The ocean is home to many incredible sea creatures, but it is also a way for humans to travel from one side of the world to another via water vessel. Whether you have a merchant ship that is transferring goods to foreign shores or enjoying the ocean air on a private vessel, such as a yacht, just like vehicles, they all must be legally registered.

The practice of flagging ships in foreign countries was first introduced in the 1920s when U.S. ship-owners became frustrated with the strict regulations and increase of labor costs. This made Panama a standout in the flag of convenience industry.

What are some of the benefits of registering a vessel in Panama?

Maritime laws are non-invasive

  • Any questionable actions or offenses that involve marine commerce, marine salvaging, marine navigation, shipping, sailors, or the transportation of passengers or goods by sea fall under the maritime law. This is not to be confused with the “Law of the Sea,” which deals with jurisdiction over coastal waters
  • Panama allows you to register a yacht or another type of vessel regardless of where you live. This means that you can legally register under the Panamanian flag 

Panama does not have a minimum tonnage requirement

  • Tonnage is the size or carrying capacity of a ship measured in tons
  • Most countries require a minimum amount of weight carried upon a vessel, but Panama does not abide by this rule when it comes to vessel registration. The only exception is if you have a vessel that is more than 20 years old, it will need to be inspected in order to qualify. This is a simple process and having a lawyer present to represent you, will make the process go smoothl.

Transferring offshore vessels is an easier process

  • With proper certification, transferring offshore vessels and yacht registrations to Panama do not require the typical survey seen within many other countries registration requirements. This is especially helpful for companies who do not want downtime with their operations, which can often be a heavy and costly burden on the company
  • Many countries require vessels to dry dock for inspection, even if they have the proper certification, however Panama does not

Registering a vessel in Panama can save you money

  • Many countries require offshore vessels to pay taxes when they register a vessel. However, taxes on company profits made through international trade do not need to be paid by companies operating vessels registered in Panama


This is all possible due to international law

A “flag state” gives the ship the right to fly its civil ensign according to the United Nations article 91, 1982. The flag state has control over the required safety and pollution documents and will perform regular inspections of the vessels equipment and crew. Those in charge of the registry may be governmental or a private organization.

The number one reason for most to choose registering in Panama is for tax purposes, or lack thereof. Registering a vessel in Panama allows someone to reduce the amount of tax that is payable by means that are within the law.

Labor laws are another reason to register outside of one’s country, due to lower wages nationally. National registries will usually require that a certain percentage of a ship’s crew be filled by the country’s citizens.

The United States has approximately 3,400 vessels registered, China has approximately 3,700, and Panama has nearly 8,600 ships that fly their flag. The advantages are overwhelming, which is why so many people choose to register internationally. For more information on how to register a water vessel (merchant or privately owned) in Panama, contact us today for trusted offshore legal services in Panama.