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Panama Pacifico: Gateway to the Americas

Contributed by Freemont Group
22 May, 2011

Last month a delegation of the Freemont Group participated in a live and invest overseas seminar held in Panama. It proved to be an exciting event that revealed many lesser well-know Panamanian legal secrets and investment opportunities. One presentation in particular was a combination of both: the new free zone of Panama Pacifico. Based on the Dubai free zone concept, Panama Pacifico offers a wide range of (tax) exemptions and facilities unheard of in the America´s.

Similar to the Free Zones of Dubai, Panama Pacifico houses a ´One Stop Shop´ that bundles 15 government’s offices into one location. All companies incorporated in the Free Zone receive full exemption from indirect taxes such as import duties, sales taxes, license fees, real estate tax and so on.

Companies that comply with Law 41 of 2004 as Business Activities specified under article 60, will be completely exempted of all direct taxes as well. The law lists 13 categories:

  • Distribution centers of Multinational companies (Law 8 of 2010)
  • Back office operations
  • Call centers
  • Multimodal and logistics services
  • High-tech product and process manufacturing
  • Maintenance, repair and overhauling of aircraft
  • Sale of goods and services to the aviation industry
  • Offshore services
  • Film industry
  • Data transmission, radio, TV, audio and video
  • Stock transfer between on-site companies
  • Sale of goods and services to ships and their passengers
  • Corporate headquarters (governed by SEM Law 41 of 2007)
  • Municipal taxes are determined in advance by the Municipality of Arraijan for a period of ten years.

Flexible labor law
Panama’s labor law has been a great obstacle for foreign businesses. As a result only a handful of multinationals have outsourced their call centers to Panama instead of, for example, India.

In Panama Pacifico labor laws are significantly more flexible than elsewhere in the country. Companies can hire a higher percentage of foreigners, personnel can be laid off more easily and rules pertaining to overtime and holidays are on a realistic level.

Visa programs
Panama has several appealing visa programs that offer full citizenship after a period of five years.

The amount of (tax) exemptions and other (legal) facilities isn’t the only factor that makes Panama Pacifico stand out, the size of the project is massive:

  • 1,400 hectares
  • 1 million square meters of commercial space
  • One 4000 meter runway
  • 20,000 homes
  • 40,000 new jobs
  • Retail centers and hotels
  • Schools and places of worship
  • Parks, recreational amenities and a championship golf course
  • Deep water harbor within minutes of project

Already several major multinational companies and many smaller businesses have established offices and/or manufacturing plants on the site. Notable names are Dell, 3M and Caterpillar. We witnessed the ongoing construction during our visit to the site.

Apart from business incentives Panama Pacifico offers many investment opportunities too. The first of the 20.000 homes and apartments are soon to be delivered. One could also invest in commercial real estate, most notably in the planned town center.

Panama Pacifico is a unique opportunity for EU companies to establish themselves on the Western Hemisphere in a business-orientated climate at minimum costs. Even rents are priced very competitively: the cheapest 50m2 office units go for less than $1000 per month.


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