Why Panama still matters in 2026

Every few years, someone declares Panama “dead” as an offshore jurisdiction, usually right after reading a recycled article written by a compliance intern who’s never set foot there. Meanwhile, real operators keep using Panama quietly, effectively, and lawfully. Let’s clear the fog.

The myth of Panama’s “end”

Yes, the Panama Papers happened. And yes, many corporate service providers packed up their fake “global structuring” businesses and ran for the nearest EU-regulated sandbox. But the actual legal and structural backbone that made Panama attractive hasn’t changed. What changed is who’s still capable of using it properly.

Legal framework: still one of the best

Panama’s offshore companies are governed by Law 32 of 1927, a near-perfect copy of Delaware corporate law from the golden age of capitalism: flexible, minimal disclosure, and tested in courts for nearly a century. Add Law 47 of 2013 and Law 18 of 2015, which introduced the immobilization of bearer shares, and you get a hybrid system: confidentiality with traceability. Not secrecy, just privacy with a paper trail for those who know what they’re doing.
Panama’s Foundations Law (Law 25 of 1995) remains unmatched for asset protection and estate planning. A Panamanian foundation is a legal person without owners; an elegant shield between the assets and anyone trying to grab them. Article 35 explicitly states that assets transferred to a foundation “may not be seized, attached, or subject to precautionary measures” arising from personal debts of the founder or beneficiaries. In human language: your creditors can scream all they want, but the foundation doesn’t care.

Case uses (for those who actually operate)

1. Asset protection & inheritance:
   Use a Panamanian foundation as the owner of a holding company in another jurisdiction (for example, a Cyprus or BVI company owning real estate or investments). The foundation provides continuity, avoiding probate and insulating assets from private lawsuits.
2. International trading & consulting:
   A Panamanian IBC can act as a neutral contracting party in cross-border deals. Under Article 1 of Law 32, it can operate anywhere except within Panama itself. That’s the point: income earned abroad isn’t taxed in Panama—territorial taxation, not residence-based fantasy.
3. Banking and escrow structures:
   Panamanian entities still pair well with accounts in friendly Latin American or Caribbean banks. Many boutique private banks still recognize Panama companies as standard operating entities, because unlike Seychelles or Belize, Panama has actual courts, case law, and a banking regulator with teeth (Superintendencia de Bancos).
4. Intellectual property holding:
   Thanks to territorial taxation and flexible governance, Panama remains suitable for holding IP, especially when royalties are collected from outside the country. Properly structured, that income is not taxable in Panama.

The legal principle

Article 7 of Panama’s Tax Code: “Income derived from activities conducted outside the territory of the Republic of Panama is not subject to Panamanian income tax.”
That single line is the quiet secret of the system. You can have a Panamanian company managing contracts, payments, or assets worldwide: so long as the operations occur abroad, Panama doesn’t want your taxes.

Why it still works

Panama offers something most “compliant” jurisdictions lost: a working legal system that understands offshore commerce. The courts aren’t perfect, but they’re predictable. Corporate law there was written for entrepreneurs. And despite pressure from the OECD circus, Panama never adopted a public register of beneficial owners.
Combine that with a mature legal industry, bilingual professionals, and time tested jurisprudence, and you get one of the few jurisdictions that survived the global transparency hysteria with its spine intact.

Panama didn’t die. It evolved and moved from mass market anonymity to selective utility. The amateurs left; the professionals stayed.
If you know what you’re doing, and more importantly, why you’re doing it, Panama still delivers privacy, protection, and stability wrapped in the armor of nearly a century of law.

Marty McFly said:

Can you suggest a good lawyer in Panama?

For companies: Midland Counselors, Lombardi Aguilar Group (@LAGLEX)
For residence permits: Lombardi Aguilar Group
For legal opinions, litigation: Icaza, Gonzalez-Ruiz, Aleman

Filda said:

Substance test should touch only specific subset of passive income + multinational groups (generally 750M classification)

This. No substantial practical changes for the majority of the cases.