A. PANAMANIAN CORPORATIONS.

A corporation constituted under the Laws of the Republic of Panama is a versatile, fast and specially trustworthy vehicle to carry out, not only local, but also offshore business activities.

Two or more persons, of age, of any nationality and/or domicile, may constitute a corporation for any legal objective, by means of the execution in Panama or abroad, in any language, of any incorporation contract or articles of incorporation. Said document must be recorded at the Public Registry Office.

Law N° 32, of February 26, 1927, regarding corporations, has not substantially been amended in its context and original spirit. Due to this fact, Panamanian corporations offer many advantages among which we may mention the following:

• There exists respect towards the juridical personality of corporations, and in consequence, a distinction and separation of its shareholders as natural persons.
• The nonexistence of requirements regarding nationality and residence of the subscribers of the Articles of Incorporation, shareholders, directors and officers of the corporation.
• The possibility of issuing the totality of the capital stock in bearer shares.

Panamanian Corporate Laws require all corporations to have a Resident or Registered Agent in the Republic of Panama, who must be a lawyer or law firm, duly authorized to carry out these activities in the Republic of Panama.

Respect Toward Juridical Personality.

One of the most important advantages of Panamanian Corporations is the strict respect towards its juridical personality. Panamanian Law clearly separates the personality and liability of the Shareholders, Directors and Officers and that of the Corporation. Panamanian Courts of Law have traditionally recognized this distinction, particularly the separation of the assets of the corporation from those of its shareholders, directors and officers.

Tax Information.

Due to the strict adherence of Panamanian Tax Laws to the "territorial source principle", incomes are taxable only when produced within the territory of Panama. Hence, corporations that do not carry out operations within the Republic of Panama, and do not perceive income from Panamanian sources, are subject to income tax payment.

The employees, officers or directors of a Panamanian corporation that live abroad, do not have to pay income tax, or any other type of tax in the Republic of Panama, from transactions carried out outside Panama, or from payments received for these services.

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