PANAMA Law and Practice Contributed by: Teresa Carballo and Edgar Young, Pacifica Legal
International banks, neobanks and payment platforms also increasingly accept Panamanian entities as cli- ents. Accordingly, there is no general legal prohibition on crypto-asset businesses obtaining banking or pay- ment services in Panama. Access is improving, but No ESG or sustainable finance requirement applies to digital assets as a category in Panama, but ESG disclosure may become relevant where the project is a regulated issuer, a listed or publicly offered product, a sustainable or thematic financing, or a company sub- ject to sustainability-related financial reporting. 1.2.4 Tax Panama has not updated its tax regime specifically to address blockchain or digital assets. There is no crypto-specific income tax, capital gains tax, mining tax, staking tax, token issuance tax, or special tax classification for digital assets. The analysis is still made under Panama’s ordinary tax rules, especially the territorial income tax system. The key rule remains Article 694 of the Fiscal Code, which provides that Panama taxes income derived from any source within its territory, regardless of where it is received. The same provision also states that certain activities, such as directing, from a Panama office, transactions that are perfected, consummated, or have effects abroad, are not considered Panama- source income. The general corporate income tax rate for legal entities is 25% on taxable net income, according to the Dirección General de Ingresos. approval remains case-by-case. 1.2.3 ESG/Sustainable Finance In practical terms, this means that a blockchain or crypto business is not taxed simply because it uses digital assets. The key question is where the income is generated and what the activity is. A Panamanian company carrying out all commercial operations out- side Panama, with no Panama-source income, may generally fall outside Panama income tax, subject to proper documentation and source analysis. Your entity guidance follows the same approach: offshore entities generally pay the annual franchise tax and must main- tain accounting records, but foreign-source income
is generally outside Panama income tax, where the operations, customers, and income source are out- side Panama. 1.2.5 Insolvency Panama has not adopted a special winding-up, res- olution or insolvency regime for blockchain-based businesses or digital-asset firms. There is no crypto- specific equivalent of a bank resolution regime, client- asset insolvency regime or VASP insolvency frame- work. In practice, a blockchain company incorporated or operating in Panama would be handled under the ordinary insolvency rules, unless it is also a regulated bank, insurer, securities-market entity or another entity subject to a special intervention or liquidation regime. The main law is Law 12 of 2016, which governs insol- vency proceedings in Panama. It applies to commer- cial individuals and commercial companies, whether or not registered with the Public Registry, that have a commercial domicile, branch, agency or establish- ment in Panama. The law is built around two main routes: reorganisation, where the aim is to preserve a viable business, and judicial liquidation, where the aim is an orderly sale or realisation of the debtor’s assets for distribution to creditors. For a blockchain company, the key practical question would be what assets actually belong to the debtor. Treasury crypto-assets, token holdings, receivables, intellectual property, software, domain names, smart- contract administration rights, exchange accounts and fiat balances would generally need to be iden- tified and brought into the insolvency estate. If the business is non-custodial and user assets remain in users’ own wallets, those assets should not ordinar- ily form part of the debtor’s estate. If, however, the company holds client assets through omnibus wallets, exchange accounts, smart contracts, custodians or multi-signature wallets, the analysis becomes much more sensitive and will depend on the terms of use, custody terms, segregation of assets, accounting records and actual control. Law 12 is not written for digital assets, so enforcement is practical as much as legal. An insolvency represent- ative would need access to wallet records, private- key arrangements, multi-signature signer information,
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