Mundo compares Panama's special zones: the mainstay of the world economy today
Special zones are a significant plus for businesses that want to thrive, especially when it comes to trade deals and commercial activities. Putting together and managing a company is a challenge and leading it to success it's an even bigger one.
Luckily for some kinds of activities like export services, trading, and innovative projects in Panama the famous special economic zone regimes bring weighty advantages.
Trading economics and export services simplified thanks to the special zones
In this regard, Panama has been one of the countries to make use of these special zones thus creating a fertile soil for businesses and projects in Panama to grow optimally. The benefits are not necessarily applied to export services or international trading businesses. In some cases, a special economic zone can be focused on supporting science projects and other initiatives mainly related to fulfilling innovative goals. Hence the reason why IT startups thrive in such zones.
Given the state of the world economy today, in which costs are increasing and geopolitics are changing the rules of the game, finding a safe space where to put your plan in motion is surely an advantage.
Special zones for science projects and related projects in Panama
Recently, we've discussed the Colon Free Zone and Panama Pacifico which are the two most popular in the country. Nonetheless, Panama boasts several special economic zone regimes which may just be the right fit for your initiative. This is another reason why we consider that Panama ticks all the boxes when it comes to covering the needs of perpetual travelers, nomad capitalists, and international investors.
Getting to know special economic zone regimes for projects in Panama
The Baru Free Zone
Far away from the capital, in the province of Chiriqui, the Baru Free Economic Zone grants tax exemption for all import taxes. This applies to equipment, materials, and finished goods.
Moreover, companies can operate without an aviso de operacion (Panama's equivalent to an operating license). Chiriqui is roughly 300 kilometers away from the capital, Panama City.
OFTZ or oil-free trade zones
Since petroleum is an important part of the world economy, this point demonstrates Panama’s positive influence in the region and beyond. Actually, the Colon Free Zone is the second largest in the world.
On the other hand, the OFTZ provides exemptions on indirect and direct taxes. Also on duties, fees, and rights related to transferring movable property and real estate. The benefits are applied only to external operations and those activities stated in the decree.
International Technological Park (Clayton) and City of Knowledge for projects in Panama to thrive
This foundation was specially created to promote educational research and science projects in Panama. Thus, the City of Knowledge constitutes a special economic zone that promotes the construction of products destined both for the local and international markets. Mainly it's focused on initiatives that promote innovation and that render, process, assemble, or produce services for high-tech products.
Thanks to this special economic zone businesses can access several exemptions including ITMS, and exemptions on import tax for equipment or materials related to the project. Exemptions on real estate tax and tax on funds remitted abroad are also applied. It's worth noting that exemptions apply to those activities directly related to the development of products.
Logistics zone at Tocumen International Airport
Managed through a government-owned corporation, this special zone is focused on logistics and manufacturing activities. It concentrates mainly on pharmaceutical and perishable products, e-commerce activities, and spare parts.
The charm of Casco Viejo
Very few know that this beautiful neighborhood is more than a tourist attraction. Here we also find another one of Panama's special zones. The beauty of the place is celebrated by being a World Heritage site, a distinction that was granted in 1997.
Casco Viejo also provides tax incentives for investors and property owners. Several projects in Panama are focused on real estate, and Casco Viejo offers investment benefits in this direction.
Tax deductions are accessible on amounts donated for restoration, expansion, illumination, maintenance, or construction in Casco Viejo and this applies both to corporate and individual income. The benefit is available for projects in Panama that intend to improve historical parks and buildings.
Moreover, taxes are exempted on import duties of construction equipment and materials. There's also an exemption for 10 years from the date of issuance of the occupational permit for building, rebuilding, or restoration, which applies to profits derived from the transfer or sales of properties within the historical area.
A 30-year exemption applies on real estate tax both on improvements and on land from the date on which the occupational permit is issued. This applies only when the permit is obtained during the time in which the law is in effect.
Exemptions are also available for tenants. Those who rented property within the special economic area can ask for a deduction on personal tax during the next five years after the occupancy permit is issued. Finally, there are tax incentives for public parking lots.
Other special zones for projects in Panama
So far, it's becoming clear that the special economic zone regime encompasses more than the Colon Free Zone. Probably the second most popular area is Panama Pacifico which offers tax-free benefits with the purpose of promoting trading activities, employment, and investment in general.
It's worth mentioning call centers which can access several of the benefits found in a special economic zone. Nonetheless, the company must be based in Panama and must have an ASEP permit for commercial export services.
Benefits of special zones in Panama
The essence of the Panama special zones is to provide advantages to certain areas of business. Given the fact that Panama is a hub for international trade and one of the key locations when it comes to the world economy, these incentives are mainly focused on trade deals, import and export services, and similar activities.
In Colon, for instance, registered companies access a variety of tax exemptions mainly when it comes to import and export services and the transfer of goods and equipment that are essential for the business. Logistics and storage are also considered key operations and enjoy benefits, and so are repackaging and invoicing.
Furthermore, dividends are taxed at a 5% rate, royalties are free of tax under certain conditions, and several costs are reduced by avoiding consular feeds and charges on shipments.
Nonetheless, projects in Panama can be of all kinds. This is also considered within the special economic zone regimes, especially in Panama Pacifico and Ciudad del Saber, Spanish for City of Knowledge. In this case, the incentives are oriented towards facilitating the development of innovative products mainly in the IT industry.
Disclaimer: this article is the result of editorial research, and it intends to give a general overview when it comes to projects in Panama, export services, and Panama special zones. Hence, this article must not be taken as financial advice or as a professional consultation. Before making any important investments or registering a company in any of the free zones first consult with a certified advisor.
Exploring Panama Special Zones with Mundo
Mundo is proud to have an on-site team and several associated experts and lawyers in Panama. Since many of our team members live here, we can provide excellent advice and solid support when it comes to projects in Panama.
A company in the country of the canal brings world-class advantages to the international and local investor, and these can be further enhanced by a special economic zone. Add to this the wide array of residency alternatives, a dollarized economy, a high-end international banking system, outstanding asset protection options, and a pro-business environment, and you have found the perfect mix.
We also have fostered a network of experts in other countries including the United States, Saint Lucia, Saint Kitts, Turkey, and several corporate hubs. Get in touch with us and find the best solution to fit your needs.
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