Panama attracts regional headquarters, logistics, trading and service businesses: it uses the US dollar, taxes mainly income from Panamanian sources and sits at the centre of the Americas. Setting up still takes several separate workstreams: forming the company, registering for tax, filing a notice of operations, opening a bank account and, before the first hire, registering as an employer. This guide sets out the steps in order, and when it makes sense to hire your first employee before the company exists.
Choose the legal form
Most foreign investors use one of three forms. The choice affects governance, disclosure and how the business is taxed, so take Panamanian legal and tax advice before you file.
| Form | What it is | Typical use |
|---|---|---|
| Sociedad anónima (corporation) | The traditional Panamanian company, governed by Law 32 of 1927, with shareholders and a board of directors | Operating companies and holding structures |
| Sociedad de responsabilidad limitada (limited liability company) | A company owned by partners whose liability is limited to their contributions | Smaller operating businesses with few owners |
| Branch of a foreign company | The foreign company registers itself in Panama instead of forming a new entity | Groups that want the parent to hold the activity directly |
Groups that want to run regional management from Panama can also look at special regimes such as the multinational headquarters regime (SEM, Law 41 of 2007), the Panamá Pacífico special economic area or the Colón Free Zone. Each has its own admission rules, and the benefits belong to the admitted company, not to anyone who works for it.
Register the company: the steps in order
- Appoint a resident agent. Every Panamanian company needs a resident agent, which must be a Panamanian lawyer or law firm. The agent files the documents and keeps the required due-diligence records.
- Prepare and register the articles. The articles of incorporation (or the branch documents) are signed, notarised where required and registered with the Public Registry (Registro Público). Foreign documents usually need an apostille and a Spanish translation.
- Report the beneficial owners. Through the resident agent, the company reports its final beneficial owners to the confidential register under Law 129 of 2020.
- Register for tax. The company obtains its taxpayer number (RUC) from the General Directorate of Revenue (DGI) and registers for the taxes that apply to its activity.
- File the notice of operations. Before trading in Panama, the business files its notice of operations (aviso de operación) through the PanamaEmprende system and obtains any licence its activity needs.
- Open a bank account. Panamanian banks run full know-your-customer checks on the company, its directors and beneficial owners, and on expected transactions.
- Register as an employer. Before the first employee starts, the company registers with the Social Security Fund (CSS), sets up payroll and prepares written employment contracts under the Labour Code.
How long this takes depends on how quickly documents are apostilled and translated, on the bank’s review and on any licence. Treat any timeline as an estimate until each step is confirmed.
Tax basics for a new company
| Item | Rule | Notes |
|---|---|---|
| Taxation principle | Territorial: income from Panamanian sources is taxed | Whether income is foreign-source depends on the facts of the activity, not on where payment is received |
| Corporate income tax | 25% general rate | Special regimes and some sectors have their own rules |
| ITBMS (value added tax) | 7% standard rate | Higher rates apply to some goods and services |
| Employer social security (CSS) | 13.25% of salary until 28 February 2027 | 14.25% from 1 March 2027 and 15.25% from 1 March 2029 (Law 462 of 2025) |
| Education insurance | Employer 1.5%; employee 1.25% | Paid with the monthly CSS filing |
A company that has no Panamanian-source income still has filing obligations, so plan accounting and annual returns from the start.
Your first hire: before or after the company?
Hiring needs an employer registered with the CSS. If the company is not ready, or you want to test the market first, an employer of record can employ the person on your behalf. Panama’s Labour Code, however, prohibits arrangements in which one business supplies another with the workers it needs to operate while keeping the employer role (Article 94), with authorised temporary staffing for up to two months as the exception (Article 95). So an employer of record works only where the arrangement for the role is set up to fit the law, and that is confirmed before any offer.
| Your own company | Employer of record | |
|---|---|---|
| Who employs | Your Panamanian company | A local employer, once the arrangement for the role is confirmed |
| Before the first hire | Formation, tax registration, bank account, CSS employer registration | A service contract and the confirmed arrangement for the role |
| Best for | A long-term team, local sales and invoicing | A first hire or pilot while you decide on a local company |
| Ongoing work | You run payroll, CSS, the 13th-month pay and HR, or outsource payroll | The employer runs payroll, CSS, the 13th-month pay and the employment |
See Employer of Record in Panama for how this works, or estimate the full employer cost in our Panama salary and employer cost calculator. Once your company is registered, Panama payroll covers the monthly cycle. Hiring a foreign national? Work permits and the limits on foreign staff are covered in Hire Foreign Employees in Panama.
Employer obligations from day one
- A written employment contract; a fixed term or a probation period is valid only if the contract states it
- Working time of up to 48 hours a week on the day shift, with overtime paid at a surcharge
- The minimum wage for the region, activity and company size, under Executive Decree No. 13 of 2025 (see our Panama minimum wage guide)
- The 13th-month pay in three instalments, on 15 April, 15 August and 15 December
- 30 days’ paid leave for every 11 months of continuous work
- Monthly CSS filings and income tax withholding
For more detail, see our Panama employment law guide.
Checklist before you launch
- Legal form chosen with Panamanian legal and tax advice
- Resident agent appointed and articles registered
- Beneficial owners reported
- RUC obtained and notice of operations filed, with any licence
- Bank account opened
- CSS employer registration and payroll in place before the first employee starts, or an employer of record arrangement confirmed
This guide is general information, reviewed November 2026, and not legal or tax advice. Rules and practice change, so confirm each step with Panamanian advisers before you act.
Planning a first hire in Panama? Tell us about the role and we will set out the arrangement that fits and the full-year cost. We will respond within 24 hours.