Establishing and running payroll in Panama
If your organization is interested in expanding into Panama, one of your initial steps will probably be to hire employees locally and establish payroll in Panama. This can be a lengthy and difficult process for many businesses, often taking several months to complete and resulting in unexpected delays.
At New Horizons, we specialize in providing Panama payroll outsourcing to foreign businesses aiming to build a presence in the region. We will handle the setup, running, and any associated administration for your Panama payroll, simplifying the whole process and empowering you to focus on the important job of a successful expansion, even if you don’t have an established entity in Panama.
Why choose the New Horizons payroll solution?
If you have an entity
If your organization has already established an official entity in Panama, then you can outsource your payroll setup and management to New Horizons to simplify your expansion.
This level of outsourcing is well-suited to larger organizations that are interested in expanding into Panama on a long-term basis.
If you don’t have an entity
For organizations that have not already registered an entity in Panama, we offer our standard payroll outsourcing service with the additional use of our Panama subsidiary. We will act as employer of record for your new employees, so you won’t have to go through the long process of registering an entity in Panama yourself.
This service is a low-risk, flexible, and scalable option for businesses looking to expanding into Panama.
How we can help you expand in Panama
Panama payroll guide
Taxation and withholdings requirements in Panama
Employers and most employees in Panama must both contribute to social insurance for the employees. Contributions equal 6.75% of salary for employees and 2.75% for employers. The government also contributes 1.04%.
Panama’s territorial income tax laws are very favorable for many, particularly foreign workers. Panamanian sourced income is taxed progressively at rates of between 0% and 25%.
Entitlements and terminations in Panama
Employees in Panama are generally entitled to 30 days of notice prior to termination of their employment contract. Severance payments, if applicable, usually equal around three to four weeks of pay for every year of service with an employer. Probation periods are limited to three months.
How to establish a Panama payroll
In most cases, any organization aiming to start a payroll in Panama needs to establish an official entity in the country. This can take longer than expected, as you will need to closely follow Panama’s unique and often complicated business laws.
Alternatively, you can choose to outsource your Panama payroll to New Horizons. We provide the use of our Panama subsidiary to act as employer of record for your Panama workforce, so you won’t have to go through the complex process yourself and can benefit from our outsourcing services even without a registered entity in Panama. Additionally, we can build your payroll and manage your HR, compliance, and any other associated administration, enabling you to work on successfully expanding your businesses in Panama.
Your all-in-one solution for Panama payroll outsourcing and global expansion
New Horizons’ Panama payroll services help your business to begin trading in Panama as quickly as possible, without the difficult process of registering a Panamanian entity and adhering to the local laws. This can help your business to commence its Panama operations in as little as 48 hours and has the potential to save you more than 80% in expansion costs, whether or not you already have an entity in the country.
New Horizons can also manage your company’s payroll, benefits, and expenses in Panama. Additionally, we can oversee HR duties, as well as employment and tax compliance. And as the only global PEO with an in-house recruitment team, New Horizons can source, recruit, and onboard your local staff.