1\u201d): Responsible for reviewing preliminary designs, building plans, and other construction documents.<\/p>\n<p>b) Ministry of Housing and Land Management (in Spanish, \u201cMinisterio de Vivienda y Ordenamiento Territorial\u201d): Responsible for verifying the project\u2019s zoning according to its location.<\/p>\n<p>c) Panama Fire Department (in Spanish, \u201cBenem\u00e9rito Cuerpo de Bomberos de Panam\u00e1\u201d): Responsible for reviewing safety, electrical, and plumbing aspects of the building to prevent fires.<\/p>\n<p>d) Ministry of Health (in Spanish, \u201cMinisterio de Salud\u201d): Responsible for validating the health and sanitation aspects of the project.<\/p>\n<p>e) Ministry of Public Works (in Spanish \u201cMinisterio de Obras P\u00fablicas\u201d): Responsible for reviewing construction plans and ensuring project safety.<\/p>\n<p>f) National Institute of Aqueducts and Sewers (in Spanish \u201cInstituto de Acueductos y Alcantarillados Nacionales\u201d): Responsible for verifying the availability of potable water and sewage systems.<\/p>\n<p>g) National Disability Secretariat (in Spanish \u201cSecretar\u00eda Nacional de Discapacidad\u201d): Responsible for ensuring accessibility for all individuals within the project.<\/p>\n<p>h) Waste Management Authority (in Spanish, \u201cAutoridad de Aseo\u201d): Responsible for reviewing the design for solid waste handling and collection.<\/p>\n<p>i) Ministry of Environment (in Spanish, \u201cMinisterio de Ambiente\u201d): Responsible for verifying the environmental impact of the project.<\/p>\n<p>j) Land Transit and Transportation Authority (in Spanish, \u201cAutoridad del Tr\u00e1nsito y Transporte Terrestre\u201d): Responsible for assessing the project\u2019s impact on vehicular and pedestrian traffic.<\/p>\n<p>Once all competent authorities have reviewed the documentation and granted their approval, the Directorate of Works and Construction will issue the construction permit. Subsequently, once construction is completed and the corresponding inspections have been carried out, the occupancy permit will be issued.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can an investor do a transaction in the country in any currency or only in domestic currency? a) Is there an approval requirement (e.g. through Central Bank or another governmental agency) to use foreign currency in the country to pay: i. in an acquisition, or, ii. to pay to contractors, or, iii. to pay salaries of employees? b) Is there a limit on the amount of foreign currency in any transaction or series of related transactions? i. Is there an approval requirement and a limit on how much foreign currency a foreign investor can transfer into the country? ii. Is there an approval requirement and a limit on how much domestic currency a foreign investor can buy in the country? iii. Can an investor buy domestic currency outside of the country and transfer it into the country to pay for an acquisition or to third parties for goods or services or to pay salaries of employees?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The legal tender in the Republic of Panama is the Panamanian balboa. However, in the Republic of Panama no bills are issued, which is why the use of the U.S. dollar was adopted. In legal documents to be submitted to the authorities, the amounts detailed in the documents must be stated in Panamanian balboas or in U.S. dollars. An example of this is the public deeds of corporations or property sales registered in the Public Registry of Panama, where the value or sale price includes the phrase \u201cdollars, legal tender of the United States of America.\u201d<\/p>\n<p>In addition, Article 217 of the Commercial Code of the Republic of Panama states that when the currency indicated in a contract does not have legal or commercial tender in Panama and the parties have not determined its value, payment may be made in national currency at the prevailing bank exchange rate on the day of payment.<\/p>\n<p>Notwithstanding the foregoing, Article 805 of the Commercial Code of the Republic of Panam\u00e1, which regulates commercial loans, allows the parties to agree that the loan repayment be made in foreign currency, considering that any change in the exchange rate will be to the detriment or benefit of the lender.<\/p>\n<p>Based on all the above, it can be understood that documents to be registered or submitted before national authorities must be in the legal tender of the Republic of Panama. However, private documents between individuals may stipulate the price in foreign currency, provided that the equivalent amount in the national currency is stated and both parties agree.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there approval requirements for a foreign investor for transferring domestic currency or foreign currency out of the country? Whose approval is required? How long does it take to get the approval? Are there limitations on the amount of foreign or domestic currency that can be transferred out of the country? Is the approval required for each transfer or can it be granted for all future transfers?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, there is no limitation or requirement for prior approval for a foreign investor to transfer national or foreign currency outside the country. The transfer limit or commission for such transfer will depend on the bank where the funds to be transferred are held.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a tax or duty on foreign currency conversion?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, there is no tax or duty on foreign currency conversion. As mentioned in previous answers, the legal tender in the Republic of Panama is the U.S. Dollar. However, exchange houses or banks in Panama may establish a percentage or commission for the conversion of foreign currency.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a tax or duty on bringing foreign or domestic currency into the country?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, there is no tax or duty on foreign currency conversion. As mentioned in previous answers, the legal tender in the Republic of Panama is the U.S. Dollar. However, exchange houses or banks in Panama may establish a percentage or commission for the conversion of foreign currency.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a difference in tax treatment between acquisition of assets or shares (e.g. a stamp duty)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Panamanian tax regulations establish a differentiated treatment between the purchase of assets and the acquisition of shares.<\/p>\n<p>For asset purchases, taxes vary depending on the type of asset:<\/p>\n<ul>\n<li>Movable property: The Transfer Tax on Movable Goods and Services (ITBMS), equivalent to the local VAT, applies at a rate of 7% on the sale price, in addition to the income tax on capital gains, which is levied at 10% on the profit obtained.<\/li>\n<li>Real estate: Income tax on capital gains applies at a rate of 3% on the higher value between the sale price and the cadastral value, along with the real estate transfer tax, which is 2% on the sale price or cadastral value, whichever is greater.<\/li>\n<\/ul>\n<p>For share acquisitions, the capital gains tax applies at a rate of 10% on the net gain (sale price minus acquisition cost). The buyer is required to withhold 5% of the total sale value as an advance payment of income tax and remit it to the tax authorities within 10 business days. The seller may choose to treat this withholding as a final payment. In certain cases, the complementary tax may also apply, functioning as an advance on the dividend tax.<\/p>\n<p>In both scenarios, the stamp tax must be paid on the purchase agreement, under the general rate of B\/.0.10 for every B\/.100.00 of the document\u2019s value.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">When is a stamp duty required to be paid?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, the Stamp Tax applies to public or private documents that create, modify, or extinguish obligations and are not subject to another special tax.<\/p>\n<p>Stamps must be affixed to the document at the time of signing or formalizing the legal act. This tax applies to instruments such as contracts, checks, and negotiable documents, among others.<\/p>\n<p>The general rate for this tax is B\/.0.10 for every B\/.100.00 of the document\u2019s value.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are shares in private domestic companies easily transferable? Can the shares be held outside of the home jurisdiction? What approval does a foreign investor need to transfer shares to another foreign or domestic shareholder? Are changes in shareholding publicly reported or publicly available?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, shares in private corporations are transferable, subject to compliance with certain formalities. The transfer must be executed by endorsing the share certificate and recording the transaction in the company\u2019s share register. Additionally, notification must be provided to the Superintendence of Non-Financial Entities (SSNF) regarding any change in the shareholder structure. These requirements ensure greater control, traceability, and legal certainty.<\/p>\n<p>Panamanian law does not impose restrictions on the location where shares are held, whether within the Republic of Panama or abroad. Transfers between foreign or domestic investors do not require governmental approval, provided that corporate and tax formalities are observed. However, in regulated sectors, prior authorization may be required. Shares must always be recorded in the company\u2019s share register, and either the original or a copy must be available for inspection by competent authorities, such as the Tax Authority or the SSNF, upon request.<\/p>\n<p>For corporations operating outside regulated sectors, no institutional approval is required for a foreign investor to transfer shares to another foreign or domestic party. Conversely, if the corporation operates in regulated industries such as banking, insurance, securities, or telecommunications, prior authorization from the relevant regulatory authority\u2014such as the Superintendence of Banks, Superintendence of Insurance, or the Securities Market Authority (SMV)\u2014may be mandatory.<\/p>\n<p>Changes in shareholding are not publicly recorded in the Public Registry. Corporations are required to maintain an internal register of shares and minutes, documenting changes in ownership, the number of shares, and the date of transfer. This register remains private but may be requested by competent authorities for purposes of transparency and oversight.<\/p>\n<p>The Public Registry only contains the articles of incorporation, amendments, and board resolutions; it does not disclose the list of shareholders or changes thereto. Shareholder information is considered confidential and is not available for public consultation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a mandatory FDI filing? With which agency is it required to be made? How long does it take to obtain an FDI approval? Under what circumstances is the mandatory FDI filing required to be made? If a mandatory filing is not required, can a transaction be reviewed by a governmental authority and be blocked? If a transaction is outside of the home jurisdiction (e.g. a global transaction where shares of a foreign incorporated parent company are being bought by another foreign company, but the parent company that\u2019s been acquired has a subsidiary in your jurisdiction), could such a transaction trigger a mandatory FDI filing in your jurisdiction? Can a governmental authority in such a transaction prohibit the indirect transfer of control of the subsidiary?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, there is no general obligation to submit Foreign Direct Investment (FDI) for all transactions, unlike jurisdictions with strict control regimes. Investments in open sectors, such as commerce, services, and industry, do not require prior authorization or mandatory registration. However, certain restrictions do apply to specific activities (for example, retail trade and certain professions), although these do not constitute a general FDI control regime.<\/p>\n<p>Nevertheless, particular requirements exist in some cases, mainly related to immigration programs and special regimes, such as:<\/p>\n<ul>\n<li>Qualified Investor Program: Grants permanent residency through investment in real estate (minimum USD 300,000 until October 2024, thereafter USD 500,000), securities listed on the Panama Stock Exchange (minimum USD 500,000), or fixed-term deposits in local banks (minimum USD 750,000). Applications must be filed with the National Immigration Service and validated by the Ministry of Commerce and Industries (MICI).<\/li>\n<li>Headquarter of Multinational companies\u2019 regime (Law 41 of 2007 \u2013 SEM, Law 54 of 1998): Companies meeting the requirements and opting into these regimes must register with MICI to access tax benefits and legal stability.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are typical exit transactions for foreign companies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, typical exit strategies for foreign companies depend on the investment size, sector, and tax optimization considerations. The most common options include:<\/p>\n<ul>\n<li>Sale of shares and\/or assets: The transfer may be executed in favor of either foreign or domestic investors.<\/li>\n<li>Mergers and acquisitions (M&amp;A): Sale of the company to a multinational group or integration with another local or regional entity, a practice frequently observed in sectors such as logistics, energy, financial services, and technology.<\/li>\n<li>Corporate dissolution: Requires compliance with all tax and labor obligations prior to ceasing operations.<\/li>\n<li>Re-domiciliation: Relocation of the company\u2019s legal domicile to a more favorable jurisdiction. Panamanian law permits re-domiciliation without requiring liquidation of the entity, although this option is less commonly utilized.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do private companies prefer to pursue an IPO? i. on a domestic stock market, or ii. on a foreign stock market? iii. If foreign, which one?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, private companies rarely choose to conduct an Initial Public Offering (IPO) in the local market, primarily due to the limited size of the domestic securities market and its low liquidity. Instead, companies seeking access to public capital typically consider larger and more liquid international markets.<\/p>\n<p>The Panamanian securities market is relatively small and lacks depth, which restricts the ability to raise significant amounts of capital. Consequently, few local companies opt to list on the Panama Stock Exchange. However, businesses with regional or global ambitions tend to favor foreign markets that offer greater liquidity, higher trading volumes, access to institutional investors, international recognition, improved valuations, and a more robust regulatory infrastructure for large-scale issuances.<\/p>\n<p>Among the most attractive markets are:<\/p>\n<ul>\n<li>NYSE or NASDAQ (United States): due to their high liquidity and global reach.<\/li>\n<li>Toronto Stock Exchange (TSX): particularly appealing for sectors such as mining and energy.<\/li>\n<li>More developed Latin American markets (Mexico, Brazil, Colombia): for companies seeking to strengthen regional presence.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do M&amp;A\/Investment\/JV agreements typically provide for dispute resolution in domestic courts or through international arbitration?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, the prevailing practice in mergers and acquisitions (M&amp;A), investment transactions, and joint ventures is to include international arbitration clauses, supported by Law No. 131 of 2013, which governs both domestic and international commercial arbitration. These clauses are typically implemented under the procedural rules of specialized institutions such as the Panama Conciliation and Arbitration Center (CeCAP). Nevertheless, national courts remain an available option in specific circumstances.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How long does a typical contract dispute case take in domestic courts for a final resolution?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Panama, a typical contractual dispute before national courts may take between one and three years to reach a final resolution, depending on several factors:<\/p>\n<ul>\n<li>Case complexity: Duration increases when multiple parties, expert evidence, or intricate contractual provisions are involved.<\/li>\n<li>Court workload: Highly congested courts may experience delays in scheduling hearings and issuing judgments.<\/li>\n<li>Available resources: Shortages of judges and administrative personnel contribute to procedural delays.<\/li>\n<li>Conduct of the parties: Cooperation and partial settlements can expedite proceedings, whereas appeals significantly extend timelines.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are domestic courts reliable in enforcing foreign investors rights under agreements and under the law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In general, Panamanian courts are regarded as reliable in upholding the rights of foreign investors. The country has a solid legal framework and policies that promote foreign investment. Furthermore, Panama recognizes the validity of duly executed contracts and protects vested rights under the Civil Code, while also providing access to international arbitration mechanisms (ICSID, UNCITRAL) as an additional layer of protection.<\/p>\n<p>Nevertheless, significant challenges remain, including judicial delays and perceived lack of transparency in certain complex proceedings.<\/p>\n<p>Accordingly, Panama offers legal guarantees and international mechanisms that strengthen investor protection. However, for substantial transactions, it is advisable to:<\/p>\n<ul>\n<li>Incorporate international arbitration clauses in contracts.<\/li>\n<li>Register the investment under Law 54 to ensure legal stability.<\/li>\n<li>Engage specialized legal counsel to mitigate risks in local proceedings.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there instances of abuse of foreign investors? How are cases of investor abuse handled?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While there have been instances of abuse and disputes, investors benefit from international protections and access to arbitration mechanisms to mitigate risks. Reported cases include:<\/p>\n<p><strong>Conflicts with financial institutions:<\/strong> The international group Decuria alleged abuse of power and lack of transparency by Panamanian entities and a foreign bank (Scotiabank), claiming aggravated fraud, extortion, and criminal conspiracy. The case impacted investors and families, with estimated losses exceeding USD 45 million, and highlighted a five-year delay in judicial response, which undermined confidence in the system and discouraged foreign investment.<\/p>\n<p><strong>Case involving a Mexican entrepreneur:<\/strong> An investor who entered Panama under an investor visa lost properties and assets following accusations of money laundering and identity fraud. The proceedings were criticized for lack of clarity and alleged irregularities in the investigation, affecting the investor\u2019s fundamental rights.<\/p>\n<p>In Panama, cases of investor abuse are addressed through:<\/p>\n<p><strong>Domestic judicial system:<\/strong> Investors may file civil or criminal claims before local courts, although certain cases have revealed delays and transparency concerns.<\/p>\n<p><strong>International mechanisms:<\/strong> Panama is a member of ICSID and party to bilateral investment treaties that allow recourse to international arbitration under Investor-State Dispute Settlement (ISDS). This mechanism provides a neutral forum, binding arbitral awards enforceable worldwide, and protection against arbitrary state measures.<\/p>\n<p><strong>International treaties:<\/strong> These agreements include provisions for resolving disputes through international arbitration, reducing reliance on local courts.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are international arbitral awards recognized and enforced in your country?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Panama recognizes and enforces international arbitral awards under a robust legal framework. Such awards are deemed binding and may be enforced through an application filed with the Fourth Chamber of General Business of the Supreme Court of Justice. Awards rendered in Panama do not require a recognition procedure and are executed directly; for foreign awards, the exequatur process applies.<\/p>\n<p>Currently, Panama recognizes arbitral awards pursuant to the following instruments:<\/p>\n<ul>\n<li>New York Convention (1958).<\/li>\n<li>Inter-American Convention on International Commercial Arbitration (Panama, 1975).<\/li>\n<li>Article 158 of the Code of Private International Law and Law No. 131 of 2013, which govern the domestic procedure for recognition and enforcement of arbitral awards.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there foreign investment protection treaties in place between your country and major other countries?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Panama currently maintains 16 bilateral investment treaties with the following jurisdictions: Germany, Argentina, Canada, Chile, South Korea, the United States, Spain, France, Mexico, the Netherlands, the United Kingdom, the Dominican Republic, the Czech Republic, Sweden, Switzerland, Ukraine, and Uruguay. These treaties aim to create a favorable environment for investors seeking to transfer capital, focusing on the following principles:<\/p>\n<ul>\n<li>Establishing frameworks for economic cooperation to promote and protect businesses and entrepreneurs.<\/li>\n<li>Ensuring that foreign investments receive non-discriminatory treatment in accordance with international standards, including fair and equitable treatment.<\/li>\n<li>Providing protection against expropriation without compensation.<\/li>\n<li>Allowing investors to freely transfer profits, dividends, interest, and other payments related to their investments.<\/li>\n<li>Granting access to international dispute resolution mechanisms. In this regard, investors may resort to ICSID (International Centre for Settlement of Investment Disputes) or international arbitration under rules such as UNCITRAL. Panama is a signatory to the ICSID Convention, enabling foreign investors to seek international arbitration in the event of disputes.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">5440<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/123502","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=123502"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}