Countries › Panama › Guide › 15. Exiting › Closing the Panamanian branch of a foreign company

Closing the Panamanian branch of a foreign company

Last verified: 2026-10-29 · Status: Stable

A foreign company registered to do business in Panama must file at the Registro Mercantil the instruments of dissolution or consolidation that affect it, and a branch closure follows the same tax and licence steps as a company. Branches pay a 10 percent branch tax on their Panamanian taxable income less the income tax paid on it, as a final tax with the annual return, so no dividend tax applies when the head office takes the profits. The final return is due within 30 days of ceasing business and the Aviso de Operación must be cancelled within 30 days.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates freely as legal tender; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Branch tax on Panamanian taxable income less income tax	10 %Código Fiscal art. 733 literal f, as of 2026-10-29 · in force
Deadline for the final income tax return after ceasing business	30 daysCódigo Fiscal art. 717, as of 2026-10-29 · in force
Maximum fine for a foreign company operating without registration	5000 PABLey 32 de 1927 art. 91, as of 2026-10-29 · in force
Exchange rate used for USD conversions	1 PAB per USDBalboa at par with the US dollar (Superintendencia de Bancos), as of 2026-10-29 · in force

The rule

1. Foreign companies registered at the Registro Mercantil under Ley 32 must file for registration the amendments to their pacto social and the instruments of consolidation and dissolution that affect them.Ley 32 de 1927, art. 92, 1927-02-26 official text · verified 2026-10-29

2. Foreign sociedades anónimas acting in Panama without complying with the law cannot start judicial or other proceedings, but can be sued, and face a fine of up to B/.5,000.
Cost to do it: Fine up to B/.5,000 for operating without registration.Ley 32 de 1927, art. 91, 1927-02-26 official text · verified 2026-10-29

3. Branches of foreign legal persons pay as tax 10 percent of 100 percent of their taxable income earned in Panama, less the taxes paid on that same income; this is final and is paid with the annual sworn return.
Cost to do it: 10 percent of Panamanian taxable income less income tax paid on it.
Example: Taxable income B/.1,000,000, income tax at 25 percent B/.250,000: branch tax 10 percent of B/.750,000, B/.75,000. / US$75,000 of branch tax.Código Fiscal art. 733 literal f as worded by Ley 8 de 2010 art. 36, art. 733 literal f, 2010-03-15 official text · verified 2026-10-29

4. A person ending its business must file within 30 days its sworn return and final balance and pay the tax due to cessation.Código Fiscal art. 717 first paragraph as worded by Ley 8 de 2016 art. 62, art. 717, 2016-04-04 official text · verified 2026-10-29

5. Cessation of operations must be notified to PANAMAEMPRENDE within 30 days to cancel the Aviso de Operación.Ley 5 de 2007, art. 12, 2007-01-11 official text · verified 2026-10-29

6. The branch's foreign company pays the tasa única of B/.300 a year as a foreign legal person while registered, and no corporate act is registered while it is unpaid.
Cost to do it: B/.300 a year until the cancellation is registered.Código Fiscal art. 318-A as worded by Ley 52 de 2016 art. 9, art. 318-A, 2016-10-27 official text · verified 2026-10-29

Step by step

Head office board resolves to close the branch; legalize the resolution for use in Panama.
Terminate employees under the Labour Code and settle local creditors.
File the final return within 30 days of ceasing business, including branch tax.
Notify PANAMAEMPRENDE within 30 days and update the RUC.
Register the closing instrument at the Registro Mercantil with the tasa única paid.

Common traps

The branch tax is final, so no further dividend tax applies when profits go to head office, but it is paid every year, not only at closure.
Unpaid tasa única blocks registration of the closing instrument.
Workers of a branch have the same closure protections as company employees.

Sources

← Mergers and moving a company out of Panama: consolidation of S.A.s, SRL mergers and continuation abroadClosing down and employees: closure dismissals, prior authorisation, indemnity and seniority premium →

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