ESTABLISHMENT OF THE DISTRIBUTION CENTER

In order to establish a distribution operation from the Colon Free Zone, the following steps must first be accomplished:

1) DEFINITION OF THE CORPORATION

This corporation can be local or foreign; but all corporations must be registered in the Public Registry of Panamá.

To register a local corporation, the following information is needed:

• Corporate by-laws must be presented by BusinessPanama lawyers for its registration. The articles must comply with the local requisites.
• Name and documents of identification or passports of the directors of the company.

If the corporation is already registered abroad, the following documents must be presented by BusinessPanama lawyers for its registration:

• Articles of incorporation, notarized and legalized by the Panamanian consul in the country of the origin of the corporation.
• Certificate of registry of the corporation in the Registry of the country of origin, notarized and legalized by the Panamanian consul of the country of origin of the registry.
• Copy of the last financial statement of the corporation, accompanied by a declaration of the percent of the capital from the society that will be assigned to the operations in Panamá.
• Power of attorney appointing and authorizing a Panamanian lawyer as representative and to register the corporation in the Panamanian Public Registry.

As another alternative, a foreign corporation can operate under the special figure denominated as Agent of Movement of Merchandise, which allows for the re-export of products from the Free Zone while maintaining invoicing operations outside of Panamá. This figure is not subject to all the local tax filing formalities mentioned in the following article.

2) TAX FILING

Re-export activity is exempt from taxes, but tax filing is compulsory. Sales from the Colon Free Zone to distributors located in the Republic of Panamá are subject to an income tax (net of expenses) of 30%. A certified public accountant must present this tax filing.

3) REQUEST OF A PERMIT CODE IN THE FREE ZONE

Once the corporation has been registered in the Public Registry, the administration of the Colon Free Zone will request that the corporation obtain a Permit Code. This request must be made in writing by presenting the following three forms duly filled:

• General Information: This form must present the basic information of the corporation and its legal representative, the principal products, the countries of importation and re-exportation, banking and commercial references; this form must be signed by the legal representative of the company.
• Acceptance of a Representation Contract : In order for a corporation to operate through an established company in the Colon Free Zone, both parties must sign a representation agreement.
• Legal Tax Declaration by Legal Representative : The administration of the Colon Free Zone requests that the tax declaration be signed, declaring that the company and the representative are not involved in illicit activities.

These forms must be accompanied by the following documents:

a) Copy of the corporate by-laws
b) Tax good standing certificate, a local tax certificate confirming that no taxes are owed.
c) Registration certificate of the corporation within the Public Registry, issued less than 4 months ago.
d) Copy of the passport or personal identification of the legal representative.
e) Commercial referral letter of the company.
f) Financial referral letter of the company.
g) Fiscal Good standing Certificate from the Colon Free Zone.
h) Commercial referral letter of the legal representative.
i) Financial referral letter of the legal representative.

The permit code can be obtained in approximately fifteen days. The submittal of this form can be done by our Group since we have lawyers experienced in these matters.

4) FORMAT OF THE INVOICE

The formal of the invoice can be submitted by the corporation or chosen among our current formats, which includes the letterhead approved by the corporation. If the corporation supplies the format, it is necessary to receive a copy of the same in order to ascertain that our invoicing system can print all the information in the assigned spaces.

The local government indicates that all formats must be printed with a sequential number, regardless of the number of the invoice that the corporation will utilize. This indication is especially important for the local corporations.

5) INFORMATION FOR OUR DATA BASE

In order to input the necessary information before the beginning of operations, we request the following information:

• Sale Conditions for each country (FOB, C & F, CIF or other INCOTERMS)
• List of prices for each local distributor per country.
• Information of each product (Product code, description, packaging, weight, tariff classification, special handling instructions).
• Information of the distributor (Distributor Code, name, address, fax/telephone, e-mail address, terms of payment, and method of shipment).

6) INSURANCE

The corporation can choose between using its own global insurance, a local insurance policy contracted locally or our insurance policy available to our clients. The risks that the company must insure for are storage and transportation.

7) SPECIAL HANDLING INSTRUCTIONS

For all the products that require special handling (refrigeration, dangerous goods), we require to have the necessary documentation on the characteristics and needs of the products as soon as possible in order to instruct the team in charge of the product and organize all the necessary logistics before its arrival.

8) ADDITIONAL SERVICES

The corporation can choose from the following available optional services such as: General Accounting and cost accounting, Offshore invoicing for direct shipments, payment and collection services through a local bank account. These services are additional and will be quoted according to the volume and the specific needs of the client.

This communication covers the principal points that must be taken into account at the moment of organizing the operation. We remain at your disposition for any further assistance or questions should the need arise.

For more information, please contact us at

BusinessPanama Group
Plaza 2000 Tower, 10th Floor
50th Avenue
Panama City
Tel (+507) 223-6788
Fax (+507) 263-2460
info@businesspanama.com