Find out how special
economic zones in Panama can support your expanding business in Central
Panama supports a number of special economic zones that offer wide-ranging benefits to companies operating within them.
Panama has one of the strongest and stable economies of Central America. According to the World Bank, Panama ranks as the second-fastest growing economy in the Caribbean and Latin America with a forecasted growth of 3.7% in 2020. This consistent growth supports increasing business confidence in establishing a company in Panama.
If your business is
related to import and export goods, Panama is the country you’re looking for to
start expanding. Panama supports a number of special economic zones that offer wide-ranging
benefits to companies operating within them.
The most important special economic zones in
Panama are the following:
Colon Free Zone
City of Knowledge.
Choosing the right
special economic zone in Panama for your business needs depends on the location
where you want to trade goods from, and/or your principal business activity.
How do special
economic zones in Panama benefit business?
The special economic
zones in Panama offer benefits related to immigration, labor and fiscal incentives
to encourage foreign investment into the country. Depending on your commercial focus,
each special economic zone offers a different set of incentives to suit
different business models.
company in the Colon Free Zone in Panama
The Colon Free Zone in Panama was the first special economic zone established in the country in 1984. This special economic zone is divided into 9 different sectors covering 1,064 hectares and housing more than 1,800 local and foreign companies.
The principal purpose of the Colon Free Zone in Panama is to attract foreign businesses by offering tax exemptions to companies that import goods and reexport them outside of the country.
What are the available
incentives for businesses in the Colon Free Zone?
Tax exemption on imports, re-exports and manufacturing
Tax exemption on re-export incomes
Tax exemption on invoicing
Tax exemption on other national or provincial taxes
Low cost on the rent of land, building or any required
Migratory facilities for foreign executives
Digitalized security system
A large financial network of national and
Sales through e-commerce.
company in Panama Pacifico
The Panama Pacifico special economic zone is the newest of its kind in the country. In this zone, businesses can access major technological advances while conducting commercial activities.
The Panama Pacifico
special economic zone is the newest of its kind in the country. In this zone,
businesses can access major technological advances while conducting commercial
activities. Establishing your company in Panama Pacifico will grant your
company similar benefits to the Colon Free Zone, but you would instead be located
near the Pacific Ocean.
This special economic zone incentivizes the development of different business sectors such as logistics, sea and air transportation, high-technology and innovation, call centers and shared services.
The Panama Pacifico special economic zone allows the entrance of any kind of business. This means that even if your company is not a beneficiary of local exemptions, you can offer your services to all the companies already allocated within the special economic zones.
Which commercial activities
can receive tax exemptions in the Panama Pacifico special economic zone?
administration and/or operations support
and/or training of personnel
and/or logistics control
logistical market support
or administration, financial, treasury and accounting
and export activities
Tax incentives in the
Panama Pacifico special economic zone
tax declarations (5%)
the Valued Added tax (called ITBMS in Panama)
withholding tax of 2%
in the Panama Pacifico special economic zone
Integrated Procedures System: inside Panama Pacifico, companies can access the necessary public institutions to apply for licenses or permits.
Single Record: Panama Pacifico facilitates the procedure of establishing the company in Panama Pacifico by allowing business owners to undertake all the necessary processes with one single entity located inside the special economic zone.
Education centers: inside this special economic zone, companies will also have at your disposal schools if needed.
Private institutions such as banks, pharmacies, restaurants, gyms, among others.
Fixed rates for overtime (maximum 25%) and for work done on holidays
The weekly rest days are negotiable between the employer and the employees. According to the Panamanian Labor code, the rest days are on Sunday.
Companies can be open for business, even in National Holidays.
A 15% foreign labor force is allowed (only 10% is permitted outside of the zone according to the Panamanian Labor code).
All work permits and residence visas can be obtained at Panama Pacifico authority facilities.
All types of residence visas obtained in Panama Pacifico can be extended for the direct family members (Sons or Parents).
Foreign staff hired as specialists have the right to import 100% duty-free, for a single time, all types of articles for personal or domestic use, up to the sum of USD100,000
Investment stability law: this benefit will allow your company to maintain the benefits obtained for 10 years, even if the law that granted the benefits change.
Is the City of
Knowledge the special economic zone for you?
The City of Knowledge is another of the 3 more important special economic zones in Panama. This special economic zone encourages the development of new technologies, granting labor, immigration and tax benefits to companies that establish themselves to create or develop any kind of technologies that promote the development of Panama.
The City of Knowledge
as a main special economic zone in Panama focuses on boosting the innovative
and competitive capacities of the users that are in the compound.
Which benefits are
offered by the City of Knowledge?
The City of Knowledge as a main special economic zone in Panama focuses on boosting the innovative and competitive capacities of the users that are in the compound.
The import of products such as equipment, furniture or machines that are important for the development of the companies that are located in the City of Knowledge will be exempt from all taxes, contributions, and fees.
The purchase or sales of machines, equipment, furniture and services that are necessary to the development of the company inside of these special economic zones in Panama will also be exempt from Valued Added Tax, in Panama called (ITBMS).
The production, processes
of high-tech goods, assemble or similar services provided by companies located
in the City of Knowledge in Panama will benefit from the following incentives:
operations, transactions, and procedures will be completed free of National
taxes, contributions and fees.
capital of the company will also be exempt from direct national tax, including
patent, trademark or any kind of license taxes.
The State will grant special visas to foreign personnel who enter the country to contribute to the development of the City of Knowledge project.
Editor’s note: Changes have been made to the Panama Friendly Nations Visa, applicable as of August 2021. Read more here.
The companies affiliated
with this special economic zone can hire the foreign personnel needed to carry
out their tasks.
Expand to a
special economic zone in Panama with support from trusted legal experts
There are many benefits
to establishing your company in Panama. To be able to take advantage of the
special economic zones in Panama, you’ll need to seek advice from experienced local
At Biz Latin Hub, we
can assess your needs and determine which special economic zone in Panama may
be the best fit for your business, allowing you to expand safely and in full
compliance with local regulations.
Our multilingual team of legal, accounting, and payroll experts possesses comprehensive experience in company formation, accounting and finance, market entry support and more. As an international company, we provide you with tailor-made market entry and back-office solutions suited to your company’s needs in Latin America. Contact us now here at Biz Latin Hub to start your investment in Panama.