Panama: Laws promoting foreign investment

In 1948 Panama enacted its Colón Free Zone (CFZ) trade law, giving way to the creation of the second largest free trade zone in the world… and to a host of laws to come that would encourage foreign direct investment (FDI). The CFZ on the Caribbean end of the Canal is home to more than 1,800 companies enjoying incentives like no import duties, no income taxes, and a low 5% dividend tax.

Stability

One of the greatest incentives for foreign investments is the Legal Stability Law, which provides ten years of stability from increases stemming from future laws affecting national taxes, labor, import tariffs, and municipal taxes.

Panama Pacifico

Laws creating Special Economic Areas with similar incentives to the Colon Free Zone has resulted in several business parks like the 1,400 hectare Panama Pacifico which also enjoys exemptions from real estate, stamp and dividends taxes along with international calling taxes. There are more than 145 foreign companies operating in this area including eight Fortune 500 companies. 

The United Kingdom’s largest property developer, London & Regional, is developing Panama Pacifico and when completed is expected to employ 40,000 people and will be worth $10 billion USD which is more than half of Panama’s gross national product.

Exports

Export Processing Zone laws include similar benefits as the CFZ plus exemption from taxes on capital assets, patents and licenses. Additional benefits include elimination of immigration visa quotas and work permit restrictions for employing foreigners.

Call Centers

The Call Centers law provides similar incentives to the Colon Free Zone plus it provides exemption from the value added tax (ITBMS), and relaxed labor laws for flexible hours and lower holiday and overtime pay. Like the other zones mentioned above, call centers also enjoy immigration and work permit quota exemptions for their foreign employees.

Tech & education haven

The City of Knowledge, located in the former U.S. Army’s Fort Clayton, contains high tech companies, educational and international research facilities. All of the incentives provided to call centers are included here. Among organizations and universities with a presence here are the Red Cross, UNICEF, The UN, and Florida State University.

Regional headquarters

Multinational Regional Headquarters law allows multinational companies to open a regional headquarters here offering benefits including tax free income for business conducted outside of Panama. This law also makes it faster and easier to obtain immigration visas and work permits for “key” employees in “management” positions.

To take advantage of the incentives consult with a Panama law firm familiar with these laws along with labor and immigration laws.

Fuente: El Visitante 

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