Other Free Trade Zones in Panama

About Other Free Trade Zones in Panama

Free trade zones in Panama are part of an integrated system which promotes the establishment and operation of companies that contribute to the country’s development, job creation, and inclusion in the global economy. Participants can have access to different investment opportunities, as well as economic, scientific, technological, cultural, educational and social growth.

In Panama, there are 12 active free trade zones with 123 registered companies. These free trade zones are protected by Law 32 of 2011 and offer tax, labor, and migratory benefits.

Incentives

Companies located in Panama’s free trade zones can take advantage of the following incentives:

Tax

  • Logistics and technology companies, assembly, manufacture, scientific research centers, education centers, general services companies, health specialists’ centers and environmental services companies are exempt from income tax for foreign operations
  • Dividend tax rate of 5% regardless of the source of the funds, and a complementary tax 2% in cases where there is no distribution of income.
  • Exemption of temporary transformation of products outside the zone
  • 0% tax and custom duties exemption for goods and services required for operation
  • Exemption from taxes and import duties on raw materials, semi- finished products, purchase as well as imports of equipment and building materials, machinery, spare parts, tools, accessories, supplies, packaging materials and any goods or services.
  • The developers of free trade zones are exempt from income tax in the lease and sublease

Migratory

  • Permanent residence visa for investors
  • Temporary staff visa valid for term of the contract
  • Short term visa as a trader for business in free zones
  • Temporary permits for special activities: teacher, student, or researcher of a higher education center in a free zone; investigator of scientific research center
  • Immigration permits can be extended to the spouse, children and elderly dependents of the principal applicant

Labor

Special Labor conditions include an allowance for

  • Shift rotation of workers
  • An Agreed holiday period between the parties
  • Only a surcharge of 25% when overtime is required
  • Only a 50% surcharge on standard wages when working on a holiday.

Requirements to operate in a Free Trade Zone

A company can establish their operations in a Free Trade Zone through an Operations License granted by the Ministry of Commerce and Industries.

The following are requirements to obtain such license:

  1. Formal request addressed to the National Commission of Free Zones.
  2. Bank references, from local or foreign business companies of recognized solvency.
  3. Attach a study that contains:
    1. Activity of goods or services to be developed.
    2. Origin and detail of the material, machinery, etc., to be used.
    3. Number of jobs that are projected to be generated.
    4. Initial investment and future investment project.
    5. Timeline and project execution.
    6. Identification of the natural or legal person.
    7. Certificate of peace and national security.
    8. Certification on simple paper of invested capital issued by a public accountant.
    9. Certification of shareholders or partners of the company signed by the secretary or treasurer.
    10. Certification issued by the promoter of the free zone.

Our team at Kraemer & Kraemer can assist you with the process of applying to operate a Free Trade Zone in Panama as well to give you the proper legal advice to establish your company. Send us a note to info@kraemerlaw.com to learn more.

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