When Non-Payment Leads to Corporate Rights Suspension

Executive Summary

Panamanian companies are generally required to pay an annual government charge known as the Tasa Única, commonly referred to in English as the Panama Annual Franchise Tax.

For corporations and limited liability companies, the annual Tasa Única is currently B/.300 (US$300). A payment made after the applicable deadline is subject to a B/.50 late-payment surcharge.

Missing one annual payment does not immediately suspend a company. However, non-payment has legal consequences from the first delinquent period, and a company that remains delinquent for three consecutive annual periods may have its corporate rights suspended under Article 318-A of Panama's Fiscal Code.

Suspension is significantly more serious than simply owing an annual fee. A suspended entity may be prevented from conducting business, disposing of assets, initiating new legal proceedings, exercising rights, or carrying out corporate actions that legally bind the company.

What Is the Panama Annual Franchise Tax?

The Tasa Única is an annual charge imposed on Panamanian legal entities to maintain their registration in full force before the Public Registry of Panama.

It should not be confused with corporate income tax. The Tasa Única is connected to the company's legal existence and registration rather than to the amount of revenue or profit generated by the entity.

Article 318-A of the Fiscal Code applies the obligation to corporations, limited liability companies and other legal entities covered by the provision. The Panama General Directorate of Revenue (Dirección General de Ingresos – DGI) currently confirms an annual charge of B/.300 for corporations.

Accordingly, maintaining an entity that is not actively conducting business does not, by itself, eliminate the annual corporate maintenance obligation.

When Is the Panama Annual Franchise Tax Due?

The payment deadline depends on the date on which the entity was originally registered with the Public Registry.

The DGI currently applies these deadlines for annual Tasa Única payments.

For example, a Panama corporation registered in March would generally have its subsequent annual franchise tax due by July 15 each year.

A company registered in September would generally have its subsequent payment due by January 15.

What Happens If the Annual Franchise Tax Is Paid Late?

There is an important distinction between:

• delinquency, and

• suspension of corporate rights.

They are not the same legal status.

After the First Missed Payment

A late Tasa Única payment currently carries a B/.50 surcharge.

More importantly, Article 318-A provides that failure to pay the annual Tasa Única for the period in which it becomes due may prevent the Public Registry from:

• registering corporate acts that require registration; and

• issuing ordinary certifications relating to the delinquent legal entity, subject to specific statutory exceptions.

The Registry may still issue certifications requested by competent authorities or certain third parties seeking to enforce their rights, with the certification reflecting the entity's delinquent status.

This means that even before formal suspension, unpaid franchise taxes can interfere with routine corporate transactions.

When Does Non-Payment Lead to Suspension?

Under Article 318-A of Panama's Fiscal Code, corporate rights may be suspended when the entity remains delinquent in payment of its Tasa Única for three consecutive periods.

The process involves the DGI identifying entities that meet the statutory delinquency condition and reporting them for suspension before the Public Registry.

This is not merely a theoretical enforcement mechanism.

The DGI has repeatedly published official lists of entities with three consecutive years of unpaid Tasa Única and ordered the corresponding suspension process. For example, Resolution No. 201-3447 of April 15, 2025 expressly addressed entities with three consecutive years of Tasa Única delinquency.

What Does Suspension of Corporate Rights Mean?

Suspension substantially restricts the company's legal capacity.

While the suspension remains registered, Article 318-A provides that the entity is generally unable to:

1. initiate legal proceedings;

2. conduct business or dispose of its assets;

3. make claims or exercise rights; or

4. carry out corporate actions that legally bind the entity.

For a company holding real estate, investments, bank accounts, shares or other significant assets, these restrictions can create serious operational and transactional problems.

A suspended company may therefore encounter difficulties when attempting to:

• sell or transfer corporate assets;

• register corporate resolutions;

• restructure its directors, officers or ownership documentation;

• complete transactions requiring evidence of corporate standing;

• satisfy bank or financial institution compliance reviews;

• execute certain corporate documents; or

• proceed with transactions requiring Public Registry filings.

The precise effect on a specific transaction should be evaluated based on the company's legal status and the nature of the proposed act.

Does Suspension Mean the Company Immediately Ceases to Exist?

No.

Suspension and dissolution are separate stages.

A suspended company remains capable of taking certain actions specifically recognized by law. These include:

• requesting reactivation;

• defending itself in proceedings brought against it; and

• continuing legal proceedings that it initiated before the suspension became effective.

However, suspension should not be treated as a status that can safely remain unresolved indefinitely.

Current DGI resolutions applying Article 318-A state that, once the suspension has been registered, the entity has one year to be reactivated. If reactivation does not occur within that period, the Public Registry may proceed with the entity's definitive cancellation, with the company consequently treated as definitively dissolved.

This distinction is particularly important for owners of older Panama entities who may assume that an inactive company can simply remain dormant without maintenance.

Can a Suspended Panama Company Be Reactivated?

Potentially, yes, provided the company remains within the period in which reactivation is legally available.

Article 318-A requires the cause of the suspension to be corrected and provides for an applicable B/.1,000 reactivation fine. Current DGI guidance for companies also refers to payment of outstanding Tasa Única obligations and a B/.25 registration charge in connection with the reactivation process.

The DGI identifies a specific procedure for requesting reactivation due to Tasa Única delinquency and requires supporting documentation evidencing the corresponding payments.

The actual amount required to restore a particular company will depend on its account status, outstanding annual taxes, surcharges and any other applicable compliance issues.

For that reason, the first step should normally be to verify both the company's Public Registry status and its DGI account status before making assumptions about the required corrective action.

Why Corporate Maintenance Should Be Reviewed Before a Transaction

The cost of keeping a Panama company compliant is relatively predictable. Correcting several years of accumulated non-compliance can be substantially more expensive and may involve additional legal and administrative work.

The issue becomes particularly relevant before:

• selling real estate held by the company;

• transferring shares or membership interests;

• opening or maintaining a corporate bank account;

• obtaining corporate certificates;

• changing directors or officers;

• changing the resident agent;

• entering into financing arrangements;

• restructuring the entity; or

• selling the company itself.

A transaction can be delayed if the parties discover only at closing that the entity is delinquent or suspended.

Corporate status should therefore be treated as a due-diligence item rather than merely an annual administrative expense.

Practical Considerations for Panama Company Owners

Owners of Panama companies should periodically verify:

• whether the annual Tasa Única has been paid;

• whether any late-payment surcharges remain outstanding;

• whether the company appears in good standing at the Public Registry;

• whether a suspension notation has been registered;

• whether the company's resident agent remains properly appointed;

• whether corporate records are current; and

• whether other statutory compliance obligations remain outstanding.

Paying the annual franchise tax addresses only one component of corporate maintenance. It does not automatically correct unrelated deficiencies involving resident-agent status, corporate records, accounting-record obligations, beneficial ownership requirements or other regulatory obligations applicable to the entity.

Frequently Asked Questions

How much is the Panama Annual Franchise Tax?

For a Panama corporation, the current annual Tasa Única is B/.300 (US$300) according to the DGI.

Is there a penalty for paying late?

Yes. The DGI currently specifies a B/.50 late-payment surcharge.

Is a Panama company suspended after missing one payment?

No. One unpaid period produces delinquency and can restrict Public Registry services, but suspension for Tasa Única delinquency applies after three consecutive unpaid periods under Article 318-A.

What happens after three years of unpaid Tasa Única?

The DGI may order the suspension process, and the Public Registry may register the suspension of the entity's corporate rights.

Can a suspended company still sell property?

Article 318-A expressly restricts a suspended entity from conducting business or disposing of its assets while the suspension remains in effect. The company's status should therefore be resolved before attempting an asset disposition.

Can a suspended company be reactivated?

Yes, while reactivation remains legally available. The underlying default must be corrected and the applicable reactivation requirements satisfied.

How long does a suspended company have to reactivate?

Current DGI resolutions applying Article 318-A state that the company has one year from registration of the suspension to reactivate before definitive cancellation may occur.

Is an inactive Panama company exempt from the annual franchise tax?

Generally, no. The Tasa Única relates to maintaining the legal entity's registration rather than to whether the company generated income or actively operated during the year.

Conclusion

Failure to pay Panama's annual franchise tax should not be viewed simply as an outstanding government fee.

The consequences escalate over time.

A first delinquency can interfere with Public Registry filings and certifications. After three consecutive unpaid annual periods, the company may face suspension of its corporate rights, substantially limiting its ability to conduct transactions, dispose of assets and exercise legal rights.

Once suspension is registered, the issue becomes time-sensitive because failure to reactivate the entity within the legally permitted period may ultimately result in definitive cancellation.

For entities holding property, investments or other assets, confirming corporate status before a transaction can avoid unnecessary delays, additional costs and legal complications.

Check the status of your Panama entity.

Panama Entity can assist with reviewing the company's corporate status, outstanding Tasa Única obligations, resident-agent status and the steps required to restore the entity to compliance.

Request Corporate Maintenance

References

• Panama Fiscal Code, Article 318-A, as amended.

• Law 52 of October 27, 2016, Republic of Panama.

• Law 254 of November 11, 2021, amendments relating to transparency and corporate compliance.

• Dirección General de Ingresos (DGI), official Tasa Única guidance.

• DGI Resolution No. 201-3447 of April 15, 2025, concerning entities delinquent for three consecutive Tasa Única periods.

• Official Gazette No. 30588 of August 12, 2026, application of Article 318-A and current reactivation/cancellation framework.