Panama Free Zone Company

There are 12 Free zone regimes in Panama, the largest of which is the Colon free zone. The Colon free zone has over 800 acres of warehouses and stores and is the second largest free zone in the world. Noteworthy are also Ciudad del Saber (city of knowledge) free zone and the Panama Pacifico free zone, both located within minutes’ drive from Panama City.

Panama law also allows companies to buy land and obtain permission from the government to establish their own free zone regimes.

Each free zone has its own specific features; however, the general free zone laws have the following common legislative framework:

• A Panamanian company (SA) or entity can apply for a free zone license at a very reasonable cost by simply registering its activities in the particular free zone and having an office and staff there.
• There are banks operating inside the free zone and, in most cases, Panamanian banks will automatically accept that a company in the free zone is an operating company due to its activities and therefore the company will be deemed a tax resident of Panama. This means under CRS there is only reporting to Panama. Under the free zone all goods and services sold outside Panama are automatically excluded from all taxes including profit taxes. (there is currently only 1% turnover tax, however this does not apply in all cases). This is because a free zone company is automatically treated as having its income from sources outside Panama.
• The free zone company pays zero duty on the import of goods, services, technology that is destined for export. This means that one can store both tangible and intangible goods and technology in the free zone duty free and export them to Latin America and the rest of the world.
• The free zone entitles you to assemble or put together imported elements of goods and services and have them considered to have been manufactured in Panama. This, in some cases, gives advantage to existing trade treaties between Panama and its neighbors.
• The free zone is useful not only in import of goods, it is being utilized as a center for the development of blockchain and crypto technologies, educational and learning facilities, and startups.
• In some cases, special regimes for large companies permit the shifting of an entire company and its staff to the free zone with favorable labor and visa regimes. In the case of large companies, special dispensations and regulations can be enacted to smooth the transition.
• With worldwide trade wars and disputes tightening by the day, Panama is an ideal base to set up operations because it is politically neutral and well known as a transshipment hub.

Also, only a few people know that establishing a free zone company and injecting over 160,000 USD into its founding capital, automatically provides residency and indeed subsequent tax residency to the shareholders who can also become directors. In such a case, they would pay no profit tax on their investments paid into their personal account in Panama.  The free zone company can therefore be considered an ideal base to have the center of management and control of your international corporate structures.

Panama legislation allows for the establishment of special investment zones called free zones. The zones are designed to facilitate investment in goods and services and also to develop the incubation of certain technologies in spheres such as IT, education and others.

The biggest free zone in Latin America is in Colon, a province of Panama. This free zone has thousands of retailers and wholesalers which sell goods to Latin America.

Another zone is the Ciudad De Saber (city of knowledge) which was designed as a free learning center. In Ciudad del Saber you will find universities, blockchain and crypto startups and many other innovative projects.

At present, legislation is under review to license crypto currencies and other related businesses. However, under current law, such technologies are neither regulated nor forbidden, which means they are allowed. There are a number of crypto startups and blockchain businesses operating in Ciudad del Saber. Panama is currently a crypto friendly country, although banks will not work with crypto funds now due to the absence of regulation.

Establishing your company in the free zone simply means obtaining an office there and permission from the free zone authority. Once that is done you are automatically part of a regime which allows many benefits including:

• Zero customs duty and VAT on entry and exit of all goods and services for re-export.
• Preferential visa regimes for staff and relaxed work visa issuance as well as faster processing times.
• A presumption of export and therefore presumption of zero tax regime.
• Other benefits which can be negotiated with the regulator.

In certain cases, some areas of land can be designated free zones by agreement with the Panamanian authorities, thus enabling the creation of special zones.

Special economic zones

In some cases, some areas may be appointed as Special Economic zones, according to Panamanian law. This allows the creation of special and advantageous conditions.

City of knowledge

This special zone is in the old military base in Clayton, which was used by the American marines. Nowadays it has been redesigned as a center of free tuition. Here you will find universities, blockchain enterprises, crypto startups, and many other innovative projects.

Currently, the Panamanian government is revising the legislation in order to grant crypto licenses. According to the current regulation, crypto activities are nor prohibited nor regulated. This means crypto activities can be carried out, but there is no possibility of getting support or financing for them.

Panama is a crypto-friendly country, although, due to the lack of regulation, the banks prefer not to work with this type of project.

Panama Pacifico special economic zone

Located in the old Howard military base, where the American air force used to be based, this project intends to centralize the Transnational and manufacturing high technology sector, along with distribution and storage centers, commercial offices, residency complexes and a special airport for this zone.

This special economic zone has a variety of incentives for those who wish to operate here:

• Tax benefits and incentives.

• Special customs regime for importing products and exemption for re-exportation products.

• Special labor conditions. The companies that are registered here have better labor requirements than in the rest of the country. This helps increase productivity and savings.

• Migration benefits, different to the migration requirements in the rest of the country. Emphasis in corporate migration.

• One special customer service assistance especially designed for fulfilling the needs of the companies registered in the zone. This service is located inside the special economic zone of Panama Pacifico.
  
  
  Mundo has currently a special offer which includes a Panama company in Panama Pacifico plus gold storage. You can find more information here.

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