About Panama

Panama has historically been recognized as a privileged Country in the heart of the Americas due to its invaluable geographical position and environment free of natural disasters which has been maximized with the construction of the Canal (now in expansion), developed ports (in both coasts), five optic cables, air connections (the most important in Latin America), proven democracy, modern tax system, reliable banking hub, non-discriminating society and first world-quality human resources, as shown in the efficient operation of the Panama Canal; all these characteristics make of Panama a competitive regional trade center.

In view of the above-mentioned, our Country has unified efforts to promote international investment by implementing different mechanisms to attract foreign investors. Panama has more than 40 laws and decrees that offer advantages to the investors in terms of tax and operations. Some of the areas that are beneficiated from those regulations are tourism, mining, insurances, agro-industries, petroleum free zone, infrastructure and construction. Besides, Panama offers to foreign investors the possibility to apply for any of the following trade alternatives:

1. Colon Free Zone
2. Special Economic Area Panama-Pacific
3. Multinational Company Seat
4. Processing Zone

1. Colon Free Zone:

The Colon Free Zone was created by Decree-Law No. 18 dated June 17th, 1948 as an autonomous institution with its own legal personality but supervised by the executive organ and the general comptroller. Since the time of its creation the Zone has successfully fulfilled its purpose as a place to import, re-export, store, assemble and re-pack a wide range of merchandises as electronic devises, shoes, bags, jewelry, clothing, motors, beverages, furniture, textiles and the most popular of the international fashion market is traded in the Colon Free Zone.

2. Processing Zones for the Exportation:

According to Law No. 25 of November 30th, 1992, Processing Zones for the Exportation (PZE) are those delimited areas created as free trade zones. The purpose of these areas is to provide the best environment for the establishment of companies from all over the world that could be beneficiated from the Panamanian advantages and compete in the international market. In the PZE could be established natural or juridical persons, locals or foreigners, oriented to the production of goods and services in the following companies’ categories: Manufacturing, assembling, processing of semi-elaborated or finished products and services for exportation.

3. Special Economic Area Panama-Pacific:

Panama has developed a law which pursues to enhance the exploitation of its economic and commercial potential. To this end, it created a tax, customs, labor, immigration and of special businesses system for the establishment and operation of a Special Panama-Pacific Economic Area, by means of Law No. 41 July 20th, 2004, which creates an autonomous entity of the State, named Agency for the Special Panama Pacific Economic Area, addressed to spur and ensure the free flow and movements of assets, services and capital to attract and promote investments.

Located in the former Howard Air Base, that was returned to the Republic of Panama by the Government of the United States, by virtue of the execution of treaties on the Panama Canal. Very close to Rodman and Balboa ports at the entrance of the Panama Canal, is only 15 minutes from the center of the city of Panama. Due to the connectivity, the area is very attractive for any kind of economic activities, including but not limited, to activities related to computer science and telecommunications, technology, maintenance, repair and conditioning of airplanes, logistic activities, assembling, development of real estates, tourism, among others.

Among the benefits and tax incentives of establishing any type of company in this region, are the following: transferring of shares between the companies in the area, Transferring of assets and the rendering of services between the companies in the area or companies established in the oil free zones or port areas, selling of merchandises or rendering services to visitors, passengers or crew members in transit abroad or to vessels that cross the Panama Canal or aircrafts that use ports enabled in Panama with foreign destiny, except that the sale is carried out by the manufacture itself or a company of the same economic group, services or activities related to aviation and airports, transportation, handling and storage of cargo, maintenance, repair, conversion and re-conversion of aircrafts, aircrafts’ spare parts and/ pieces, as well as the distribution, manufacturing of aircrafts’ spare parts and/or pieces, manufacturing of high technology products, multi-modal and logistics services and call center services.

4. Multinational Company Seat:

By means of Law 41 of August 24, 2007, a special system was created for the establishment and operation of Seats of Multinational Companies and the Commission of Licenses for the Seats for Multinational Companies, and other provisions were issued; the Republic of Panama pretended to facilitate access to the already existing benefits in labor and tax matters, for the Seats of Multinational Companies.

Law No. 41 defines a SEM company as a multinational company that from Panama, carries out operations address to offer the services defined in this Law, to its Head Office or its subsidiaries or its filial or associate companies, or that establishes it Head Office in Panama, hereinafter the Company Group. The Seats shall always be part of multinational companies with international or regional operations or important in their country of origin. It is understood for all purposes, as the seat of a multinational company (SEM), those companies that offer services to related companies and that have their own income.

Law No. 41 establishes tax benefits for the Seat of a Multinational Company as well as for the foreign medium-high level personnel. Additionally, it offers immigration and labor benefits, especially for foreign employees that the SEM contracts. Among the activities that SEM can carry out with its main company group, are the followings: Guidance and/or administration for the operation in a specific geographic or global area of a company of the company group, the logistic and storage of components or parts required for the manufacturing or assembling of manufacturing products, technical assistance to companies of the company group or to customers who had acquired any product or service from the company, the accounting of the company group, the preparation of plans that are part of the designs and/or constructions or part of same, which constitute a part of the typical course of the business activity of the head office or any of its subsidiaries, the counseling, coordination and follow-up of the market guidance and publicity of assets or services produced by the company group, the electronic processing of any activity, including the consolidation of the operations of the company group, The financial management (treasury) to the company group, the support of operations and investigation and development of products and services of the company group, any other service previously approved by the License Commission of SEM.

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