There are 3 tax-free trade zones in Panama. Each of them offers different kinds of tax breaks based on their intended purposes. Below is a review of Panama’s tax incentivised businesses zones.
The Colón Free Trade Zone was created in 1948 and is the 2nd largest free-trade zone in the world, behind Hong Kong’s. More than 1,800 companies operate within the zone. Most of these businesses are involved with the exporting and importing industry, having warehouses, factories and repackaging facilities for various products. A semi-independent governmental agency administers the Colón Free Trade Zone, granting operational permits and leasing space.
To be located in the Colón Free Trade Zone companies must have a minimum 60% of the imported products exported annually, and hire five Panamanians.
The Colón Free Zone consists of a port and transit systems designed for exports, re-exports, imports, manufacturing, warehouses, refining and processing goods, and other activities related to free-trade zones.
No import duties
Only a 5% dividend tax
Zero tax on income derived from export activities
Zero tariffs and quotas on imports and exports to foreign countries
The Panama Pacifico Special Economic Zone is being constructed on a 1,390-hectare site with an 8,400-foot runway for planes. When completed, it will be a small city including bank offices, corporate offices, call centres, high-tech products and manufacturing, logistics services, offshore services, aircraft maintenance and repair services, film industry, transferring goods and services to ships and airplanes, and exporting goods.
Qualification for location within the Panama Pacifico is being engaged in one of the following industries.
Companies wishing to operate inside this economic area must apply to London & Regional Panama and the government agency Panama Pacifico Agency.
London & Regional Panama (LRP) merges two companies: Latin America’s Southstone Investment Company and London & Regional Properties (L&R). L&R brings vast real-estate knowledge on a distinguished level, as developer, manager and owner of nearly US$21 billion in worldwide properties on 5 continents. Southstone combines Latin American cultural insight, experience and economic support.
The former US Howard Air Force Base is being developed into a Special Economic Zone for multinational corporations and high-technology companies. There are over 125 multinational companies now established there, with 50 more coming in 2012.
LRP has a master plan including the latest trends in green buildings, fibre-optic networks, and walkable neighbourhood designs. The developer’s vision includes: “Enter a new world that forms a bridge between tradition and innovation, country breathing space and big-city accessibility, private funding and government support. A true master-planned community that brings together people of all ages to live, work and play. A haven of residences with a vivacious mix of strolling neighbourhoods and chic homes. A global enterprise offering unprecedented business advantages. All set within a sustainable landscape linked by parks and trails.”
Panama Pacifico offers a new way of life that’s all about connectivity, unlike any other destination in Latin America.
Once a US Air Force base, the majority of Panama Pacifico’s infrastructure was already established. Panama Pacifico benefits from being connected to Panama’s leading public-works suppliers operating out of the Panama Canal. From potable water works, premier electrical connections to state-of-the-art high-tech capabilities from 5 key submarine-telecommunications spheres and excellent roads, Panama Pacifico’s excellent infrastructure accommodates present and future generations.
Panama Pacifico already has an on-site shuttle-bus system. The new Transportation Demand Management system began in 2012, with commuter buses for on-site employees.
The entire infrastructure system will be underground, preserving the community’s natural views and character.
The Panama Pacifico Special Economic Zone also provides Panama immigration benefits, including easy application for and issuance of the following visas.
There is a one-stop-shop immigration office to handle all applications for visas and work permits.
Another benefit is the tax-free importation of personal effects with a total value of up to US$100,000.
In addition, the Panama Pacifico Special Economic Zone offers labour incentives such as:
The former US Army base of Fort Clayton has been converted into the Ciudad del Saber (City of Knowledge), containing high-tech companies providing services to international governments, international research, education, science-research centres, universities, businesses and non-government organisations. The not-for-profit City of Knowledge Foundation administers this complex.
The City of Knowledge (Ciudad del Saber) Special Economic Zone is a scientific, technological and entrepreneurial park. The types of businesses allowed include scientific, technological, human-development and cultural organisations.
The Panama Tax Free Processing Zone Investor Program allows foreign investors and their families to relocate to Panama and obtain Panama residency by renting a plot of land, office or entire building with at least a 10-year lease within one of Panama’s Tax Free Zones. The qualifying purpose of the business varies for each free zone.
Panama immigration laws favour foreign investors who can generate business from Panama to the rest of the world. There are distinct tax advantages for foreigners who can operate manufacturing plants, assembly plants, call centres, software-creation facilities and other businesses which can export their products or services. These businesses also get a substantial tax break when selling a certain percentage of their products or services locally.