Doing Business in Panama

Thinking about doing business in Latin America? Then Panama could be one of your best choices. Read on below to find out why!

About Panama

Due to its geographic location, Panama is a unique strategic logistics hub in the world, with ports and airports equipped wi1th the latest technology. Its financial and banking system with a dollar based and open service economy, class communications platforms, with economic, political and social stability, plus a great lifestyle environment, make Panama the ideal destination to establish Regional Headquarters or Headquarters of Multinational Companies (MHQ)

What is a MHQ?

On August 24th, 2007, the Panamanian Government approved a new law for the establishment and operation of Headquarters of Multinational Companies.  A MHQ, is a company that carries out operations from Panama, offering their services to its Head Office, or its subsidiary companies, or its associated companies, or establishes its Head Office in Panama. The headquarters will always be part of multinational companies, with important international or regional operations in their country of origin. 

The law, offers several tax incentives for the company and for the upper-middle-level foreign personnel. Some of them: 

Corporate Incentives:

• The company is subject to income tax at a rate of 5% on taxable net income.

• Exemption from paying dividend tax, complementary tax, and branch tax; 

• The companies will not be subject to the use of fiscal equipment, or be required to obtain a commercial license.

For Executives:

• Income tax exemption

• Import tax exemption for household items

• Car import tax exemption

• Permanent Visa for administrative-executive level staff and dependents.

• Temporary Staff Visa


Recently, the country has gone through many reforms to ease business operations and promote foreign investment to benefit the manufacturing and real-estate sectors. 


To reactivate the real-estate sector, and implement a new financing model, The Government of the Republic of Panama approved Law No. 179 on November 16th, 2020. This law brings a creative alternative for people who wish to acquire a real estate, without the initial payment that is currently required for banks to grant mortgages for the purchase of houses, offices or commercial spaces, seeking to make the financial and investor sector increasingly attractive.

Tax Incentives:

• Exemption from paying income tax on the portion of the rents corresponding to interest.

• Exemption from paying movable goods and services transfer tax (ITBMS) on the rents will be payable for a period of five years. 

• Real-estate transferred to the lessee will not be subject to the real estate transfer tax (ITBI).

License to operate

To engage in the activity of Financial Leasing of Real Estate, companies must have a license issued by the Superintendency of Banks of Panama, who will be responsible for the authorization, supervision and inspection of those companies. The law has set a one-time registration fee of US $30,000.00 to carry out this activity.


To become a more competitive and attractive country for foreign direct investment, the Government of Panama established the special regime for the Establishment and Operation of Multinational Companies related to manufacturing, known as the EMMA Law No. 159, issued on August 31st 2020.

 The aforementioned law allows multinationals to provide the following services to their business group such as:

• Assembly of products, machinery and equipment.

• The manufacture of products, machinery and equipment.

• Remanufacturing of products, machinery and equipment.

• Maintenance and repair of products, machinery and equipment.

• Product development, research or innovation of traditional products or processes.

• Analysis, laboratory, test or other related to manufacturing.

• Logistics: storage and distribution center of components or parts.

Special Tax Regime

EMMA licensed companies will be subject to tax incentives similar to those obtained by MHQ companies:


 If your plans for year 2021 includes starting your own business or working remotely, in a place with great quality life, warm weather, beaches then incorporating a Panama Company is a smart choice, and I would like to explain you briefly, what are the best benefits of doing so.

Key Benefits when you register a corporation in Panama

  • Do not require paid up capital 
  • Low maintenance costs: US$600.00 annually
  • Directors can be foreign or nationals.
  • The company can be used for international trade, to settle trusts, to establish an offshore bank account or offshore investment account, to hold ownership of real estate, intellectual property, or any other type of assets.
  • Territorial tax system: when your income is obtained from an international source, no tax is payable.
  • Board meetings can be held physically, internationally, or by technological methods. Directors may attend personally or by proxy.

Innovativ Law has a broad experience in Corporate and Banking law, within all development stages of companies from start to finish. 

We will be happy to answer your questions, please feel free to contact us. Get in touch with our Panama Business Specialist Melissa Saucedo at

Panama Business Specialist
Panama Business Specialist Melissa Saucedo

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