Set up your business in Panama

The cost of setting up a company in Panama can vary depending on several factors, such as the type of company, the services you require, and whether you engage a professional service provider or handle the process yourself. Here are some general costs to consider:

• Government fees: To register a company in Panama, you'll need to pay various government fees, including registration fees, notary fees, and publication fees. These fees can range from a few hundred to a few thousand dollars, depending on the type and capitalization of the company.
• Legal and professional fees: Many people choose to engage the services of a lawyer or a professional service provider to assist with the company formation process. The fees for these services can vary depending on the complexity of the setup, ranging from a few hundred to a few thousand dollars.
• Office space: If you plan to have a physical office, you'll need to consider the cost of leasing or purchasing office space. The cost will depend on the location, size, and quality of the premises you choose.
• Additional costs: There may be other costs involved, such as obtaining business licenses, hiring employees, opening a bank account, and fulfilling any specific requirements based on your business activities. These costs can vary significantly depending on your specific needs.

It's important to note that the information provided is a general guideline, and the actual costs can vary depending on various factors. It's recommended to consult with a legal or business professional familiar with Panamanian regulations and requirements to get a more accurate estimate based on your specific circumstances.

The time it takes to open a business in Panama can vary depending on several factors, including the type of business, the specific location in Panama, and the efficiency of the administrative processes. Generally, it can take several weeks to a few months to complete all the necessary steps. Here is an overview of the typical process:

• Business Structure and Name Registration: The first step is to choose the legal structure for your business (e.g., sole proprietorship, partnership, corporation) and register your business name. This process can be completed relatively quickly, often within a few days.
• Legal Requirements: Depending on your business type, you may need to comply with specific legal requirements. For example, you may need permits, licenses, or authorizations from various government agencies. The time required for this step can vary significantly based on your business's nature and location.
• Tax Registration: You will need to register for tax purposes with the Panama Revenue Authority (Dirección General de Ingresos or DGI). This process can take a few weeks.
• Bank Account Opening: Opening a business bank account is a crucial step. The time required for this step can vary based on the bank and your specific situation but may take a few weeks.
• Commercial Registration: Registering your business with the Public Registry (Registro Público) is essential. The time required for this step can also vary but may take several weeks.
• Social Security and Labor Compliance: If you plan to hire employees, you'll need to register with the Social Security Fund (Caja de Seguro Social or CSS) and ensure compliance with labor laws. This process can take time, including several weeks.
• Municipal Permits: Depending on your business location, you may need municipal permits and licenses, which can add to the overall timeline.
• Notary and Legal Procedures: Various legal and notarial procedures may be required depending on your business's specific needs and legal structure.

ITBMS, or Impuesto de Transferencia de Bienes Muebles y Servicios, is Panama's value-added tax (VAT) system. It is also known as the Value Added Tax (VAT) in some countries. ITBMS is a tax applied to the transfer of movable goods and the provision of services in Panama. It is designed to tax the value added at each stage of the production and distribution process.

As of my last knowledge update in September 2021, the standard rate of ITBMS in Panama was 7%. However, please note that tax rates can change over time, and it's essential to check with the Panamanian tax authorities or consult with a local tax professional for the most up-to-date information on ITBMS rates and any potential changes that may have occurred since then.