Panama Tax Incentives: Colon Free Zone vs. Panama Pacifico

Panama Tax Incentives: Colon Free Zone vs. Panama Pacifico

Oct 10, 2013 | Investing in Panama, Moving to Panama

Panama tax incentives have recently been strengthened by various  laws that provide tax breaks and other benefits to companies that operate in Panama’s largest tax free processing zones, the Colon Free Zone, and the Special Economic Area, Panama Pacifico. This article will compare the two in regards to their tax incentives and benefits for companies incorporated in Panama.

The Colon Free Zone

The first Panama tax incentive began in 1948 when the Colon Free Trade Zone was established and has become the second largest tax free zone in the world after Hong Kong. Over 1,800 companies operate in the Colon Free Zone with the majority of them involved in importing and exporting, including factories, warehouses, and re-packaging many products.

The colon Free Zone is administered by a semi-autonomous government agency which has the power to lease space and grant operation permits. To be able to lease space, a company must have at least 60% of all imported products exported every year and hire 5 Panamanian employees.

The Colon Free Zone has its own port and a transit system enabling imports, exports, manufacturing, re-exports, warehousing, processing and refining goods, and other Panama tax incentives activities.

Colon Free Zone Benefits include:

  • Zero Tax on Export Activities Income;
  • Zero Import Duties;
  • Zero Quotas and Tariffs on Imports and Exports to Other Countries;
  • Low Dividend Tax of 5%.

Panama Pacifico Special Economic Zone

The Panama Pacifico Special Economic Zone is still being built on a 1,395 hectare (3,447 acre) site including an 8,400 foot jet airfield runway for cargo planes. This is situated near the Panama Canal for easy access. Upon completion this will become a small city with corporate offices, bank offices, logistic services, call centers, offshore services, high tech production and manufacturing, aircraft repairs and maintenance services, goods being transferred to airplanes & ships, exporting goods, and a film industry.

Panama Pacifico Benefits include:

  • No Income Taxes;
  • No Import Duties;
  • No International Phone Calls Tax;
  • No Remittance Tax;
  • No Stamp Tax;
  • No Dividend Tax;
  • No Sales Tax (ITBMS);
  • No Export/Re-Export Tax; and
  • No Licensing Tax.

Additional Benefits include:

  • 10 year Consistency for all Tax Benefits;
  • Companies Receive Additional Immigration Visas and Work Permits for foreign workers.
  • Labor laws are Relaxed Concerning Sunday & Holiday Pay, Working Hours, and Negotiating Different Rest Days and Vacation Time for Employees.
  • Tax Exemptions for Transferring goods and Providing Services between the ports, to ships and passengers, to petroleum free zones, to other companies, to government agencies inside the Panama Pacifico, and to the London & Regional Panama Company.

London & Regional Panama

The developer is London & Regional Panama (LRP) which merged two companies: London & Regional Properties (L&R) with Latin America’s Southstone Investment Company. London & Regional Properties has extensive real estate experience by being the developer, manager, and owner of over $20 Billion USD in global real properties in five continents. Southstone Investment Company brings knowledge of Latin American cultural along with experience and economic support.

The Panama Tax Incentives for The Colon Free Zone and Panama Pacifico are truly large incentives attracting companies and organizations from around the world.

Interested in learning about Panama’s tax laws, incentives, and other benefits to moving to Panama? Contact us and we will gladly offer assistance, or click here to read more about Panama taxes.

International Relocation Firm Staff Writer

International Relocation Firm Staff Writer

As one of the leading Panama Law Firms, and one of the regions most reliable service providers, International Relocation Firm brings a wide range of professional knowledge to our clients needs. Our staff is made up of professional consultants, Panama attorneys and immigration specialists who are experienced in international relocation, and are experts in providing a seamless Panama immigration process.

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