Panamanian corporations, Private Interest Foundations and holding structures under a territorial tax system — with the Indian FEMA, POEM and disclosure implications addressed from the outset.
Panama has been an international corporate and shipping centre for a century. Its legal system offers two flexible vehicles that are widely used by international families and businesses: the Sociedad Anónima (S.A.), a corporation under Law 32 of 1927, and the Private Interest Foundation under Law 25 of 1995, which is used for asset protection, succession planning and holding family wealth without the constraints of a trust.
Panama taxes on a strictly territorial basis: income earned from activities carried out outside Panama is not subject to Panamanian income tax, and a company that has no Panama-source income files no income tax return there. The annual obligations are limited to the government franchise tax (tasa única) of USD 300, the registered agent fee, maintenance of accounting records and the beneficial ownership filing introduced by Law 129 of 2020. Bearer shares have been immobilised since 2015 and every entity must have a Panamanian resident agent (a licensed law firm).
Panama is a legitimate and well-regulated jurisdiction — it was removed from the FATF grey list in October 2023 — but any offshore holding structure must be set up with a clear commercial or family purpose, full disclosure in India and a realistic view of bank account opening. We help you decide whether Panama is the right choice at all before you incur any cost.
| Item | Position |
|---|---|
| Corporate tax | 0% on foreign-source income (territorial); 25% on Panama-source income |
| Annual franchise tax | USD 300 |
| Minimum directors / shareholders | 3 officers / 1 shareholder (S.A.) |
| Formation time | 3–7 working days |
| Audit / filing | No return for foreign-source income; accounting records must be maintained |
| Resident agent | Mandatory (Panamanian law firm) |
Requires three directors/officers (president, secretary, treasurer — may be the same persons or corporate), one shareholder, a resident agent and a registered office. Used for international trading, holding shares and investments, consultancy invoicing and yacht/ship ownership.
A separate legal entity created by a founder, managed by a foundation council (minimum three individuals or one corporate member) for the benefit of named or class beneficiaries. No owners; assets are held for the purposes in the charter and regulations. Commonly used to hold shares of operating companies, real estate and investment portfolios for a family. Read our dedicated Foundations page.
A members' company with more flexible internal rules, sometimes preferred for US tax classification reasons.
Licensed operations within the special economic areas with customs, immigration and tax incentives for logistics, manufacturing and distribution businesses.
We confirm the commercial or family objective, check Indian FEMA permissibility for the intended activity and identify banking options before anything is filed.
KYC on all shareholders, directors, founders and beneficiaries; drafting of the articles of incorporation or foundation charter.
Deed executed before a Panamanian notary and registered; certificate of incorporation and registered documents issued.
Share certificates or foundation regulations, minutes of first meeting, apostilled corporate documents for use abroad and beneficial ownership filing with the resident agent's system.
Application to a Panamanian or international bank with a clear business rationale; expect enhanced due diligence.
The Indian side of an overseas structure
For Indian resident promoters, setting up abroad is only half the job. Depending on how the entity is owned and funded, you may need to comply with the Overseas Investment Rules, 2022 (Form FC filing through your AD bank, a Unique Identification Number and an Annual Performance Report), the Liberalised Remittance Scheme limit of USD 250,000 per person per financial year, Place of Effective Management (POEM) rules that can make a foreign company tax-resident in India if it is controlled from here, transfer pricing on transactions with your Indian business, and Schedule FA disclosure of foreign assets in your Indian return. We build these into the plan from the start.
Yes, provided the investment is made under the Overseas Investment Rules through the LRS or ODI route, the entity engages in bona fide business activity permitted under those rules, and the shareholding, income and assets are disclosed in the Indian tax return. Investments in entities engaged in real estate business or financial services abroad are restricted and require careful structuring or prior approval.
It is a succession and asset-protection vehicle: a founder endows the foundation with assets (typically shares of companies or investment accounts), the foundation council manages them according to the charter and private regulations, and beneficiaries receive distributions as specified. It avoids probate across multiple countries and can hold family assets across generations. For Indian residents the tax treatment of contributions and distributions needs specific analysis.
Bank onboarding for offshore entities is stricter than a decade ago. Panamanian banks will want to see genuine activity, references and a clear source of funds; international EMIs and banks in other jurisdictions may accept Panama entities with the right profile. We assess bankability before you incorporate and will tell you frankly if another jurisdiction would serve you better.
Panama participates in the OECD's Common Reporting Standard, and there is a tax information exchange agreement between India and Panama. Structures should be set up on the assumption that ownership and account information is visible to Indian authorities, which is why full disclosure is part of our engagement.
Company formation and compliance in United Arab Emirates.
Learn moreCompany formation and compliance in Saudi Arabia.
Learn moreCompany formation and compliance in Hong Kong.
Learn moreCompany formation and compliance in Seychelles.
Learn moreCompany formation and compliance in Cayman Islands.
Learn moreCompany formation and compliance in Delaware.
Learn moreCompany, LLP and subsidiary formation for Indian and foreign investors.
Learn moreTell us about your business and where your customers and investors are; we will send a structure recommendation and a full cost schedule.
