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Panama: Law of Offshore

Colon Free Zone

The Colon Free Zone was established by Decree Law 18 of 1948; it allows any Panamanian corporation, or registered foreign company, to operate inside the Zone, subject to submission of the following documents:

  • An application form and Affidavit signed by the Legal Representative of the corporation;
  • Copies of the Articles of Incorporation and By-Laws;
  • A Certificate confirming the status of the corporation and giving details of its officers;
  • Commercial and Banking references;
  • A copy of the ID or passport of the Legal Representative;

The Law defines permissible activities in the Free Zone as follows:

"To bring in, store, display, unpack, manufacture, put in containers, mount, assemble, refine, purify, blend, alter and, in general, carry out operations with and handle all kinds of merchandise, products, raw materials, containers, and other articles of commerce, with the sole exception of articles the importation of which is prohibited by the laws of Panama."

There are some requirements laid upon firms operating with the Zone:

  • To employ a minimum of 5 local employees;
  • To export a minimum of 60% of the merchandise handled;
  • To report merchandise movements on official forms;
  • To report and pay relevant taxes yearly.
There are a number of ways in which a firm can operate within the Zone:
  • Land Lease Contracts offered by the Zone allow a corporation to build facilities for its own use or to sub-let; rents per square metre per month vary according to the degree of development of the land in question; investment by a lessor into basic infrastructure is rewarded with discounts on rentals; leases are for 5 to 20 years, renewable;
  • Building Lease Contracts allow a corporation to rent facilities direct from the Zone; rents per square metre per month vary; terms vary from 1 year to 20 years;
  • Representation Contracts allow a corporation to be represented in the Zone by another firm already established there;
  • Public Warehouse Contracts allow a corporation to use space and facilities provided by the Zone at a fee of 0.5% of the FOB value of the merchandise concerned.



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