Starting a Business in Panama: A Legal Guide (2026).

Panama remains one of the most attractive places in the region to start a business: the US dollar as legal tender, a territorial tax system, strong logistics connectivity, and a mature body of corporate law. But setting up a company properly means chaining together several interdependent steps in the right order: the legal structure, the commercial license, the beneficial ownership registry, immigration and work permits, tax registration, and finally the bank account.

This guide is a general map of those steps and of the legal decisions worth making before you sign the first document. Each section links to the relevant detailed guide so you can dig deeper wherever you need to.

1. Choosing the legal structure

The first decision — and the one that shapes almost everything else — is the vehicle you will use to operate. Several forms coexist in Panama:

• Corporation (Sociedad Anónima, S.A.), governed by Law 32 of 1927. This is the most common and flexible structure: capital divided into shares, liability limited to the contribution, foreign and non-resident shareholders and directors allowed, and a mandatory resident agent (a lawyer or law firm). It is the natural choice for businesses that plan to scale, bring in partners, or raise investment. Requirements, costs, and the step-by-step process are in our guide to the Panama corporation.
• Limited Liability Company (Sociedad de Responsabilidad Limitada, S.R.L.), governed by Law 4 of 2009. Similar asset protection, using "participation quotas" instead of shares; often preferred when the identity of the partners matters or for foreign tax-treatment reasons.
• Entrepreneurship Company (Sociedad de Emprendimiento, SdE), created by Law 182 of 2020. Designed specifically for entrepreneurs: minimum capital of B/. 500.00, members who may only be natural persons residing in Panama, and temporary tax benefits (exemption from Income Tax and from the Single Annual Fee during the first two years, among others). It comes with meaningful trade-offs — an income cap of B/. 1,000,000.00 and participation restrictions — which we explain in the guide to entrepreneurship companies and their key points.
• Individual / sole proprietor. For small operations it is possible to operate as a natural person directly under a Notice of Operations, without incorporating a company, though without the asset separation the structures above provide.

There is no one-size-fits-all answer: it depends on size, the profile of the partners (resident or not), investment appetite, and tax planning. If you are unsure which one fits your project, our corporate law team can advise you.

2. Notice of Operations (business license)

With narrow exceptions, every commercial or industrial activity in Panama requires a Notice of Operations (Aviso de Operaciones), the license that authorizes you to operate. It is governed by Law 5 of 2007 and processed online through the PanamáEmprende system of the Ministry of Commerce and Industries (MICI).

The Notice identifies the economic activity you will carry out, and here it is important to note that certain activities are reserved for Panamanian nationals — retail trade, among others — a foreign entrepreneur should check in advance whether their line of business is allowed; see the list of activities and professions restricted to foreigners. The requirements, fees, and process are detailed in the guide to understanding your Panama business license.

3. Ultimate beneficial owner (UBO) registry

Since Law 129 of 2020, every Panamanian legal entity must report its ultimate beneficial owners (the natural persons who ultimately own or control the entity) to the Private and Sole Beneficial Ownership Registry, administered by the Superintendency of Non-Financial Subjects. The report is filed by the resident agent using the information the client supplies, and it must be kept up to date.

This is a compliance obligation that cannot be overlooked: failure to comply carries penalties and can even lead to the suspension of the company at the Public Registry. We explain the scope and rationale of this measure in the guide to the Ultimate Beneficial Owners Registry.

4. Work permits for the foreign entrepreneur and staff

Incorporating a company and being a shareholder does not by itself grant the right to work in Panama. A foreign entrepreneur who will also work in their own company generally needs two layers: an immigration status (residency) from the National Immigration Service, and a work permit from the Ministry of Labor and Workforce Development (MITRADEL).

The company is also subject to the payroll percentages set by the Labor Code: as a general rule, at least 90% of staff must be Panamanian (ordinary personnel), with quotas of 10% for ordinary foreign workers and up to an additional 15% for trusted, expert, or technical personnel. The permit types, requirements, and steps are in the guide to the Panama work permit, and the investment- and employment-related immigration categories can be reviewed in our labor migration service.

5. Tax regime: income tax, SME regime, and ITBMS

Panama applies a territorial system: only Panama-source income is taxed. The general corporate Income Tax rate is 25%. For entrepreneurs and small businesses, however, there is a special Income Tax regime with lower progressive rates, whose requirements (registration with AMPYME, income caps, and excluded activities) we detail in the guide to the special Income Tax regime for SMEs and entrepreneurs. Remember that the Entrepreneurship Company (SdE) adds its own temporary exemption, discussed in section 1.

On indirect taxes, most sales of goods and services are subject to ITBMS (the movable goods and services transfer tax) at a general rate of 7%. If your business exceeds the billing threshold, you must register as a taxpayer and file returns.

Every taxpayer also needs a tax identification: the RUC for nationals and companies (see what the RUC is and how to obtain it) and the NT for foreigners without a national ID (see what the NT is for foreigners).

6. Corporate bank account

The final link — and often the most demanding — is opening the company's bank account. Panamanian banks apply strict due diligence (know your customer): they will ask for the company's documents, the details of the beneficial owners, bank and commercial references, and a clear description of the source of funds and the activity. Preparing this file well from the start avoids rejections and delays.

The requirements, the usual documents, and tips for a smooth process are in the guide to opening a bank account in Panama.

Putting it all together

Starting a business in Panama is entirely feasible, but each of these steps has legal nuances that are best resolved in the right order and with sound judgment: the wrong structure, a restricted activity, or an incomplete bank file can cost time and money. Our corporate law team supports the whole process, from incorporation to the bank account.

This content is general legal information about Panamanian law and does not constitute legal advice for a specific case. For decisions about your company, consult a lawyer.