News and Publications
March 2010
Special Panama-Pacific Economic Area
Always looking for new opportunities of businesses, the Republic of 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 (insert access to the law), 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 return 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 and technology, offshore services, maintenance, repair and conditioning of airplanes, logistic activities, assembling, development of real estates, tourism, among others.
Benefits and Incentives
Among the benefits and tax incentives of establishing any type of company in this region, are the following:
The following activities shall be exempted from taxes that encumber profits:
- Offshore services
- 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
- Call center services
Labor and Immigration Treatment
The Labor Code applies, with some exceptions to the provisions in this matter. The transaction for Resident Permit in the capacity of Investor in the Panama-Pacific Area is the following:
- To foreigners that give evidence of having invested an amount not less than US$250,000.00 in the risk capital of the Company in the Panama- Pacific Area or in Developing or Operating Companies. Same shall have the right to have their domicile in the country and inside the Panama-Pacific Area for the term of five years, and their granting gives the right to the multiple exits and entries permit.
- The contracted foreign personnel who are granted a Working Permit for the Panama-Pacific Area, as well as the persons to whom the Investor Permit for the Panama-Pacific area are granted, shall have the right, per family, to import 100% free from direct and indirect contributions, taxes, rights and national liens, for only one time, all types of articles for domestic or personal use up to an amount of US$100,000.00
The companies in the Panama-Pacific Area, the Developer and the Operator may introduce in the Panama-Pacific Area all type of merchandises, products, equipments and other assets in general, as well as to transfer and sell them to other Companies of the Panama-Pacific Area, to the Developer and Operator, without quantity limitations, exempt, at all times, from the payment of taxes, contributions, rates, liens, import fees and other tax contributions, national or provincial or of any other order, including consular fees or of any other denomination, except those provided by the Law.