Taxes and legal structure when selling your business in Panama

Before agreeing on a price, understand what would be sold, how it would be paid for, and each party's obligations. This guide is general information, not tax or legal advice. Professionals in Panama should confirm the treatment of your transaction.

Define what transfers

A share sale and an asset sale should not be treated as equivalent. Ask your lawyer and accountant to identify the proposed structure, included assets, remaining obligations, and necessary consents.

Do not choose a structure based on an isolated tax rate. Request a comparison of the overall outcome for your situation.

Distinguish withholding from final tax

The DGI's Form 108 guidance, in Spanish, describes withholding of 5% of the disposal value of shares and other securities as an advance toward income tax on the capital gain.

That withholding is not a universal rate or the final tax on every business sale. Ask your advisor to confirm applicability, tax basis, taxable gain, exceptions, and the relevant settlement procedure.

Calculate what you would receive

Request a projection separating:

• Total price and the amount payable at closing.
• Withholding, taxes, expenses, and outstanding obligations.
• Deferred payments and the conditions for receiving them.
• Payment dates and tax-compliance deadlines.

Do not treat a conditional payment as available cash. Ask how the projection would change if conditions are not met or payments are delayed.

Bring the questions into negotiations

Before signing, establish who files and pays each obligation, what documentation is needed, and how the parties would coordinate. If the structure changes, update the calculation with your advisors.

Santa Maria Ventures is an emerging firm seeking to acquire and operate established businesses for the long term. We can explain our approach as a potential buyer; your advisors should assess the tax and legal consequences for you. Start a confidential conversation, with no cost or obligation.