Countries › Panama › Guide › 16. What is normal abroad but not here › Retail trade is reserved to Panamanians
Retail trade is reserved to Panamanians
Last verified: 2026-10-29 · Status: Stable
Abroad, a foreign investor can usually open shops or sell directly to consumers through a local company it owns outright. In Panama the Constitution reserves retail trade (selling to the consumer, and acting as representative or agent of producers or traders) to Panamanians by birth, certain naturalised Panamanians and companies formed by them. Wholesale trade is open to everyone, foreigners may hold stakes in companies that sell products they manufacture themselves, and fronting arrangements are to be policed and sanctioned by law.
Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates freely; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar and that the dollar circulates without restrictions in commercial and financial transactions (checked 29 October 2026). USD figures therefore equal the balboa figures.
Key facts
| Retail trade by foreigners | Reserved to Panamanians by birth, qualifying naturalised Panamanians and companies formed by them; foreigners may hold stakes in companies selling their own manufactured products textConstitución Política art. 293, as of 2026-10-29 · in force |
|---|---|
| Wholesale trade by foreigners | Open to all; may be restricted by law to protect Panamanian wholesalers textConstitución Política art. 294, as of 2026-10-29 · in force |
The rule
1. Only the following may engage in retail trade: Panamanians by birth; individuals who were naturalised when the Constitution came into force and are married to, or have children with, a Panamanian national; other naturalised Panamanians three years after receiving their final naturalisation letter; legal and natural persons already lawfully in retail trade when the Constitution came into force; and legal persons formed by Panamanians or by foreigners entitled to retail trade individually under the article.
Cost to do it: No fee; the cost is structural, since a foreign owned company cannot hold the retail business itself.
Example: A company owned 100 percent by a foreign parent cannot operate a chain of stores selling to consumers in Panama. / A US$5,000,000 store rollout planned through a wholly foreign owned subsidiary has to be restructured before launch.Constitución Política (texto único, Gaceta Oficial 25176 de 15 de noviembre de 2004), art. 293, numerals 1 to 5, 2004-11-15 official text · verified 2026-10-29
Cost to do it: No fee; the cost is structural, since a foreign owned company cannot hold the retail business itself.
Example: A company owned 100 percent by a foreign parent cannot operate a chain of stores selling to consumers in Panama. / A US$5,000,000 store rollout planned through a wholly foreign owned subsidiary has to be restructured before launch.Constitución Política (texto único, Gaceta Oficial 25176 de 15 de noviembre de 2004), art. 293, numerals 1 to 5, 2004-11-15 official text · verified 2026-10-29
2. Retail trade means selling to the consumer, acting as representative or agent of producing or trading companies, or any other activity the law classifies as retail. A farmer or maker of handicrafts selling their own products is excepted. Foreigners not entitled to retail trade may still hold a participation in companies that sell products manufactured by those companies themselves.
Cost to do it: No fee.
Example: A foreign owned manufacturer in Panama may sell its own production to consumers; a foreign owned importer reselling third party goods to consumers may not. / Acting as a local sales agent for a foreign brand also counts as retail trade, whatever the size of the commissions.Constitución Política (texto único, Gaceta Oficial 25176 de 15 de noviembre de 2004), art. 293, second and third paragraphs, 2004-11-15 official text · verified 2026-10-29
Cost to do it: No fee.
Example: A foreign owned manufacturer in Panama may sell its own production to consumers; a foreign owned importer reselling third party goods to consumers may not. / Acting as a local sales agent for a foreign brand also counts as retail trade, whatever the size of the commissions.Constitución Política (texto único, Gaceta Oficial 25176 de 15 de noviembre de 2004), art. 293, second and third paragraphs, 2004-11-15 official text · verified 2026-10-29
3. Wholesale trade is everything outside the retail definition and any natural or legal person may engage in it. The law may restrict wholesale trade by foreigners where needed to protect wholesale trade carried on by Panamanians, without harming foreigners already lawfully in wholesale trade when the restriction takes effect.
Cost to do it: No fee.
Example: A foreign owned distributor selling only to other businesses is in wholesale trade and is open to foreigners. / B2B distribution of US$2,000,000 a year to Panamanian retailers can be done by a wholly foreign owned company.Constitución Política (texto único, Gaceta Oficial 25176 de 15 de noviembre de 2004), art. 294, 2004-11-15 official text · verified 2026-10-29
Cost to do it: No fee.
Example: A foreign owned distributor selling only to other businesses is in wholesale trade and is open to foreigners. / B2B distribution of US$2,000,000 a year to Panamanian retailers can be done by a wholly foreign owned company.Constitución Política (texto único, Gaceta Oficial 25176 de 15 de noviembre de 2004), art. 294, 2004-11-15 official text · verified 2026-10-29
4. The law must establish a system of surveillance and sanctions to stop people who cannot engage in retail trade from doing so through a nominee (interpuesta persona) or in any other fraudulent way.
Cost to do it: No fee; nominee structures expose the business to sanctions under the implementing law.
Example: Placing a Panamanian nominee shareholder over a foreign funded retail chain is the conduct the article targets. / Side letters that give a foreign investor the economics of a nominally Panamanian retailer carry the same risk.Constitución Política (texto único, Gaceta Oficial 25176 de 15 de noviembre de 2004), art. 293, last paragraph, 2004-11-15 official text · verified 2026-10-29
Cost to do it: No fee; nominee structures expose the business to sanctions under the implementing law.
Example: Placing a Panamanian nominee shareholder over a foreign funded retail chain is the conduct the article targets. / Side letters that give a foreign investor the economics of a nominally Panamanian retailer carry the same risk.Constitución Política (texto único, Gaceta Oficial 25176 de 15 de noviembre de 2004), art. 293, last paragraph, 2004-11-15 official text · verified 2026-10-29
5. Panamanians and foreigners are equal before the law, but the law may, for reasons of work, health, morality, public security and the national economy, subject foreigners in general to special conditions or deny them certain activities.
Cost to do it: No fee.
Example: Sector laws can add nationality conditions beyond retail trade, so check the specific licence law for the activity. / Applies to any foreign investment, whatever its size.Constitución Política (texto único, Gaceta Oficial 25176 de 15 de noviembre de 2004), art. 20, 2004-11-15 official text · verified 2026-10-29
Cost to do it: No fee.
Example: Sector laws can add nationality conditions beyond retail trade, so check the specific licence law for the activity. / Applies to any foreign investment, whatever its size.Constitución Política (texto único, Gaceta Oficial 25176 de 15 de noviembre de 2004), art. 20, 2004-11-15 official text · verified 2026-10-29
| Activity | Foreign owned company | Rule |
|---|---|---|
| Selling to consumers (shops, online sales to consumers) | Not allowed | art. 293 |
| Representative or agent of producers or traders | Not allowed | art. 293 |
| Selling own manufactured products to consumers | Foreigners may hold a participation | art. 293 |
| Selling to businesses (wholesale) | Allowed, subject to possible restrictions by law | art. 294 |
| Farmer or handicraft maker selling own products | Excepted from the retail definition | art. 293 |
Retail or wholesale: who may do it (Constitución Política arts. 293 and 294).
Worked example
- A foreign beverage brand wants to sell in Panama. A wholly foreign owned Panamanian sociedad anónima can import and sell to supermarkets and distributors (wholesale, art. 294), but it cannot open its own branded stores or act as the brands' local sales agent to consumers (retail, art. 293).
- If the same group builds a bottling plant in Panama, foreigners may hold a participation in the company that sells that plant's products to consumers (art. 293, second paragraph).
Step by step
- Map every revenue line as retail (consumer sale, agency or representation) or wholesale before choosing the structure.
- For consumer facing lines, partner with a company formed by Panamanians, or sell through Panamanian retailers on wholesale terms.
- Check sector laws for additional nationality conditions (art. 20) and the special regimes, such as free zones and headquarters regimes, covered in the investing section.
- Document the commercial terms with any Panamanian retailer at arm's length, without side arrangements that hand control or economics back to the foreign investor.
Common traps
- Agency and representation of foreign brands count as retail trade, so a foreign owned local agent is caught even if it never touches the goods.
- Nominee shareholders are exactly what art. 293 asks the law to sanction; they do not cure the restriction.
- Online sales to Panamanian consumers made by a local company are retail trade; the Constitution does not distinguish channels.
- The manufacturing exception covers the company's own products only, not third party goods sold alongside them.
Sources
Related pages
- investing/restricted-activities-and-ownership-limits
- entities/choosing-an-entity
- start/start-here
- normal-abroad/what-works-differently-in-panama
- /country/panama/
- /calendar/
- Live dashboard
Related: Panama country profile · live dashboard · central bank and release calendar · our posts on X
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