Colon Free Zone and other Free Zones

Colon free zone is a duty free heaven with more than 800 acres and 2,000 companies operating

Colon Free Trade Zone

Known as the World’s second largest Free Trade Zones, the Colon Free Trade Zone is considered as Panama’s duty-free heaven. With over 2000 companies either represented or operating on its complex of more than 800 acres, and a massive turnover of US$20 billion per year of imports and exports move in and out. Everything from the latest electronics from Japan, silks from Italy, designer perfumes from France, clothing, jewelry, computers, appliances and just about anything else you can think of from around the world, all at bargain basement prices, you can find it at the CFZ straight from the factory, could it get any better?

Shopping in Panama is truly extraordinary and world class. Panama stands heads and shoulders above its Central and Latin American neighbors when it comes to shopping. In fact, thanks to the CFZ, and the massive amount of goods that pass through the canal every day, you can find the newest and best of everything.

When a container ships from China, Japan, Taiwan or Korea on its way to the east coast of the United States or Europe, it passes thru the Panama Canal. It is very easy to remove a few containers in the CFZ. As a result, there is an immense selection of goods to choose from – far greater than anywhere else in Mexico or Miami.

Typically, wholesalers at the CFZ order between 20 to 40 foot-long containers stuffed with items to resell. This shopping center is where buyers of small and medium-sized stores come to fill their shelves with items that may cost as low as US$0.10, if you buy them in bulk. It’s like a supersized wholesale club.

LatAm and Caribbean buyers prefer to buy at the CFZ instead of travelling to Asia. In the CFZ, buyers can get containers filled with a variety of items. In some Asian countries, they would likely have to buy containers filled with one product. For this and many other reasons, the CFZ is considered as a shopping heaven for buyers wholesalers across the Americas.

For consumer retail companies, using the CFZ as a method for export in Latin America will experience the following benefits:

  • Save Time. Instead of traveling to every Latin American country where there might be export prospects, talking with merchants, agents, representatives, and distributors, you would only need to go to one location – Panama, which is highly accessible given its prominence as a regional air hub.
  • Grow Sales. Because the CFZ is the world’s second largest free trade zone, with exports of USD 11.5 billion and growing, retailers from many countries in Latin America simply schedule regular shopping trips to CFZ merchants. When they order, they order in wholesale quantities – the target retailer buying in the CFZ is frequently a department store owner with 10-15 stores in his country of origin.
  • Reduce Complexity. You buy in dollars from a CFZ merchant. The entry is duty free. And you are only buying from one company – therefore you only have one relationship to manage. Finally, the CFZ is co-located with some of the world’s largest transshipment ports, meaning that it is easy for merchants to pick and pack customized shipments to any one of a number of otherwise small Latin American ports of entry.
  • Reduce Financial Risk/Make More Money. You are selling to established CFZ merchants. They in turn make their money by showcasing your products. They know their customers and are able to offer financial terms based on creditworthiness. These terms in turn allow you to sell more products instead of having to bear the risk of offering terms or losing the sale. In addition, you do not have any duties to pay – those end up being the responsibility of the final buyer once your goods enter that country.

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. 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 4 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 year period;
  • 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 existence of modern shipping ports with modern facilities, large facilities for containers, direct access by the Pan American highway, air and rail access transporting containers from the Pacific Ocean to the Atlantic Ocean daily, makes the Colon Free Zone the best place to invest for its many advantages over other areas free in the world.

Permitted Activities

  • Exportation
  • Re-exportation
  • Importation
  • Manufacture
  • Sale, commercialization and distribution
  • Refining and processing of goods.
  • Operations, transactions, negotiations or incidental activities appropriate to establishment and operation of international free trade zones.

Tax Incentives

  • 0%  taxes on incomes from operations abroad.
  • 0%  taxes on the products imported for re-exportation.
  • Exoneration of services that have effects abroad.
  • Highly competitive costs.

Immigration Incentives

  • Expedited migratory procedures are granted for foreign executives and investors.

Ways of Establishing Operations

  • Operation Permit.
  • Representation Agreement.
  • Lease of Premises.
  • Lease of Lot (land).
  • Public Storage.

The Colón Free Zone is located a few kilometers from the Panama Canal in the Caribbean sector, in the Colon Province and it is considered the first Free zone in the Western hemisphere and the second largest worldwide.

The country has granted a total of 19 licenses to operate Free Trade Zones, of which 13 are currently active and located in the cities of Panama and Colon.Other Free Trade Zones

Free Trade Zones are part of a special, comprehensive and simplified regime for the establishment and operation of companies that contribute to national development and the generation of employment and foreign exchange, incorporated into the global economy of goods and services, promoting investment and promote economic, scientific, technological, cultural, educational and social development.

The country has granted a total of 19 licenses to operate Free Trade Zones, of which 13 are currently active and located in the cities of Panama and Colon.

The Panama Pacifico Special Economic Area (PPSEA) provides 110 hectares of commercial space, 27 hectares for the International Business Park and 88 hectares for the Pan-American Corporate Center. 120 companies, of which eight are Fortune-500 companies, with 4,500 employees are established there already.

Other Free Trade Zones based in the country are: Panexport, with 21 companies; Isla Margarita Development with 8 companies; Zona Franca Estatal de Davis with 6 companies, Zona Franca Corozal – Marpesca, S.A. with 33 companies, Vaguil, S.A. with 51 companies, Zona Franca de Albrook with 33 companies, among others. Most firms in Free Trade Zones are engaged in activities foreign trade services.

"Specific Business Activities" will receive maximum tax incentives when located here. Some of those special business activities are: corporate headquarters, distribution centers of multinational corporations, back-office operations, multimodal and logistics services, high-tech product and process manufacturing, maintenance, stock transfer between onsite companies, repair and overhauling of aircraft, sale of goods to the aviation industry, sale of goods and services to ships and their passengers, call centers, data transmission, radio, TV, audio and video, film industry and off-shore services.

Tax incentives exemption from indirect taxes for all companies, full tax exemptions on income, dividends and transfer/withholding for 12 "Specific Business Activities" , legal stability for 10 years; one-stop-shop with access to 15 government entities; on-site customs operations; special labor incentives; expanded immigration benefits and on-site workforce training center are some of the benefits of operating an business in PPSEA.

Logistic Parks

Panama is considered the best logistic center in the Americas for its privileged geographical position and has adopted laws and regulations that encourage activities and proper integration of infrastructure and world-class logistics services, among which are included the Panama Canal, multiple ports in the Pacific and the Caribbean, Interoceanic Highway and Railroad, air Hub of the Americas, Free Trade zones and Special Economic Zones, among others.

Panama Logistics Park is a Real Estate Industrial Project and Logistics, developed with world class standards, strategically located in the east of Panama City a short distance from Tocumen Airport and fast connectivity with the rest of the infrastructure offered by the country.

Panama Export ZonesExport Zones

These are defined as free zones or free enterprise zones, that offers all infrastructure, facilities, buildings, systems and support services, as well as the operational organization and administration necessary, under criteria of maximum efficiency, to establish themselves within them, companies develop all over the world whose activities are the production of goods and services for export. The immediate objective is to promote optimal conditions of efficiency and comparative to guarantee exporting companies high levels of competitiveness in international markets benefits.

Panama’s strategic location makes it the best destination in America to export and import products. It is situated between North and South America, bordered by the Caribbean Sea and the Pacific Ocean. A majority of Panama’s trade transactions are carried out in the Colón Free Trade Zone, which is one of the biggest free trade zones in the world.

Panama exports 144 products with revealed comparative advantage, meaning that its share of global exports is larger than what would be expected from the size of its export economy and from the size of a product’s global market.

According to the Economic Complexity Index (ECI), Panama is the 114th largest export economy in the world and the 70th most complex economy. The top exports of Panama are Passenger and Cargo Ships, refined petroleum, coal tar oil, petroleum gas and packaged medicaments, using the 1992 revision of the Harmonized System classification.

The top export destinations of Panama are Ecuador, Guatemala, South Korea, The United States and El Salvador.

Panama borders Costa Rica and Colombia by land and Colombia and Ecuador by sea.

To view our Services in the Colon Free Zone, please click here

  1. Re-export of goods from CFZ warehouses;
  2. Sales to clients located within Panama’s customs territory;
  3. Direct sales to foreign clients in which goods are shipped from a third country; manufacturer without physically arriving in the CFZ; or
  4. Transfers in which sales are made to other CFZ firms.

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. 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.

If you want to set up your Business in the Colon Free Zone, we can provide you our well-known One Stop Shop services since we have licensed real estate agents, excellent lawyers, insurance specialists, investment advisors and other professionals to assist you on all your business needs.

We can help you with -

  • Setting up the company
  • Locating office and living premises in Panama City for the company and its executives
  • Legal services for setting up all operations, contracts, permits, etc.
  • Accessing special tax incentives
  • Applying for visas, work and residence permits
  • Relocation services
  • Other services required

For more information, please contact us.

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