Panama: Country and Foreign Investment
The Colon Free Zone was established by Law No. 18 of 1948. The Free Zone is in the city of Colon at the Atlantic entrance to the canal, and has been extremely successful - more than 2,500 companies are established there, shipping more than US$16bn of goods annually. Over 28,000 people work in the Free Zone.
All kinds of processing and manufacturing are permitted within the Free Zone, while administration can be conducted from inside or outside the zone. 80% of a company's output must be exported; the remainder can be sold internally (separate books have to be kept).
A draft law establishing a simplified and comprehensive scheme for establishment and operation in the free zone was approved by the Executive in December, 2010. Minister for Trade and Industry, Roberto Henriquez, explained that the initiative seeks to adapt national legislation to meet WTO standards. The bill encourages new investment in high-tech companies, logistics and environmental services as well as higher education establishments and research centres. The bill was approved by the Cabinet Council in December, 2010.
Companies established in the Free Zone are largely free of taxes - see Offshore Legal and Tax Regimes for further details.