Colon Free Trade Zone (“CFZ”) is the largest free zone in the Americas and the second largest in the world. Created in 1948, the free zone houses 1,751 merchants, receives yearly more than 250,000 visitors from all parts of the World, mainly from countries such as Haiti, Jamaica, Costa Rica, Venezuela, Colombia, United States, Ecuador, and others. The CFZ generates exportation and re-exportation goods valued at more than US$ 11.4 billion in 2010.
The CFZ, world trade leader, is located at the Caribbean entrance of the Panama Canal, with access to three ports in the Atlantic and one in the Pacific. The products most often imported in the CFZ are electric appliances, clothing, watches, perfumes and cosmetics, textiles, gold jewelry, liquors, and cigarettes. According to statistics, the country noted as the best client is Venezuela due to its high purchase index. Colombia follows, and the largest importer is Hong Kong.
The CFZ generates many benefits to the national economy. The intense commercial activity that develops in this emporium has an enormous impact in the local economy, which is reflected in the contribution to the national internal product of 7.5%, reason why it is considered one of the largest pillars in the Panamanian economy.
At December 2010 in Colon Free Zone has contributed $ 100.5 million to the national economy. While commercial activities generated $ 21,624,215 million in transactions from January to December 2010, business operations were developed as follows: USD 10,228.2 million and USD 11,395.39 billion in re-exports. In the first quarter of 2011, the Colon Free Zone generated USD 3025.4 million imports and U.S. $ 3139.5 million in re-exports.
The CFZ success is due to a combination of factors such as the geographical location of Panama at the crossroads of the world, the Panama Canal, the fact that the US dollar is legal tender, a large banking center on its doorstep, a developed insurance and reinsurance industry, several state-of-the-art container ports and not very onerous business requirements.
Colón has regained the glory that once belonged to nearby Portobelo which, until the middle of the 18th century, was a major trading center in the New World.
Most Free Zone merchandise is transshipped from Panama to other parts of the Western Hemisphere and Europe. Imports into the CFZ come mainly from the Far East. The largest individual supplier of the CFZ is Hong Kong (China) followed by Taiwan, United States, Japan, Korea, France, Mexico, Italy, Puerto Rico, Switzerland, United Kingdom, Malaysia and Germany. These countries supplied nearly 87 percent of all CFZ imports. Colombia is the largest buyer of merchandise, buying nearly 16 percent of all CFZ exports. Other principal buyers are Venezuela, Panama (domestic market), Guatemala, Ecuador, Costa Rica, Dominican Republic, the United States, Chile, Cuba, Honduras, Peru, Brazil, Nicaragua and El Salvador. These countries buy approximately 83% of all exports from the CFZ.
The CFZ is administered as an autonomous institution of the Panamanian government. Today it is completely developed, and covers approximately 400 hectares, including 45 hectares designated as an industrial zone. So far in 2011 have opened 80 new companies.
The CFZ offers free movement of goods and complete exemption from tax on imports and re exports. There are no taxes on the export of capital or the payment: of dividends. In addition, there are reduced income tax rates on earnings from re-export sales. Furthermore, firms located in the CFZ are exempt from import duties as well as from guarantees, licensing, and other requirements and limitations on imports. Due to its geographic location, the CFZ is a major factor in channeling goods from large industrialized countries to consumer markets in Latin America.
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Re-export of goods from CFZ warehouses;
Sales to clients located within Panama’s customs territory;
Direct sales to foreign clients in which goods are shipped from a third country; manufacturer without physically arriving in the CFZ; or
Transfers in which sales are made to other CFZ firms.
Companies operating from the CFZ enjoy many trade advantages along with special tax incentives such as tax credits, depending on the number of Panamanian employees, and special income tax rates on foreign trade operations. Companies in the free zone do not pay corporate income tax. Dividends paid on profits from foreign trade operations and from direct sales are not subject to the dividend tax. Merchandise arriving at, stored in, or leaving the CFZ destined for a foreign country is exempt from taxes, charges or any
type of tariff. Also, CFZ companies are not subject to any type of federal or municipal tax.
There are four basic ways of doing business in the CFZ:
1. Leasing lots on which the firm builds a warehouse or other facilities as designed by the firm. Land leases are granted for a 20 year period;
2. Purchasing an existing facility from the CFZ Administration;
3. Reaching an agreement with a company already established in the CFZ as the operator’s representative. The cost of this service is set by mutual agreement between the parties involved. Representation agreements are subject of approval of the CFZ Administration; or
4. Leasing a public warehouse operated by the CFZ Administration. The firm receives its goods and stores them like any other company of the zone. There are no fixed costs and payment is based on the weight or volume of the goods stored.
Infrastructure and Services
Center for collection and redistribution of load.
More than 2000 companies for display, import, re-export, store, repack, assemble, process, design and create other activities, products or raw materials and other effects of trade.
Modern showrooms, stores and warehouse.
Network of high-tech communications.
More than 25 international banks operating within the Free Zone.
Security in and around the area.
Multinational companies providing services of cargo within 24 hours.
Commuter ports, railway terminal, road and airport.
Luxury hotels 5 minutes from the shopping area.
Cruise ports closest to the area.
There are four basic ways of doing business in the CFZ:
Leasing lots on which the firm builds a warehouse or
other facilities as designed by the firm. Land leases are granted for a 20
Purchasing an existing facility from the CFZ Administration;
Reaching an agreement with a company already established
in the CFZ as the operator’s representative. The cost of this service
is set by mutual agreement between the parties involved. Representation agreements
are subject of approval of the CFZ Administration; or
Leasing a public warehouse operated by the CFZ Administration.
The firm receives its goods and stores them like any other company of the
zone. There are no fixed costs and payment is based on the weight or volume
of the goods stored.
The BusinessPanama Group has an alliance partner in the Colon Free Zone that is a well-known and fully licensed company with complete warehouses and logistic services in the Colon Free Zone. Our Colon Free Zone Alliance Partner will act as the representative of your corporation. We will receive the merchandise, send it to its distributors, invoice it and send you a detailed report.
Together, the BusinessPanama Group and its alliance partner in the Colon Free Zone can provide you full services to your proposed operation in the CFZ.
If you want to set up operations in the Colon Free Zone, please Click Here.
For more information, please contact us at BusinessPanama Group
Plaza 2000 Tower, 10th Floor
US & Canada Toll Free 1-866-750-3498
Local Tel (+507) 223-6788
Fax (+507) 263-2460 Please click here to contact us