Free Trade Zones in Panama


Free trade zones in Panama are part of an integrated system that promotes the establishment and operation of businesses that contribute to the country’s development, job creation, and inclusion in the global economy. These zones are located in delimited geographical areas within Panamanian territory and provide participants with access to various investment opportunities, as well as economic, scientific, technological, cultural, educational, and social growth.

In the current context, Tax-Free Zones in Panama are gaining increasing attention as a means to boost economic recovery following the COVID-19 pandemic. In this regard, the Panamanian government is working on new initiatives to attract more foreign investors and local companies to these zones, including the opening of new tax-free zones in the country. Additionally, new regulations are being implemented to strengthen transparency and integrity in the operation of these zones, ensuring their long-term sustainability. If you are interested in investing in Panama, Tax-Free Zones are definitely an option to consider.

Panama currently has 12 active zones with 120 registered companies. These free trade zones are protected by Law 32 of 2011 and offer fiscal, labor, and migratory benefits.

Permitted activities

  • Services
  • Manufacturing
  • Assembly
  • Logistic services
  • High-tech services
  • The processing of finished or semi-finished goods
  • Scientific research centers
  • Environmental services
  • Specialized centers for the delivery of healthcare services
  • Higher education institutions


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


  • 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
  • Tax exemption on capital investments
  • 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

Only external operations (export operations), which include the transfer of any kind of goods or merchandise as well as the provision of services to any natural or legal entity situated abroad or established within a specific free trade area, are eligible for the tax incentives provided to businesses established in the FTZ. On the other hand, activities intended for the Panamanian market at large (secondary customs territory) will be subject to import taxes, ITBMS, and income tax.


  • 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


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. Activities to be carried out (production of goods or services).
    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.

Regulation and oversight

The regulation and supervision of the operation of Tax-Free Zones in Panama are carried out by two main government entities: the Colon Free Zone Authority (AZLC) and the General Directorate of Free Trade Zones of the Ministry of Commerce and Industries (MICI).

The AZLC is the entity responsible for administering and supervising the operation of the Colon Free Zone, the largest and oldest tax-free zone in Panama. Its main objective is to promote trade and investment in the zone, and for this purpose, it ensures compliance with customs, migration, and health regulations, as well as promoting transparency and integrity in the zone’s operation.

On the other hand, the General Directorate of Free Trade Zones of the MICI is the entity responsible for regulating and supervising all other tax-free zones in Panama, including industrial and commercial free trade zones. This entity issues the necessary authorizations for the establishment and operation of companies in these zones and oversees compliance with fiscal and customs obligations by the companies established there.

Both entities work together to ensure the proper functioning of Tax-Free Zones in Panama and have implemented a series of measures to strengthen transparency, integrity, and long-term sustainability in these zones. This includes the implementation of monitoring and control systems, promotion of cooperation and dialogue with the companies established there, and strengthening of supervision and auditing mechanisms.

Ciudad del Saber

Ciudad del Saber is an innovation and entrepreneurship center in Panama City that aims to promote sustainable development and social transformation through science, technology, and innovation. Learn more.

Panama Pacifico

Panama Pacifico is a special economic zone located on the Pacific coast of Panama, which has become a hub for business, logistics, and manufacturing. Learn more.

Colon Free Zone

The Colon Free Zone is the largest special economic zone in Latin America and one of the most significant in the world, with a wide range of commercial and business activities. Learn more.

Contact us

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 to learn more

Learn more