LAC Legal was founded in 1996, initially focused on incorporating companies for international investment. Nearly three decades later, under the leadership of Diego Lacayo, the firm has transformed into a multidisciplinary practice that assists foreign investors with compliance, taxes, financing, insurance, public procurement, and even the physical establishment of their operations in the country. This shift coincides with a unique moment for Panama: its removal from the FATF gray list in 2023, the new Law 526 of 2026 with its economic substance requirements, and increasingly direct competition from the British Virgin Islands, the Cayman Islands, and emerging markets like Dubai. Given this environment, Lacayo argues that Panama’s competitive advantage can no longer be solely based on tax regulations, and explains what, in his view, does make it so.

LAC Legal was founded in 1996, at a time when Panama was still consolidating its position as a hub for international structuring. Almost 30 years later, what part of that original value proposition remains valid today, and what part has had to be completely reinvented?

The essence remains exactly the same: to help international investors and companies use Panama as a platform to do business efficiently, safely and in accordance with the law.

What has changed completely is the way that service is provided. Twenty years ago, the value lay primarily in setting up companies or structuring corporate vehicles. Today, that’s just a small part of the work.

Our clients today are looking for comprehensive support. They want to understand regulatory risks, international compliance, taxes, investments, financing, insurance, public procurement, immigration, and even the process of physically establishing their operations in Panama.

At LAC Legal, we have evolved into a multidisciplinary firm precisely to respond to this reality. We no longer sell legal documents; we help our clients execute complete investment projects.

You lead a practice that combines corporate law, M&A, investment structuring, insurance, and public procurement. What led you to take on the leadership of LAC Legal, and what did you find needed to change when you assumed that role?

Taking over the firm’s leadership meant recognizing that the legal market was changing much faster than many traditional firms.

When I took on that role, I understood that we had to stop thinking only as lawyers and start thinking as entrepreneurs who provide legal services.

That meant investing in internal processes, technology, automation, CRM, performance indicators, and a much more customer-oriented culture.

We are also promoting a more international vision. Today, much of our growth comes from foreign clients looking to invest in or relocate to Panama, so our commercial and positioning strategy is no longer exclusively local.

Finally, we have sought to develop highly specialized departments, because we believe that the future of firms lies not in being generalists but in being technical leaders in very specific areas.

Panama as an investment platform

Panama is currently competing with jurisdictions like the British Virgin Islands and the Cayman Islands, which already operate under economic substance standards, and with emerging markets like Dubai. Beyond territorial taxation, what other differentiating factors does the country offer, and what explains the growing interest of international investors in establishing themselves here?

Panama has advantages that go far beyond the tax aspect.

It has a dollarized economy, a consolidated banking center, unique air connectivity in Latin America, relative political stability, a first-rate logistics ecosystem with the Canal, and a strategic location that is difficult to replicate.

Furthermore, it offers something that many offshore jurisdictions cannot offer: a real economy.

Here, investors can form companies, hire staff, acquire real estate, develop businesses, open offices, and operate regionally from a single jurisdiction.

I believe that Panama’s future lies not in competing solely on low taxes, but in becoming the best platform for doing business in Latin America.

More than a specific transaction, what we are observing is a growing interest from international investors in establishing themselves and doing business in Panama. That is probably the most relevant market phenomenon at the moment.

Panama remains a highly attractive jurisdiction due to a combination of factors difficult to find in other countries. We maintain a territorial tax system, use the US dollar as legal tender, have a privileged geographic location, and are one of the world’s leading logistics hubs, with the Panama Canal, world-class ports, and the most important air hub in the region.

Added to this is a business-oriented environment, an open economy, and a legal framework that, with the right support, allows for the efficient establishment and operation of businesses. All of this makes Panama not only an investment destination but also a platform for serving the rest of Latin America.

Therefore, rather than identifying a single transaction, I believe the true trend is the growing number of companies and investors choosing Panama as the location from which to structure their regional operations. Our job is to support them so that this investment is established on solid foundations, in compliance with the regulatory framework and with a long-term vision.

In 2023, Panama was removed from the FATF grey list. Would you say that this removal has already translated into a real and measurable change in the appetite of its international clients, or does the country’s historical perception still outweigh its current compliance?

Being removed from the grey list was very positive news, but international reputation takes much longer to change than a technical decision by an international body.

Our clients do appreciate Panama’s regulatory progress, but we still find financial institutions and international counterparties that maintain internal policies developed during the years when Panama was under greater scrutiny. In other words, compliance improved before perceptions did.

However, we believe that Panama is on the right track and that, with regulatory stability and legal certainty, that perception will eventually align with reality.

The recent Law 526 of 2026 introduces economic substance requirements and a 15% tax on certain foreign-source passive income for Panamanian entities. What types of your clients’ structures are now exposed, and how many of them are already considering moving operations to another jurisdiction as a direct result of this law?

First, this reform should not be analyzed in isolation. The requirement of economic substance reflects an international trend toward higher standards of transparency, compliance, and real economic presence. An increasing number of jurisdictions are adopting measures in this direction.

Secondly, the fact that Panama is incorporating economic substance requirements does not necessarily mean that structures should be abandoned or moved to another jurisdiction. On the contrary, it represents an opportunity to strengthen them. A structure that meets economic substance standards is a more robust, more defensible structure with greater international recognition, reducing regulatory risks and potential challenges in the future.

In that sense, I believe this reform represents progress. Rather than negatively impacting clients, it provides them with the opportunity to benefit from higher-quality structures, prepared for an increasingly demanding international regulatory environment. That is how we are addressing this change together with our clients.

Looking ahead to the next three to five years, does LAC Legal’s growth strategy involve opening a physical presence in other jurisdictions in the region, or remaining a Panamanian firm that advises on capital investment in Latin America?

Our priority is to consolidate LAC Legal as the leading firm in Panama for international investors.

There is still enormous potential to develop areas such as investment migration, international estate planning, international tax law, insurance, M&A and public procurement.

We do not rule out strategic alliances or a presence in other jurisdictions, but we prefer to grow sustainably rather than expand solely through geographic presence.

Our goal is for any investor considering establishing themselves in Panama to immediately identify LAC Legal as their first point of contact.

If a client were to ask you today, without filters, whether it is still worthwhile to structure loans in Panama given the regulatory costs implied by the new economic substance law, what would you answer?

I would answer yes. In our experience, the question has never been solely where to structure, but how to structure according to each client’s objectives and needs.

At LAC Legal, we don’t work with standardized structures. Each client requires a specific analysis and a tailor-made solution, whether for asset protection, estate planning, investment, international expansion, or business development. Jurisdiction is just one of the elements considered in this comprehensive analysis.

From that perspective, the incorporation of economic substance requirements in Panama does not change our approach to advising. On the contrary, it strengthens the structures we design. A structure with economic substance is a more robust structure, with greater credibility and better prepared to meet the international standards that investors, financial institutions, and authorities now demand.

It is true that we are still awaiting the regulations, which will define in greater detail how this new regime must be implemented. However, based on our experience advising international entities and observing how these standards operate in other jurisdictions, we believe that many of our clients already operate at levels of substance that largely reflect the spirit of the law. For them, the adjustments will likely be limited, and in many cases, compliance will be a natural evolution of how they already conduct their business.

Panama maintains competitive advantages that remain difficult to match: a territorial tax system, the US dollar as legal tender, a world-class logistics platform, and a historically business-oriented environment. Add to that a clear and well-implemented economic framework, and I believe the jurisdiction does not lose competitiveness; on the contrary, it strengthens its international standing and offers investors even more robust and sustainable structures for the long term.

LAC Legal has gone from incorporating companies to supporting complete investment projects. This evolution is not just the journey of one firm: it is, in fact, the same path that the Panamanian legal market is currently following.

Looking ahead, Lacayo’s plan is not to expand by opening offices in other countries in the region, but rather to strengthen its presence in Panama: consolidating LAC Legal as a leading firm for international investors and developing relatively untapped areas—such as investment migration, international estate planning, and international tax law—before simply expanding its geographic footprint. It’s a commitment to sustainable growth, not size.