How to Close an Offshore Company in Panama

Closing an offshore company in Panama involves more than simply ceasing operations. This process includes the legal dissolution of the company, the submission of relevant documents to the Public Registry, the settlement of outstanding taxes, and fulfilling any other legal or contractual obligations. Notably, for operational businesses (those with local activities such as offices and personnel), additional steps will be required to ensure compliance with current administrative and tax regulations.

Additionally, having legal specialists during the process is crucial, as non-compliance can lead to penalties, fines, or future complications.

The following outlines the necessary steps to complete the dissolution and closing process:

1. Resolution of Dissolution

The first step requires the company's partners to draft a formal dissolution resolution that declares the intention to close the company. It should include details about the liquidation of the company's assets, fund distribution, and must be signed by all relevant parties as stipulated in the company’s bylaws.

2. Registration with the Public Registry

The dissolution resolution must be submitted to the Public Registry of Panama, followed by the formal process of registering the dissolution of the entity. This step officially regulates that the company has ceased operations and is undergoing liquidation.

3. Cancellation of Commercial License (“Aviso de Operaciones”)

Once the dissolution is registered, the company's commercial license must be canceled with the Ministry of Commerce and Industries. It is important to ensure that all paperwork is up-to-date to avoid future liabilities.

4. Clearance with the Tax Authority (DGI) and Social Security (CSS)

It is critical to coordinate with the General Directorate of Revenue (DGI) and the Social Security Fund (CSS) to settle any outstanding tax debts or social security contributions for employees, if applicable.

5. Publication in the Official Gazette

In Panama, it is mandatory to publish the dissolution of companies in the Official Gazette. This ensures transparency and informs third parties about the cessation of operations.

If your company had operational activities in Panama (e.g., offices, employees, or local trade), there are important additional steps:

• Termination of Contracts: You must terminate employment or commercial contracts, ensuring compliance with legal requirements regarding notice periods and severance payments.
• Notification to Suppliers: It is essential to inform suppliers about the cessation of operations and settle any outstanding debts before proceeding.
• Disposition of Assets: Conduct a final inventory, identify assets, and proceed with their sale or distribution according to the company’s bylaws.
• Final Tax Declaration: After liquidating assets, file a final declaration with the DGI to ensure all corporate taxes are in order.

There are various common challenges that may arise during the dissolution process:

• Outstanding Debts: Many companies encounter delays due to unknown or undeclared tax debts, which slow down the closure process.
• Documentation Errors: Incomplete or incorrect documentation can result in the nullification of the dissolution resolution.
• Lack of Communication: Failure to notify local authorities or stakeholders can expose the company to fines and future legal problems.

These issues highlight the importance of having specialized legal advice throughout the process.

Working with legal experts such as Limitless Legal ensures that the dissolution process is handled precisely and in the shortest possible time. Our services include:

• Preparation and review of legal acts.
• Representation before the DGI and the CSS.
• Facilitation in the liquidation of assets and taxes.
• Comprehensive management of publications in the Official Gazette.