Since the late 1950’s Panama has been at the forefront of developing its logistics and trading capacities through the creation of especial free zones regimes. Traditionally and until 2011 the Rep. of Panama had created 4 different trade zones via especial laws regime, all of which are state owned, or partly, and controlled initiatives, these are:
The Law n°32 of April 5, 2011, created a new free trade zones legal regime that works differently to what are the traditional free trade zones in Panama, as it allows private investments to develop and operate free trade zones. The law allows the free trade zones to be located in any part of the country, plus it grants tax incentives and have especial labor and immigration dispensations. Since the enactment of Law 32, a total of 19 licenses have been granted of which 12 are already operational and 7 are in the development process. Over 160 companies are already operating from these new free trade zones, mainly from Panama and Colon cities.
Executive Decree N°62 of 2017 regulates Law 32 of 2011, which established a unified regime for free trade zones in the Republic of Panama.
The Executive Decree introduces the following regulations, all of which intend to make existing and future free trade zones more competitive:
The Law and the Executive Decree both grant a especial fiscal regime and incentives for the development of free trade zones, and throughout their operation. For the development, construction and operation of a free zone, all necessary materials, equipment, services engaged and real estate transactions will be tax exonerated.
Companies established at the free trade zones and that export their services and goods, or that perform transactions with each other within a free trade zone are income tax exempted.
Applicable taxes are:
The Executive Decree also establishes the requirements for qualifying as a Promoter, Operator or Administrator, Business Licenses and a especial chapter for Call Centers.
Dr. Juan José Espino Sagel
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