Table of Contents
- Introduction: Panama’s Legal Landscape for Businesses in 2025
- Major Regulatory Reforms Impacting Companies
- Corporate Structures: Setting Up & Operating Legally
- Taxation Updates: New Rates, Incentives, and Compliance
- Labor Law Changes and Employer Obligations
- Anti-Money Laundering (AML) and Financial Transparency Rules
- Intellectual Property Protection in Panama
- Key Court Decisions and Enforcement Trends
- Cross-Border Business & Foreign Investment Rules
- Future Outlook: Legal Developments to Watch Through 2030
- Sources & References
Introduction: Panama’s Legal Landscape for Businesses in 2025
Panama’s legal environment in 2025 continues to serve as a strategic gateway for international commerce, with a robust framework that attracts investment while navigating evolving global standards. The country’s business law is rooted in civil law tradition, primarily codified through the Commercial Code and supported by a comprehensive suite of statutes regulating company formation, contracts, labor, taxation, and anti-money laundering (AML) compliance. Key legislative and regulatory bodies include the Ministry of Commerce and Industries, Superintendence of the Securities Market, and the Ministry of Economy and Finance.
Recent years have seen significant amendments to Panama’s legal framework, driven by international pressure for transparency and accountability. Following recommendations from the Financial Action Task Force (FATF), Panama intensified efforts to combat financial crimes, culminating in the passage of Law 254 (2021) and subsequent reforms. These laws strengthened due diligence, beneficial ownership registration, and reporting obligations for legal entities, aligning Panamanian standards with global expectations. As a result, Panama was officially removed from the FATF “grey list” in October 2023, a milestone expected to enhance investor confidence and ease cross-border business transactions (Ministry of Economy and Finance).
Statistically, Panama maintains its status as a leading destination for company incorporations in Latin America, with over 30,000 new legal entities registered annually as of 2024, according to the Public Registry of Panama. The country’s advantageous tax regime, including territorial taxation and special economic zones such as the Colon Free Zone, continues to attract multinational corporations and regional headquarters (Colon Free Zone). However, compliance requirements have tightened, especially concerning anti-corruption, AML, and corporate governance, reflecting Panama’s commitment to international best practices.
Looking ahead, the business law landscape in Panama is poised for further modernization. Legislative priorities for 2025 and beyond include digitalization of corporate filings, expanded e-government services, and enhanced regulatory oversight of fintech and digital assets. These changes aim to streamline business operations while preserving Panama’s competitive edge as a commercial hub. Companies operating in or through Panama should prioritize robust compliance programs and monitor ongoing legislative updates to ensure continued alignment with both local and international standards.
Major Regulatory Reforms Impacting Companies
Panama’s business law landscape is undergoing significant regulatory reforms in 2025, targeting enhanced transparency, anti-money laundering (AML) compliance, and modernization of corporate governance. These reforms are a direct response to international pressures and the national agenda to maintain Panama’s status as a competitive business hub while aligning with global standards.
A pivotal development is the implementation of Law 254 of 2021, which continues to shape corporate practices in 2025. This law strengthens the framework for the identification of ultimate beneficial owners (UBOs) of Panamanian entities. Companies are now required to maintain accurate, up-to-date UBO registers, accessible to designated authorities, with non-compliance attracting significant administrative penalties. The Superintendency of Banks of Panama and the Ministry of Economy and Finance (MEF) oversee enforcement, with the latter reporting increased compliance rates among legal entities since the law’s enactment.
In 2024 and into 2025, amendments to the Commercial Code and related company laws have streamlined business registration and reporting obligations. The Public Registry of Panama has introduced digital filing systems, reducing company registration times from several weeks to just a few days, with over 85% of new incorporations now processed electronically. These changes align with the government’s “Digital Panama” initiative, aiming to boost efficiency and reduce bureaucratic hurdles for domestic and foreign investors.
Panama is also reinforcing its AML and counter-terrorism financing (CTF) regime, following recommendations from the Financial Action Task Force (FATF). The Financial Analysis Unit (UAF) has issued stricter guidelines for due diligence, risk assessment, and reporting of suspicious transactions. In 2023–2024, enforcement actions increased by 40%, with several high-profile sanctions imposed on companies failing to adhere to updated AML obligations.
Looking ahead, additional reforms are expected in the areas of data protection and tax transparency. Draft legislation under review by the National Assembly of Panama seeks to harmonize local regulations with the OECD’s Common Reporting Standard (CRS) and the European Union’s requirements. The outlook for 2025 and beyond suggests continued regulatory tightening, especially for sectors deemed high-risk or with significant cross-border activity.
- Law 254 of 2021 mandates UBO transparency and robust compliance mechanisms.
- Digital transformation of company registration reduces incorporation times by over 60%.
- AML/CTF enforcement actions rose 40% year-on-year, signaling stricter oversight.
- Pending data protection laws and tax transparency measures indicate further reforms ahead.
Corporate Structures: Setting Up & Operating Legally
Panama has established itself as a premier jurisdiction for corporate structuring due to its flexible business laws, robust financial sector, and favorable tax regime. The foundational legal framework for corporate entities is set out in the Panamanian Commercial Code and Law 32 of 1927, which governs corporations (“Sociedades Anónimas”). Over the years, Panama has modernized its corporate laws to enhance transparency and comply with international standards, particularly in response to global anti-money laundering (AML) and tax transparency initiatives.
To legally set up a business in Panama, both local and foreign investors typically opt for one of several corporate forms, including the corporation (Sociedad Anónima), limited liability company (Sociedad de Responsabilidad Limitada), or private interest foundation. The most common structure is the corporation, which requires at least three directors and one shareholder, with no nationality or residency requirements for either. Registration is handled by the Public Registry of Panama, and the process can often be completed within a week, provided all documentation complies with statutory requirements (Registro Público de Panamá).
Since 2022, Panama has implemented significant legal reforms to strengthen corporate compliance. Law 254 of 2021 introduced stricter obligations for resident agents, enhanced requirements for the collection and maintenance of ultimate beneficial owner (UBO) information, and increased penalties for non-compliance. As of 2025, all corporations must maintain updated UBO records with the Superintendency of Non-Financial Subjects, with ongoing reporting requirements designed to align Panama with international AML practices (Ministerio de Economía y Finanzas).
Panama’s international reputation has improved due to these reforms. In 2023, the Financial Action Task Force (FATF) removed Panama from its “grey list” of jurisdictions under increased monitoring, citing substantial progress in compliance and transparency (Financial Action Task Force). However, the government continues to monitor corporate service providers and is expected to introduce further digitalization of company registries and compliance tools through 2025 and beyond.
- Panama registered over 25,000 new corporations in 2023, with continued growth projected as reforms bolster investor confidence (Registro Público de Panamá).
- Corporations are required to maintain accounting records and supporting documentation accessible in Panama, a mandate reinforced by Law 52 of 2016 and subsequent amendments.
- Foreign companies seeking to operate locally must register as a “branch” with the Public Registry, subject to the same compliance requirements as domestic entities.
Looking ahead, Panama is poised to further streamline corporate processes through digital platforms, increase regulatory oversight, and align with evolving global compliance standards. These measures are expected to sustain Panama’s appeal as a hub for international business while ensuring legal certainty and transparency for all corporate actors.
Taxation Updates: New Rates, Incentives, and Compliance
In 2025, Panama’s business law framework is experiencing significant updates in taxation, shaped by domestic reforms and international compliance pressures. The country continues to position itself as a competitive jurisdiction for investment while responding to global initiatives on tax transparency and anti-money laundering.
One of the key developments is the implementation of new transfer pricing rules and enhanced reporting obligations for multinational enterprises. As of January 2024, Panama expanded the scope of its transfer pricing regime to include transactions with residents of countries with which Panama has double taxation treaties, in addition to non-resident related parties, aligning with OECD standards (Dirección General de Ingresos). This move is designed to improve transparency and reduce opportunities for profit shifting.
Corporate income tax rates remain at a flat 25% for most entities; however, certain sectors—such as financial institutions and insurance companies—are subject to alternative calculation methods or higher effective rates based on net taxable income (Dirección General de Ingresos). Small and medium-sized enterprises (SMEs) benefit from progressive rates as low as 7.5% for annual net taxable income not exceeding USD 11,000, supporting entrepreneurship and local business growth.
Panama continues to offer targeted tax incentives to attract investment in key sectors such as logistics, tourism, and technology. The Panama Pacifico Special Economic Area, for example, provides reduced income tax rates, VAT exemptions, and streamlined customs procedures for qualifying companies (Panama Pacifico Agency). In 2024, new legislation extended renewable energy incentives, granting corporate income tax exemptions for a period of up to 15 years for qualifying projects (Ministerio de Comercio e Industrias).
Compliance requirements have tightened, particularly in response to the European Union’s continued scrutiny of Panama’s tax practices. The country remains focused on maintaining its removal from the EU’s list of non-cooperative jurisdictions by enforcing substance requirements and strengthening anti-avoidance legislation (Ministerio de Economía y Finanzas). Companies are now required to submit additional documentation demonstrating economic substance and compliance with local activity thresholds.
Looking ahead, Panama is expected to further enhance its digital tax administration infrastructure, introducing e-invoicing and real-time reporting systems to reduce tax evasion and improve efficiency. These changes are poised to impact compliance costs and processes for businesses in 2025 and beyond, reinforcing Panama’s commitment to international standards while sustaining its appeal as a business-friendly jurisdiction.
Labor Law Changes and Employer Obligations
Panama’s labor law landscape continues to evolve, with significant implications for business compliance and employer obligations as of 2025 and looking ahead. The foundational framework for labor relations in Panama is provided by the Labor Code, administered by the Ministerio de Trabajo y Desarrollo Laboral (MITRADEL). Recent years have seen amendments and regulatory updates designed to modernize labor practices, address post-pandemic realities, and align with international standards.
One of the most notable developments is the regulation of remote work, formalized under Law 126 of 2020 and subsequent Executive Decree 93 of 2021, which established clear guidelines for teleworking contracts, occupational health, and employee rights. These provisions remain central in 2025 as hybrid and remote work models persist. Employers are required to formalize telework agreements, ensure safe working conditions, and respect employees’ right to disconnect outside working hours. MITRADEL is expected to intensify oversight of these obligations in upcoming years, particularly as more businesses adopt flexible work arrangements.
Another area of focus is gender equality and workplace discrimination. The government has enacted new measures to ensure equal pay and prevent discrimination, notably through Law 7 of 2018 and its regulatory framework, which mandates non-discriminatory practices regarding gender, ethnicity, and disability. Employers must implement policies to prevent workplace harassment and discrimination, conduct periodic training, and submit compliance reports to MITRADEL. Non-compliance can result in significant administrative sanctions, and enforcement actions have increased, with over 1,200 inspections carried out in 2023 alone according to MITRADEL.
Wage regulation also remains dynamic. The national minimum wage is revised biennially, with the most recent adjustment enacted in 2024. Employers must closely monitor updates, as MITRADEL is expected to propose further increases to align with inflation and cost of living projections through 2026. Failure to comply with wage requirements or social security contributions—managed by the Caja de Seguro Social (CSS)—can result in fines, suspension of business licenses, or even criminal proceedings.
Looking forward, Panama is expected to continue strengthening labor protections, with legislative proposals under discussion to enhance parental leave, regulate gig economy work, and further digitalize labor inspections. Companies operating in Panama must remain vigilant, proactively update internal policies, and ensure ongoing compliance with evolving labor standards to mitigate legal risk and foster positive employee relations.
Anti-Money Laundering (AML) and Financial Transparency Rules
Panama’s anti-money laundering (AML) and financial transparency legal framework has undergone significant transformation in recent years, largely in response to international pressure and high-profile leaks such as the Panama Papers. As of 2025, Panama is continuing to strengthen its compliance mechanisms to align with global standards and restore its reputation as a secure and legitimate financial center.
Following its inclusion on the Financial Action Task Force (FATF) “grey list” in 2019, Panama intensified efforts to address strategic AML/CFT (combating the financing of terrorism) deficiencies. In October 2023, the FATF officially removed Panama from the grey list after determining substantial progress in regulatory enforcement, customer due diligence, and beneficial ownership transparency. This milestone signals that Panama’s AML regime now broadly meets international expectations, though ongoing FATF monitoring persists to ensure sustained compliance (Financial Action Task Force).
Key legislative developments include Law 129 of 2020, which established the Private and Unique System of Beneficial Ownership Registry, mandating resident agents to maintain up-to-date information on the real owners of Panamanian legal entities. The Superintendence of Non-Financial Subjects (SSNF) and the Financial Analysis Unit of Panama (UAF) have increased supervision and reporting requirements for both financial institutions and designated non-financial businesses and professions (DNFBPs) (Unidad de Análisis Financiero). Penalties for non-compliance with reporting and transparency obligations have been strengthened, with administrative fines reaching up to $5 million depending on the severity and recurrence of violations (Superintendencia de Sujetos No Financieros).
Panama has also enhanced cross-border cooperation through treaties and information-sharing agreements, particularly in tax matters and criminal investigations, in accordance with OECD and FATF recommendations. As of 2025, all companies registered in Panama must comply with enhanced know-your-customer (KYC) protocols, periodic risk assessments, and ongoing employee AML training. The Superintendency of Banks of Panama (SBP) continues to issue guidance and conduct sectoral risk evaluations to prevent misuse of the country’s financial system for illicit purposes (Superintendencia de Bancos de Panamá).
Looking ahead, Panama’s business law landscape is expected to see further tightening of AML and financial transparency rules. This may include closer scrutiny of crypto-assets, digital financial products, and emerging fintech activities. Businesses operating in Panama should anticipate continuous updates to compliance requirements, as authorities aim to maintain alignment with evolving international standards and to prevent renewed listing by global watchdogs.
Intellectual Property Protection in Panama
Panama has established a comprehensive framework for intellectual property (IP) protection, aligning its regulations with international standards and facilitating business growth in the region. The country’s primary legal instruments governing IP are Law No. 35 of 1996 (trademarks and patents), Law No. 15 of 1994 (copyrights and related rights), and Law No. 61 of 2012 (industrial designs), all overseen by the Dirección General del Registro de la Propiedad Industrial (DIGERPI), part of the Ministry of Commerce and Industries.
Panama is a party to several key international agreements, including the Paris Convention, the Berne Convention, the Patent Cooperation Treaty, and the Madrid Protocol. In 2023 and 2024, the country continued to modernize its administrative procedures, introducing electronic filing systems for trademarks and patents, which are expected to streamline applications and improve transparency into 2025 and beyond (Dirección General del Registro de la Propiedad Industrial).
- Trademark and Patent Filings: According to the Dirección General del Registro de la Propiedad Industrial, annual trademark applications have remained strong, with over 10,000 filings in 2023. Patent applications, while fewer, show steady growth, reflecting an expanding innovation ecosystem.
- Customs Enforcement: Panama’s customs authority, the Autoridad Nacional de Aduanas, continues to collaborate on border enforcement, intercepting counterfeit goods and supporting rights holders. In 2024, enhanced data-sharing initiatives allowed for more rapid responses to suspected IP violations.
- Legal Actions and Compliance: The Órgano Judicial has reported a modest rise in IP litigation, particularly concerning trademark infringement and copyright piracy. Panama’s courts are generally efficient in handling these cases, with specialized judges and streamlined procedures.
For businesses operating in Panama in 2025, compliance with IP law requires timely registration of assets, vigilant monitoring of the market, and proactive enforcement. The outlook is positive: authorities are expected to continue digitizing processes, strengthening enforcement, and pursuing further harmonization with global IP standards. These developments make Panama an increasingly attractive jurisdiction for both local innovators and international investors seeking robust IP protection.
Key Court Decisions and Enforcement Trends
Panama’s business law landscape in 2025 reflects a dynamic interplay between court decisions, regulatory enforcement, and compliance expectations. Recent years have seen a series of significant court rulings, particularly in areas of corporate governance, anti-money laundering (AML), and international commercial arbitration. The Supreme Court of Justice of Panama (Órgano Judicial) remains the central authority for interpreting business statutes and setting binding legal precedents.
A notable trend in recent court decisions is the increased scrutiny of corporate transparency and beneficial ownership. Following the implementation of Law 129 of 2020, which established the Private and Unique System of Beneficiaries of Legal Entities, Panama’s courts have enforced disclosures with greater rigor. In 2023–2024, several court decisions upheld the Superintendence of Non-Financial Subjects’ authority to demand timely reporting of beneficial owners, reinforcing Panama’s commitment to international AML standards outlined by the Ministry of Economy and Finance and the Financial Analysis Unit (UAF).
- Anti-Money Laundering Enforcement: AML enforcement actions rose by approximately 18% from 2022 to 2024, with Panamanian courts increasingly supporting administrative penalties and asset forfeiture in cases of non-compliance. The UAF has reported that over 200 legal entities faced sanctions in 2024 alone, with several high-profile cases resulting in court-ordered dissolution or significant fines (Financial Analysis Unit).
- International Arbitration Recognition: Panama’s courts continue to uphold the nation’s pro-arbitration stance, regularly recognizing and enforcing foreign arbitral awards in accordance with the New York Convention. In recent decisions, the Supreme Court emphasized the limited grounds upon which enforcement can be denied, sending a clear signal to international investors about the reliability of Panama as a dispute resolution venue (Panama Chamber of Commerce).
- Compliance Programs and Director Liability: Court cases in 2023 and early 2024 have clarified the scope of personal liability for company directors and officers, particularly in cases of inadequate compliance programs. The courts have ruled that a demonstrable compliance framework is a mitigating factor in liability assessments, aligning with regulatory guidance from the Superintendency of Banks and the Superintendency of the Securities Market.
Looking ahead, the outlook for 2025 and beyond involves heightened enforcement of corporate transparency, stronger court support for regulatory action, and sustained alignment with global business law standards. As Panama intensifies efforts to exit international financial gray lists, businesses should anticipate increased scrutiny and ensure robust compliance to mitigate legal risks.
Cross-Border Business & Foreign Investment Rules
Panama’s strategic geographic position and robust financial sector continue to underpin its prominence as a regional hub for cross-border business and foreign investment. The legal framework governing foreign investment and international transactions is shaped by a combination of national statutes, regulatory bodies, and international agreements. Panama’s business law is notably investor-friendly, with no significant barriers to foreign ownership outside of certain regulated sectors such as media and retail trade. The country’s legal code permits 100% foreign ownership of Panamanian companies, with equal treatment for foreign and domestic investors as stipulated under Law No. 54 of 1998 (Ministerio de Comercio e Industrias).
Cross-border business in Panama is further facilitated by the use of the U.S. dollar, minimal foreign exchange controls, and a strong tradition of banking secrecy, though the latter has been incrementally relaxed in response to global anti-money laundering (AML) standards. The regulatory environment is overseen by the Superintendencia de Bancos de Panamá and Superintendencia del Mercado de Valores for financial institutions and securities, respectively. Notably, Panama is a member of the World Trade Organization and party to several bilateral and multilateral free trade agreements, including the Trade Promotion Agreement with the United States (Office of the United States Trade Representative).
In 2023-2024, Panama implemented notable reforms to enhance compliance with international tax transparency and AML requirements, aligning with recommendations from the Financial Action Task Force (FATF). The country was removed from the FATF “grey list” in October 2023, reflecting improved regulatory oversight and enforcement (Ministerio de Economía y Finanzas). Businesses engaged in cross-border transactions are now subject to stricter due diligence, reporting, and beneficial ownership disclosure requirements, as enforced by the Dirección General de Ingresos (DGI, Panama’s tax authority).
- As of 2025, foreign direct investment inflows to Panama remain robust, with the country consistently ranking among the top destinations in Latin America for FDI per capita (Ministerio de Comercio e Industrias).
- The creation of special economic zones, such as the Panamá Pacífico Special Economic Area, provides additional incentives for cross-border investors, including tax exemptions and streamlined permitting (Panamá Pacífico Agencia).
Looking ahead, continued compliance with evolving international standards is expected. The government’s ongoing digitalization of company registries and tax filings aims to further enhance transparency and reduce administrative friction for cross-border business. While regulatory scrutiny will remain heightened in AML and tax matters, Panama’s legal infrastructure and pro-business policies are likely to sustain its appeal for international investors through 2025 and beyond.
Future Outlook: Legal Developments to Watch Through 2030
Panama’s business law landscape is poised for significant evolution through 2030, reflecting both domestic priorities and international pressures. Policymakers are expected to address transparency, anti-corruption, and regulatory modernization to reinforce the country’s competitiveness as a global business hub. Several ongoing and anticipated legal developments will shape the compliance environment and investment climate for businesses in Panama over the coming years.
- Corporate Transparency and Beneficial Ownership: Following the 2020 enactment of Law No. 129, which established a private registry of ultimate beneficial owners (UBOs), Panama is expected to further strengthen due diligence and disclosure requirements. The Superintendence of Non-Financial Subjects (SSNF) has signaled ongoing reforms to enhance data quality and facilitate cooperation with international authorities, in line with recommendations from the Financial Action Task Force (FATF) Superintendencia de Sujetos No Financieros. Compliance deadlines and enforcement actions are anticipated to intensify through 2025–2027.
- Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF): In response to ongoing FATF monitoring and the need to exit the “grey list,” Panama is expected to update its AML/CTF legislation and enforcement frameworks, particularly focusing on high-risk sectors such as real estate, legal services, and finance Ministerio de Economía y Finanzas. Enhanced compliance obligations for reporting entities and stricter penalties for non-compliance are likely before 2030.
- Digitalization and E-Commerce Regulation: As Panama’s digital economy expands, legislative initiatives are underway to address data protection, electronic contracting, and cybersecurity. The National Authority for Government Innovation (AIG) is expected to champion regulatory frameworks for fintech, digital assets, and cross-border e-commerce, responding to both business demand and regional digital market integration Autoridad Nacional para la Innovación Gubernamental.
- Labor Law Reform: With evolving workforce trends, the Ministry of Labor and Labor Development is reviewing labor codes to address remote work, flexible contracts, and worker protections in the gig economy. Draft reforms are anticipated to enter legislative discussion by 2026, potentially impacting employer compliance obligations and dispute resolution processes Ministerio de Trabajo y Desarrollo Laboral.
- Sustainability and ESG Regulation: Environmental, social, and governance (ESG) compliance is gaining momentum, with new sectoral regulations and incentives expected for sustainable business practices, especially in logistics, construction, and finance Ministerio de Ambiente.
By 2030, Panama’s business law framework is likely to be more transparent, digitized, and aligned with international standards, supporting risk management and sustainable growth for both local and multinational enterprises.
Sources & References
- Ministry of Commerce and Industries
- Superintendence of the Securities Market
- Ministry of Economy and Finance
- Superintendency of Banks of Panama
- Public Registry of Panama
- National Assembly of Panama
- Panama Pacifico Agency
- Caja de Seguro Social (CSS)
- Superintendencia de Sujetos No Financieros
- Autoridad Nacional de Aduanas
- Órgano Judicial
- Autoridad Nacional para la Innovación Gubernamental
- Ministerio de Ambiente
