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 3000 companies either represented or operating on its complex of more than 1065 acres, and a massive turnover of US$19 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?

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 and 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 can 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. Dividends paid on profits from foreign trade operations and from direct sales are  subject to  5% to 10% of  dividend tax respectively. 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.


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.

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 16 licenses to operate Free Trade Zones, between the cities of Panama and Colon.

The Panama Pacifico Area is one of the most important projects of the Panamanian Government that develops an international trade hub and attracts large multinational companies, logistics services, commerce and industry. The main objective of this Special Economic Area is the attraction of new direct foreign investment and the creation of jobs in Panama. 

With this ambitious project, that includes economic and legal benefits, the Republic of Panama promotes the development of different industries such as logistics, sea and air transportation, high-technology, call centers, shared services, among others.

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.

Export Zones

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.

During 2018, the value of exports, excluding those of the Colon Free Zone, totaled USD 672.3 million, 1.9% more than the previous year, according the Comptroller General of the Republic. The United States was our largest export partner. Other top export destinations of Panama are Netherlands, China (Continental), China – Taiwan and Costa Rica. 

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. 

If you want to set up your operations in the Colon Free Zone, the BusinessPanama Group and its alliance partner 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.


Read more »


Join to our mailing list to receive our latest news, properties and tips to do Business in Panama

Subscribe in our website

Download our Guide to Doing Business in Panama completely FREE

Get it Now!