What You Need to Know About Doing Business in Panama!
June 18, 2025
“A popular destination for international entrepreneurs.”
——-
Location: Between Costa Rica and Colombia
Capital City: Panama City
Population: 4.57 million (2025)
Language Spoken: English and Spanish
International Time: EST
Airline Service: Air Panama, American, Euroairlines
Currency: US dollar
Type of Government: Independent Constitutional Democracy
Main industries: Operating the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, tourism.
OECD: Approved
FATF: Member CFATF
Doing business in Panama offers several advantages and presents challenges that foreign investors and entrepreneurs should understand.
Strategic Location and Global Connectivity:
Panama is often called the “Hub of the Americas” due to its strategic location connecting North and South America and its control of the Panama Canal, a key global shipping route. Panama City serves as a major logistics and banking hub with excellent air and sea connectivity, making it attractive for regional operations, trade, and international business.
Business-Friendly Environment:
Panama generally ranks well in tax efficiency, corporate privacy, and ease of incorporation:
- Company formation is relatively fast, with popular structures such as the Panama Corporation (S.A.) and Private Interest Foundations.
- There is no requirement for local shareholders, and 100% foreign ownership is permitted.
- Territorial taxation means only income generated within Panama is taxed—offshore income is not subject to Panamanian tax. (Please note that US citizens are taxed on worldwide income)
Banking and Financial Services:
Panama has a well-developed banking sector, especially known for offshore services and private banking. However, Since being placed on various international watchlists (OECD, FATF), banking due diligence and compliance requirements have tightened. Thus, opening a business bank account can be time-consuming and may require strong documentation.
Considerations:
While Panama offers solid legal infrastructure for corporations, challenges include:
- Bureaucracy and administrative delays in some government services.
- A civil law system, which may be unfamiliar to those from common law jurisdictions.
- Regulatory transparency has improved, but enforcement of contracts and dispute resolution can still be slow and uneven.
- Skilled labor (especially bilingual or tech-capable) can be limited outside Panama City.
- Logistics and shipping
- Banking and finance
- Tourism and hospitality
- Real estate development
- Agribusiness and export
