Annual Costs for Corporations in Panama

Panamanian corporations, also known as stock corporations, are subject to a series of annual costs to ensure legal and tax compliance. By understanding these expenses in advance, you can avoid unnecessary penalties and fines. Here's a general breakdown:

• Annual Franchise Tax: Mandatory for all stock corporations registered in Panama's Public Registry.
• Resident Agent Fees: A legal requirement for all registered companies.
• Registered Office Address: An official Panamanian address is needed for receiving official correspondence.

Next, we will dive into each of these costs in detail so you can plan your company's budget effectively.

The Annual Franchise Tax is the primary tax that stock corporations in Panama must pay. This tax ensures that your company remains registered in the Public Registry of Panama. Here's what you need to know:

• Tax Amount: USD 300 annually.
• Deadlines: Must be paid before June 30 to avoid surcharges.
• Late Penalties: If paid late, penalties range from USD 50 to USD 300, cumulative depending on the delay.

Failing to pay this tax not only leads to penalties but also exposes your company to the risk of being dissolved by Panamanian authorities.

In Panama, all corporations are required to have a Resident Agent, typically a lawyer or an accredited legal firm. This requirement is essential as resident agents act as legal representatives before the government. Here's what this service involves and costs:

• Average Annual Cost: Ranges from USD 150 to USD 500 depending on the legal firm.
• Key Responsibilities: Act as an intermediary with tax and local authorities, as well as maintain up-to-date legal records.

Choosing a reliable resident agent, like us at Limitless Legal, ensures your corporation adheres to all regulations and receives dependable legal support.

A registered office address is the official location where your corporation can receive notifications and official correspondence. It is a legal requirement in Panama and is generally linked to the resident agent. Here's what you need to know:

• Average Cost: USD 100 to USD 300 annually.
• Benefits: Ensures that official communications are received promptly, allowing you to respond quickly to any legal or tax requirements.
• Additional Services: Some legal firms offer digitization and online forwarding of documents received at this address.

Keeping this service active is crucial, as its absence could lead to legal non-compliance and disrupt your company's operations in Panama.

Not paying mandatory annual expenses can have serious consequences for your corporation in Panama. Among the main ones are:

• Cumulative fines: As we mentioned before, the penalties for not paying the Single Annual Fee or resident agent fees can increase rapidly.
• Suspension of registration: A corporation that accumulates debts with the Public Registry can be suspended.
• Dissolution of the company: In serious cases, the Panamanian authorities have the power to dissolve the company.

To avoid these problems, we recommend that you work with a reliable law firm that manages all of these obligations for you.