Published on and written by Cyril Jarnias
For decades, the phrase “Panamanian Corporation 2026: Absolute Banking Secrecy” has captivated international entrepreneurs seeking opacity. But in 2026, the legal, tax, and banking reality of Panama bears little resemblance to the clichés inherited from the 1980s or even the Panama Papers era. The country remains one of the most sophisticated offshore platforms on the planet, but now operates within a framework shaped by international transparency, anti-money laundering efforts, and strict accounting requirements.
Absolute banking secrecy no longer exists in Panama. However, a Panamanian structure, combined with international tax planning and compliance with new regulations, can still offer high asset protection and discretion. It is essential for investors and executives to understand what remains possible regarding confidentiality.
A Century-Old Legal Framework, Completely Rewritten by Compliance
On one hand, the legal foundation of Panamanian corporations has remained virtually unchanged for nearly a century. On the other, legislation adopted since 2015 has profoundly changed how these structures are used.
The Sociedad Anónima, governed by Law 32 of 1927, is the primary legal form for incorporating a Panamanian corporation, used for international trade, asset holding, or estate structuring. Panamanian law requires a board of directors with at least three members (president, secretary, treasurer), who can be individuals or legal entities of any nationality, with no residency requirement in Panama.
However, every company must have a local resident agent, a duly licensed Panamanian lawyer or law firm, as well as a registered address within the country. This “resident agent + registered office” duo serves as the anchor point between the offshore structure and the Panamanian authorities.
The general legal framework can be summarized around a few key laws:
| Legal Text | Main Purpose | Effect on Companies |
|---|---|---|
| Law 32 of 1927 | Corporations (S.A.) | Creation, operation, types of shares |
| Law 52 of 2016 | Accounting Records | Obligation to keep and maintain accounting records |
| Law 254 of 2021 | Transparency & Records | Strengthened accounting and UBO obligations |
| Law 129 of 2020 | Register of Beneficial Owners | UBO declaration to a non-public database |
| Law 23 of 2015 | AML/CFT | KYC, AML obligations for agents and entities |
Adding to this layer of laws are recent implementing decrees that change the daily operations of companies, notably Executive Decrees 168 and then 177 in late 2024, as well as Resolution 201‑9360 of 2024. They detail precisely what is now expected, from an accounting and reporting standpoint, of every Panamanian corporation, even offshore or dormant ones.
Panama remains an offshore jurisdiction, but all companies must now be registered with a resident agent, appear on the Register of Beneficial Owners, and be able to provide their accounting documents upon request.
The End of the “Black Hole”: Accounting, Registries, and Substance
One of the major disruptions of the last decade concerns accounting. Whereas, in the past, many offshore companies could get by with virtually no paper trail of their operations, Law 52 of 2016 and then Law 254 of 2021 put an end to this organized opacity.
All Panamanian corporations, including those with no local activity or that are inactive, must now:
Taxpayers must: keep detailed accounting records showing their financial position (assets, liabilities, income, expenses) and transaction history; retain all supporting documents (contracts, statements, invoices, etc.) for a minimum of five years; inform their resident agent of the exact physical address where these records are stored; and be able to produce all these documents upon request by authorities within 15 business days.
Panama has even categorized entities to tailor these obligations:
| Entity Category | Characteristics | Main Requirements |
|---|---|---|
| Panamanian entities holding assets | Exclusively Panamanian UBOs | Annual sworn declaration |
| Foreign entities holding or generating income | At least one foreign UBO | Financial statements or summary of financial position |
| Non-operational entities | No activity, income, or assets | Annual certification of inactivity |
All share a common requirement: the need for an accounting trail. The myth of the “empty Panamanian shell, with no paperwork or accounts” no longer holds up under the new rules.
Panama applies a territorial tax system: corporate income tax (general rate of 25%) only applies to income sourced in Panama, while foreign-source income is generally exempt. However, for multinational groups receiving foreign passive income (interest, dividends, royalties), a draft economic substance regime was presented in late 2025 to comply with European Union standards.
The idea is simple: if an entity claims exemption on foreign passive income, it must prove real substance in Panama. This notably includes:
– qualified personnel employed in Panama;
– adequate premises;
– strategic decisions effectively made in the country;
– local operating expenses.
Failing this, the entity could be reclassified as “non-qualified,” and its foreign passive income taxed. Here again, the logic is clear: fewer purely nominal structures, more real and identifiable activities.
Resident Agent: Pivot of Confidentiality… Under Scrutiny
In this new landscape, the role of the resident agent is central. The law requires them to be a lawyer or a Panamanian firm holding a professional license. Their role goes far beyond that of a simple mailing address.
The resident agent must: ensure that operations comply with regulatory and legal requirements.
The legal representative of a company must: maintain KYC documentation on directors, shareholders, and ultimate beneficial owners (UBOs); know the address where accounting records are kept; file an annual declaration listing the entities represented and, from 2025‑2026, other reports depending on the company category; declare UBOs to the Unified Register of Beneficial Owners (RUBF), a database accessible only to competent authorities; and resign in case of persistent non-compliance by the company.
This framework clearly shows how Panama has chosen to meet FATF standards on beneficial ownership transparency: confidentiality vis-à-vis the public and commercial third parties remains possible, but authorities must be able to quickly access, through the resident agent, precise information on who actually controls the structure.
The relationship with the resident agent is therefore strategic. In practice, they are the ones who enable access to services such as nominee directors, banking assistance, legal maintenance, and, at the same time, will screen out clients deemed too high-risk in terms of AML/CFT.
Nominee Directors: Legal Discretion, Not Absolute Anonymity
One of the most widely used features of Panamanian companies is the use of nominee directors and shareholders. The practice is old, perfectly legal, and very common.
In concrete terms, a nominee director is a straw director provided by the local firm, who appears on public documents (Articles of Incorporation, registries at the Registro Público) instead of the beneficial owner. The latter actually holds the economic shares and decision-making power, but remains absent from publicly accessible registries.
Legal safeguards govern this technique:
To ensure the beneficial owner (UBO) maintains control of a company despite the use of nominees, several legal mechanisms are put in place. The beneficiary receives general powers of attorney signed by the nominees, allowing them to act on behalf of the company. Undated resignation letters from the nominee directors are prepared in advance, enabling the UBO to change the board of directors at any time. Nomination and indemnification contracts precisely define the limited responsibilities of the nominees. Finally, when a nominee shareholder is used, a trust declaration or nominee agreement attests that the shares are held for the exclusive benefit of the UBO.
The benefit for the client is clear: on panadata.net or at the Public Registry, only the identities of the directors appear, not those of the shareholders or ultimate beneficiaries. This is a form of structural confidentiality, authorized by Law 32 of 1927.
But to speak of “absolute secrecy” would be misleading. Under pressure from the FATF, Panama has adopted a specific transparency mechanism for these services. Agreement JD‑02‑2022 imposes on nominee providers:
– annual risk assessments;
– enhanced due diligence on each client and each nominee relationship;
– complete traceability of beneficial owners;
– periodic reports to the supervisory authority on companies for which nominees are provided.
Thus, discretion remains total vis-à-vis the general public and commercial databases, but not vis-à-vis the resident agent and regulators. Furthermore, any bank account opening in Panama involving a company with nominees requires the bank to know the true UBO, in accordance with KYC/AML rules.
Banking Secrecy: A Constitutional Protection… Pierced by FATCA, CRS, and AML
Historically, Panama ranks among the jurisdictions with the strictest banking secrecy. This secrecy is not based on a single text, but on a bundle of provisions in the Commercial Code, banking law, Penal Code, Labor Code, and even the Constitution.
For a long time, these texts allowed the existence of numbered accounts, anonymous bearer instruments, and near-impossible communication abroad regarding banking information. Law 18 of 1959 thus introduced coded accounts, while Cabinet Decree 238 of 1970, which founded the financial center, restricted the National Banking Commission’s access to client information without a specific judicial order.
The protective arsenal can be summarized as follows:
| Legal Source | Main Protection |
|---|---|
| Constitution | Protection of privacy, private property, and legitimate investments |
| Commercial Code (arts. 89 & 93) | Prohibition on providing books and documents without an order from a competent Panamanian authority; obligation to keep books at the registered office |
| Decree 238 of 1970 | Prohibition for the banking regulator to investigate clients’ private affairs without a warrant; penalties for disclosure |
| Law 18 of 1959 | Coded accounts, criminal penalties for employees who reveal information |
| Penal Code (arts. 168 & 170) | Offenses of disclosing correspondence or confidential information without authorization, imprisonment and prohibition from practicing |
| Labor Code (art. 213) | Disclosure of commercial information as valid grounds for dismissal |
This foundation remains. However, the international environment has changed radically with the arrival of FATCA, the Common Reporting Standard (CRS), and new AML/CFT standards. Panama signed a Model 1 Intergovernmental Agreement with the United States, obligating its banks to report accounts held by U.S. taxpayers. It has also implemented the OECD CRS for the automatic exchange of information with over 100 countries.
Concretely, this means that:
Key regulatory requirements for Panamanian banks regarding client identification and tax information exchange.
Banks must identify the tax residency of their clients, notably through self-certifications provided by the latter.
Non-resident accounts are reported annually to the DGI, which then transmits the data to the relevant foreign tax administrations.
Accounts held by so-called ‘opaque’ Panamanian companies are now subject to effective transparency towards the countries of residence of their ultimate beneficial owners (UBOs).
Banking secrecy therefore continues to apply fully within the Panamanian system and for tax residents of the country, since Panama does not exchange CRS information on its own residents. But for a non-resident, it is no longer a total screen, but rather a filter: the bank will not transmit anything to private third parties, but it will report information to the tax authorities of the country of residence, and will cooperate in the event of an international criminal investigation.
The implicit message is clear: the “Panamanian Corporation 2026: Absolute Banking Secrecy” structure can no longer be used to conceal assets from tax authorities. On the other hand, it remains a powerful tool for protecting these assets from private risks (commercial disputes, creditors, complex succession) and for organizing information in a controlled manner.
Bank Accounts for Panamanian Companies: Procedure and Reality of Controls
Opening a bank account for a Panamanian company in 2026 is no longer a simple form signed remotely. Panamanian banks now operate under compliance standards very close to those of Singapore or Switzerland, with stringent controls on the source of funds, actual activities, and ownership structure.
For a non-resident, the process generally takes place in several stages, over a period of 2 to 6 weeks:
Opening a professional bank account typically follows a five-step procedure. It begins with pre-qualification, often assisted by an agent or firm, to identify a bank suitable for the profile. Next, comprehensive documentation must be prepared, including the company’s legal documents, identification of directors and ultimate beneficial owners (UBOs), a business plan, and evidence of the source of funds. An interview with a bank officer is then arranged. The bank proceeds with an in-depth compliance review (KYC, anti-money laundering). Finally, after approval, the account is activated with its online services.
Banks usually require a significant minimum deposit, especially if the company has no local activity. For a foreign company without business in Panama, some institutions demand an initial deposit of $10,000, sometimes more, and a relationship threshold of at least $25,000 for certain profiles. Physical presence of the client is still frequently required, although some well-prepared cases can be handled partially remotely.
Accounts are generally in US dollars, with fees comparable to the region. However, banks are particularly strict with structures linked to cryptocurrencies or sensitive sectors. These entities must prove impeccable AML/CFT compliance and often provide local legal opinions attesting to the legality of their activities.
The result is paradoxical: Panama retains an image as an “exotic” hub but functions, for corporate accounts, as a fully integrated financial center meeting international standards. Banking confidentiality still exists vis-à-vis the public and competitors, but it coexists with automatic reporting to foreign tax authorities.
At the heart of the myth of absolute secrecy was the possibility of issuing bearer shares, whose mere physical possession conferred ownership, without any nominal register. Law 32 of 1927 indeed allows for the creation of these instruments, as well as registered shares, and historically permitted great flexibility in switching between the two.
International pressure has, however, profoundly reshaped this regime. Law 47 of 2013 established a mandatory custody system for bearer shares. Since then, every holder of such shares must:
To deposit registered certificates, you must: designate an authorized custodian (such as a bank, brokerage firm, or lawyer registered on a special list), physically deliver the certificates to them within 20 days of their issuance, and provide a sworn declaration confirming your status as owner, as well as a possible beneficiary designation to name heirs.
In case of non-compliance, the economic and political rights attached to the bearer shares may be suspended. Furthermore, the custodian is required to retain this information for at least five years after the end of the relationship, and must communicate it to competent authorities upon formal request, without this being considered a violation of professional secrecy.
While anonymity vis-à-vis the public can be maintained, it no longer exists vis-à-vis the authorities. Law 129 of 2020 established a Unified Register of Ultimate Beneficial Owners, managed by the Superintendency of Non-Financial Subjects. The resident agent is obligated to declare the ultimate beneficial owner (UBO) of each company. This register, not public, allows authorities to quickly identify the individuals behind a structure.
In other words, keeping bearer shares physically in a personal safe, outside any register, is no longer compatible with current Panamanian law. Some banks even require the conversion of these bearer instruments into registered shares before accepting the opening or maintenance of an account.
Corporate Taxation: Territoriality, Dividends, and Special Zones
In the tax domain, Panama retains what makes it a pillar of international planning: a strictly territorial system, with corporate taxation limited to income sourced in Panama. The standard corporate income tax rate is 25%, calculated on net profit. Income generated entirely abroad – sale of goods outside the country without entry into its territory, services performed and consumed abroad, dividends from foreign subsidiaries, interest from non-Panamanian sources – is generally not taxable locally.
This regime is complemented by a set of specific rules:
Rate of the Alternative Calculation of Income Tax (CAIR) applied to gross revenue for companies exceeding $1.5 million in taxable income.
In addition to these general provisions, there are several powerful special regimes, making Panama a mosaic of zones and incentives:
| Special Regime | Key Tax Benefits |
|---|---|
| Colón Free Zone | Corporate income tax exemption for certain operations, reduced property taxes, reduced transaction tax rate |
| Panama Pacífico | Reduced 5% corporate income tax rate for certain activities, exemptions from withholding taxes, VAT and property tax benefits |
| SEM (Multinational Headquarters) | Fixed 5% rate, exemption from dividend withholding tax and complementary tax, immigration and social benefits |
| EMMA (Manufacturing Services for Multinationals) | Fixed 5% rate, dividend exemptions, pro-export alignment |
| Tourism or Logistics Programs | Massive tax and import/export duty relief for eligible activities |
All corporations must however pay the annual franchise tax (Tasa Única) of $300, due to the Public Registry, as well as, where applicable, the Operation Notice tax (2% of capital, capped) if they carry out local activity. Added to this are VAT (ITBMS) of 7%, social security contributions for employers, and, for entities operating in Panama, annual reporting obligations to the DGI.
The tax regime depends on the company’s activity. An offshore company with no local activity operates abroad without Panamanian tax, but must bear recurring compliance costs (franchise tax, resident agent, accounting, filings). A company operating locally benefits from sectoral incentives but is subject to full local taxation.
Foundations and Trusts: Asset Confidentiality Rather Than Banking Secrecy
To truly organize asset confidentiality, beyond just the company, Panama offers two major tools: the Private Interest Foundation (PIF) and the Panamanian trust. These instruments are not directly used for commerce, but to hold assets (companies, real estate, investment portfolios, bank accounts) in a logic of protection, succession, and international planning.
The Private Interest Foundation, created by Law 25 of 1995, is a legal hybrid between a company and a trust. It has its own legal personality, without shareholders or owners. A founder (individual or company, of any nationality) constitutes it by filing a public charter with the Registry, which mentions the name, general purpose, foundation council, and initial capital (minimum $10,000, payable in installments).
The Panamanian Penal Code provides for a fine of up to $50,000 for the illegal disclosure of information about a foundation.
This mechanism allows for:
Creating an asset protection foundation allows separating assets from the founder’s personal estate, protecting them from seizure for future debts after a period (generally three years). It also offers a way to bypass mandatory inheritance rules by organizing transmission according to the founder’s wishes, to distribute assets quickly to beneficiaries without a heavy judicial probate procedure, and to maintain high discretion regarding the identity of beneficiaries and the inheritance structure, as this information is not public.
From a tax perspective, foundations are not subject to Panamanian tax on foreign-source income, and transfers of assets within the scope of their purpose (protection and transmission) benefit from exemptions. However, this favorable treatment does not exempt beneficiaries from their own reporting obligations in their country of residence, especially since the foundation’s bank accounts now fall within the scope of the CRS.
For an international investor, the typical combination is to house a Panamanian corporation within a Panamanian foundation: the company serves as an operational vehicle or commercial holding company, while the foundation acts as a “legal safe” holding the shares and organizing succession. The whole is structured within a framework of controlled transparency: Panamanian authorities know the UBO and the founder, foreign tax authorities receive banking data via CRS, but the public remains at a distance.
Massive Sanctions Against Non-Compliant Companies: A Signal Against Abuse
To measure how seriously Panama has taken its post-Panama Papers transformation, one only needs to look at the cleaning policy for its company register. The Ministry of Economy and Finance announced the scheduled dissolution, starting February 27, 2026, of 290,534 non-compliant companies, including 180,883 in a first wave targeting entities that had not paid their franchise tax since 2016.
This purge is accompanied by a tough sanctions regime:
Serious breaches of accounting, transparency, or reporting (KYC) obligations can lead to severe sanctions, including fines from $5,000 to $1,000,000, suspension of corporate rights, prohibition on document registration, forced liquidation of the entity, and specific sanctions for non-compliant resident agents.
A company that fails to pay its franchise tax for three consecutive years is given the status of “suspended.” Its reactivation requires payment of all arrears, plus a fine (e.g., $1,000) and sometimes additional costs for accounting and AML compliance remediation.
This tightening has a double effect: it cleans up the register by eliminating thousands of unused empty shells, and it sends a clear message to the international community about Panama’s determination to no longer act as a passive receptacle for dormant structures used for asset concealment.
Confidentiality vs. Absolute Secrecy: What a Panamanian Corporation Really Allows in 2026
At the end of this overview, what remains of the idea of “Panamanian Corporation 2026: Absolute Banking Secrecy”? Fundamentally, absolute secrecy, understood as total invisibility vis-à-vis tax and judicial authorities, has disappeared. Panama:
– automatically exchanges financial information via FATCA and CRS;
– maintains a register of beneficial owners that is confidential but accessible;
– imposes detailed accounting obligations and the ability for the state to obtain them quickly;
– heavily sanctions entities and intermediaries that refuse to play by the rules.
On the other hand, the country still offers several layers of confidentiality:
The legal framework offers several levels of discretion: anonymity vis-à-vis the public by not disclosing shareholders on the register, the legal use of nominees, professional secrecy for certain intermediaries (lawyers, directors), and constitutionally protected banking secrecy, although subject to defined legal exceptions.
In practice, a properly structured Panamanian entity in 2026 is no longer used to hide assets from the tax administration of the country of residence. It is used to organize these assets within a predictable legal environment, a proponent of tax neutrality on foreign-source income, with a high degree of protection against private contingencies (lawsuits, creditors, domestic political crises, family conflicts) and fine-tuned management of who knows what, and when.
Absolute banking secrecy, once linked to tax evasion practices, has evolved into a framework of structured legal confidentiality. This new model is now compatible with OECD and FATF international standards, while remaining highly attractive for entrepreneurs operating globally.
For those who still dream of disappearing entirely from the radar, the Panamanian corporation of 2026 will not be the right instrument. For those, however, who seek a solid international planning tool, combining tax territoriality, a variety of structures (S.A., foundations, trusts), banking sophistication, and controlled confidentiality, it remains one of the most accomplished options in the world, provided one accepts that, in international finance, the era of “absolute banking secrecy” is definitively over.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
