Free Zones in Panama: How They Stimulate Economic Growth

Panama Canal and free economic zones have made Panama a multi-industry center of the world economy. The country’s favorable geographic location, territorial taxation, and corporate legislation have long attracted international businesses and investors from all over the world. So, where do we find Panama’s free zones that are so interesting for international business?

Panama Free Zone

How Panama’s Strong Economy Ensures Stability for Business

In 2022, Panama’s government expected economic growth of 9%, while the 2023 figure is predicted to reach 5%. Increasing income from the Panama Canal thanks to reviving international trade, active investments in transport and tourism development, as well as copper production at the Cobre Mine (the largest one in the world) in Panama will contribute to a GDP rise in 2024–2027. On the whole, experts predict that the service-oriented economic model of the country will help ensure average annual growth on a level of 4.1% during these years.

In 2022, Panama is one of the Top 10 countries in Latin America by GDP per capita. Panama continues realization of large infrastructural projects that will make it even more attractive for international business:

  • Construction of the third metro line that will connect Panama City with Panama Oeste ($2.8 billion)
  • Construction of railroad lines and highways ($1.1 billion)
  • Construction of a power station with a capacity of 670 MW ($1 billion)

This is just a part of the mega-infrastructural facilities to be realized by the Panamanian government. Considerable GDP growth is also stimulated by quick tourist flow restoration (in 2022, the country was visited by 1.8 million foreigners) and financial industry development.

Success in the economy, legal and personal security for foreign investors, as well as provision of tax, work, and migration stimuli – all resulted in the country acquiring the status of an ideal place for the attraction of transnational companies and private investors.

The policy that encourages foreign investments helped Panama to create (and continue to create) different free economic zones where it attracts foreign and national investments.

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Panama’s Special Economic Zones

Today there are 21 special economic zones in Panama: Colon free zone, Panama Pacifico special economic zone, and 19 free trade zones. Here are the active zones that are mainly concentrated in Panama City, along the Panama Canal and the city of Colon:

  1. Colon Maritime Investor free zone
  2. Panapark
  3. De Albrook
  4. Marpesca/Corozal, City of Knowledge
  6. De Chilibre
  7. Las Américas
  8. Del Istmo
  9. Estatal de Davis
  10. Eurofusión
  11. Isla Margarita
  12. Las Cabras
  13. Global Logistics
  14. Aristos
  17. BPO
  18. Agroindustrial De Panamá

The last eight free trade zones are at the stage of development. 

Panama Pacifico и Baru are the special economic zones that should be paid particular attention to. These are special associations created with the same purposes as the other Panamanian free zones.

Each of these free trade zones is regulated by the laws separately elaborated for each zone, and they list the permitted kinds of activities and functions.

The policy of the free trade zones is aimed at increasing the number of companies in different areas of the country to create stimuli for the development of production facilities and new jobs, which will help the country achieve economic growth.

At first, you may have the impression that the free trade zones compete with each other. In reality, they only complement one another as they work in different economic sectors and conduct different activities.

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Zona Libre de Colón

Colon Free Zone is the first and the largest free economic zone created in Panama. It is locally known as Zona Libre de Colón, Zolicol, or ZLC for short. This is one of the largest free economic zones in the world. Colon was established in 1948 in the territory of a city with the same name. It has an area of 1,400 ha, and it is located at the entrance to Panama Canal on the Caribbean side. It comprises 9 areas:

  • Casco Viejo
  • France Field
  • Coco Solo
  • Coco Solito
  • 20 de Diciembre
  • Parque Logístico
  • El Aeropuerto Enrique Jiménez
  • Isla Margarita
  • Davis
Zona Libre de Colón

Cargo from warehouses and production facilities inside the FEZ is transported through the Multimodal Logistics Platform of World Trade that unites:

  • Four international sea terminals: Colon (where the container and port terminals are located), Manzanillo, and Puerto de Cristobal
  • Balboa-Panama, a port in Panama City
  • Two international airports: Enrique Jimenez and Tocumen
  • Panama City – Colon highway
  • Railroad

The main import flow comes from China, Singapore, and the United States, and then the goods are re-exported to the Caribbean, Central and South American countries. 

Zona Libre de Colón is a zone with no import fees, duties, levies, or quotas for imported goods, products, and services, and where you will be exempt from the following taxes:

  • Re-export profit tax
  • Import, re-export, and goods production tax
  • Revenue tax
  • Real estate tax
  • Other national or local taxes

The dividends payable on income received as a result of external economic activity in FEZs are subject to taxation at a rate of up to 5%. Colon’s additional advantages include:

  • Use of dollars as a legal means of payment
  • Low cost of lease
  • High-quality infrastructure
  • A possibility to provide a license to multi-national companies

At the start of 2023, the Colon free economic zone is a place where 2,379 companies are registered, including APC, Aquatek, Black & Decker, Bose, Calvin Klein, Elizabeth Arden, Diesel, Fisher-Price, Evenflo, Hewlett Packard, and Westinghouse. Its contribution to the national GDP makes up about 3.7%. The majority of local legal entities specialize in wholesale trade in food products, clothes, footwear, industrial commodities, household appliances, and cars.

In addition to the economic benefits, the companies and investors registered in the Zona Libre de Colón receive migration advantages that make it possible to legally reside in Panama.

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It is important to know that Colon unites the Colón free zone (the city of Colon, the Atlantic entry to Panama Canal, 4 container seaports, 2 cruise terminals, 2 international airports, and a railroad terminal) and the Colon Maritime Investor free trade zone (entry to the city of Colon, with direct access to Manzanillo international terminal and Cristobal and Colon container terminals).


Panapark, the largest private free trade zone, is located 6 km from Tocumen international airport and 40 km from Balboa seaport, near the second metro line. It offers high-quality infrastructure that includes:

  • Asphalt roads
  • Electricity supply (there are also solar batteries and generators)
  • Industrial warehouses with an area from 360 to 12,800 m²
  • Round-the-clock customs service
  • Security with video surveillance, etc.

All the companies registered in Panapark are exempted from the following taxes:

  • Income tax
  • Tax on the Transfer of Industrialized Goods and Services (ITBIS)
  • VAT
  • Import tax
  • Customs duties
  • Property tax

The capital gains and dividend tax is levied here at a reduced rate of 5%.

Find out how to open an account with a local bank without a personal visit after you register a company in one of the Panamanian free zones. 


This FEZ in Panama mainly specializes in companies with medium and high technologies, production, and logistics. Albrook was created in 1998 in Panama City. There are 20 registered companies here at the start of 2023 that have occupied all the office and warehouse premises. All companies take advantage of the standard benefits provided by all free trade zones in Panama:

  • High-quality infrastructure
  • Tax exemption
  • Access to the Panama Canal


This Panamanian FEZ concentrates on providing high-quality infrastructure to the companies that process food products and perishable goods. In addition, it has created beneficial conditions for the development of technological enterprises, as well as legal entities that engage in research & development and provide international marketing services.

This free zone is home to 33 companies that mainly deal with seafood production, including the headquarters of Marpesca (one of the world’s largest seafood producers).


PANEXPORT is the first Panamanian free industrial zone. It is located within a 30-minute drive from Balboa port and a 15-minute drive from the Tocumen international airport. Madden-Colon highway ensures direct access to the Colon free zone. In addition to logistical advantages, your business will also receive high-quality infrastructure and tax exemption.



A small-sized Chilibre free zone is located near Albrook FEZ, and it specializes in serving companies with medium and high technologies. There are only 5 companies here: three of them assemble products, and the other two process ready-made and semi-finished products and provide logistical services.

Las Américas

Las Americas FEZ is focused on the companies that conduct their activities in the following spheres:

  • Light industry
  • Assembly
  • Processing ready-made or semi-finished products
  • High tech
  • Logistics
  • Technological and medical innovations
  • Research
  • Education
  • Environmental services

It comprises two large zones, a business zone and an industrial park.

Las Americas FEZ offers really good infrastructure. Here you will find warehouses and commercial premises (more than 14,000 m²), offices (43,000 m²), hotels, and more than 1,200 parking places. However, one of the main advantages is its location within a few kilometers from an international airport with the same name and a highway, and also within 10 km from Caucedo seaport.

More than 35 companies use the services of this Panamanian free zone.

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Del Istmo

This free zone was established in April 2011 near the Pan-American highway, and it occupies an area of 14.5 hectares. Businesses can get all the tax, immigration, and work incentives here, much like in other Panamanian FEZs.

As of February 2023, the services of Del Istmo free economic zone are used by just three companies.

Estatal de Davis

This Panamanian FEZ was set up in 2002 in the province of Colon. As of February 2023, there are only three companies here, and they are engaged in the assembly, production, and processing of ready-made and semi-finished products.


This free trade zone was specially created for one company, Eurofusión S.A., that deals with the processing of ready-made and semi-finished products.

Panama Pacifico Special Economic Zone

The Panama Pacifico special zone is one of the most important ones for the government of Panama. It has long been the point of attraction for large transnational companies that engage in international trade, logistic services, and production. The zone is a multi-functional complex located on the western bank of the Panama Canal, about 15 km from Panama City, in the territory of a former Air Force base.

Panama Pacifico Special Economic Zone

The place for the FEZ was specially selected to ensure the best logistical possibilities. It is located right on the Pan-American highway that connects Panama with Central and North America. Panama Pacifico’s vicinity also includes Balboa seaport, Tocumen international airport, and Colon, the largest Caribbean container port complex.

Panama Pacifico is under joint governmental and private management, and its main task is the development of such industries as air and sea transportation, logistics, call centers, high tech, and services. It is realized thanks to excellent infrastructure, which includes a high-tech production center, warehouse premises, commercial offices, an airport, and a housing sector. All of them are located in an area of 1,400 hectares.

Panama Pacifico offers companies to use bank and corporate offices, telephone and logistic centers, production premises with services, warehouses, buildings and land plots that work on a leasing business model. Particular premises are rented out to investors on a contractual basis by charging the price per 1 square meter of leased premises and the cost of services. 

A foreigner who wishes to conduct business in Panama Pacifico will have to use a visa program for the FEZ investors by investing at least USD 250,000 in Panama. You can open a company here by submitting a package of documents to one authority.

Panama Pacifico special zone (just like Colon FEZ) offers an income tax exemption for companies and investors if the trade operations or services include the import, export, and re-export of goods that do not get to the territory of Panama.

Main advantages of Panama Pacifico:

  • Company registration by document package submission to one authority
  • Special labor and migration rules
  • Exemption from taxes and other levies on goods sale
  • No taxes on production or commercial licenses
  • Exemption from registration taxes
  • Exemption from taxes and levies connected with fuel movement or storage
  • Developed social infrastructure that includes banks, pharmacies, restaurants, residential houses, etc.
  • Right to work on days off and holidays
  • You can employ up to 15% of foreign workers
  • Special investor visas available
  • Round-the-clock customs service

Company owners and the employed foreign staff are entitled to make one-time 100% duty-free import of everyday goods for personal use whose cost does not exceed USD 100,000 in total

At the start of 2023, 232 companies were registered in Panama Pacifico FEZ, including eight Fortune 500 companies (3M, Dell, and BASF are among these).

De Barú

De Baru free zone was established in 2001 to develop the industrial sector in Panama. This unique natural zone is located in the west of Panama, not far from the border with Costa Rica. The main task of De Baru FEZ is to promote private investments in the area to produce a positive economic effect that will revive the business.

Investors are offered to buy or rent a wide range of private property and land that can be used in the tourist business, and also for industrial and commercial purposes.

Investors can locate their companies in any place within the De Baru zone as the benefits cover the whole territory of the region. Like in all Panamanian FEZs, foreign investors in the De Baru zone will take advantage of tax, customs, and migration advantages.

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The City of Knowledge

The City of Knowledge is a free zone that was specially created to develop the scientific and cultural potential, and international connections in the sphere of humanities, education, and new modern technologies. It is located in the territory of the former American military base (Clayton) near the Pacific entrance to the Panama Canal, which is a 15-minute car drive from Panama City.

The City of Knowledge occupies an area of 120 hectares. Investors can take advantage of a wide choice of offices, business centers, conference halls, computer classes, and other facilities. As of January 2023, there are 221 companies operating in the City of Knowledge.

The City of Knowledge

It also provides all the required infrastructure for investors to live with their families:

  • schools
  • medical centers
  • restaurants
  • shops, etc.

The main advantages of the City of Knowledge include:

  • tax and migration benefits
  • direct access to five international fiber optic cables that pass through Panama
  • first-class infrastructure
  • electricity supply from its own thermal power station
  • higher educational and research centers and laboratories

BPO’s Panama Digital Free Zone (under construction)

The activity of companies attracted to this digital zone is focused on the development of high computer and information technologies, as well as on the organization of a High-Tech Education Center.

San Miguelito, the capital’s urban district where the BPO’s Panama Free Zone will be located, unites the areas of Cerro Viento and Rural-Brisas of the Golf.

Thanks to its strategic location to the Northern Corridor highway, this zone will be directly connected with all sectors in Panama City and the main logistics centers, including Tocumen international airport, Balboa seaport, and a road junction with Panama-Colón Highway.

Panama allows the opening of cryptocurrency companies and does not regulate them in any way, which makes this country an ideal place to create a crypto-startup or go on an ICO.

International Company Headquarters in Panama

The country is interested in attracting transnational companies. With this purpose in mind, it allows registering a Panamanian structure that will act as a foreign or Panamanian company owned by a transnational company located in Panama.

The main goal of such a company (called Sedes de Empresas Multinacionales (SEM) in Spanish) is the provision of services from Panama to its parent or affiliated company located abroad.

Companies receive tax advantages in Panama on the condition that these legal entities get income from foreign sources rather than in the territory of the country. The same conditions make them entitled to exemption from property transfer tax.

Registration Requirements

If you want to register a parent company as headquarters in Panama, you should have a starting capital that amounts to at least $2 mln.

If you want to get a license from SEM transnational company, you will have to comply with the following requirements:

  • the group capital should amount to at least $200 mln, or it should provide the services to at least seven subsidiaries or affiliated companies;
  • the group assets should amount to at least 200 mln, and the group should be present in at least 40 countries under the same commercial brand.

The new requirements for the SEM license oblige the transnational company to have at least five full-time employees and bear the annual operating expenses in Panama in the amount of at least $500,000.

Changes in the Transfer Pricing Rules for SEM Companies

As the international requirements for transparency of financial operations are getting tougher, Panama had to modify the transfer pricing and taxation rules for the structures licensed to conduct their activities in Panama as headquarters of transnational companies.

Starting from the fiscal year 2019, any transactions between the company that has an SEM license and related parties (individuals or legal entities) will be affected by the transfer pricing rules.

Compliance with the rules does not depend on the fact that an SEM company enjoys a reduced income tax rate (Law No. 57 dated October 24, 2018). The following companies shall be considered related parties:

  • those registered in Panama
  • tax residents of foreign jurisdictions
  • those registered in Colon FEZ, Panama Pacifico FEZ, Libre de Petróleo FEZ, in accordance with the rules established for SEM companies, in the City of Knowledge zone, or in any other existing or future free or special economic zones.

Changes in Income Tax for SEM Companies

  • According to the new rules, SEM companies have to pay 5% of income tax on all kinds of services provided by the company.
  • SEM companies can apply to get a tax credit. However, even if it is provided, the income tax cannot be lower than 2%.
  • SEM companies have to submit income tax returns on an annual basis. If the reports on tax declaration are formed, the companies may include the salary paid to their staff in the item of expenses subject to deduction, including the employees that are freed from salary payment on the basis of Article 26 of the Law “On SEM Companies.”
  • Panama companies (Panama tax residents) that receive services from an SEM company have to pay a tax amounting to 5% of the total amount transferred to the SEM company’s bank account. This norm applies if the Panamanian taxpayer needs the service for production, for income retention, or is used by the recipient of the services as deductible expenses in financial reports.
  • SEM companies that receive profit from copyright, loans and finances (a source of income in Panama), provided to foreign companies (outside Panama), have to pay 5% from 50% of the amount sent.
  • The salary payable to the top manager of an SEM company (that has the right to permanent residence in Panama received under the visa for SEM permanent staff) shall be exempt from social security tax and education tax only if the salary paid is registered in the SEM company accounting reports (in the labor remuneration expenses section).

As of January 2023, the majority of SEM companies in Panama are engaged in the following activities:

  • Consumer goods (39)
  • Services (30)
  • Healthcare (19)

In total, there are 185 companies of this kind in Panama.


Registration of a Private Foundation in Panama and a Panama corporation, especially in one of the country’s free economic zones, will serve as a reliable business growth catalyst for a foreign investor.

Panama is one of the world’s leaders in the speed of company registration: the process will take just a few days. The state does not discriminate against foreigners by nationality or age, and it does not limit the amount of investment capital brought into the country or withdrawn abroad.

On the contrary, Panamanian laws guarantee the protection of foreign assets in the country and ensure a high level of confidentiality for the investor. Among other things, the country proposes tax incentives and beneficial migration rules that make it possible to get permanent residence within a short period of time. Also, a foreign resident will have the right to claim Panamanian citizenship after 5 years of permanent residence in the country.

If you want to register an enterprise in Panama, you will not even need to visit the country. The whole procedure can be completed remotely if you use our services. Ready to start right away? Simply write a letter to our e-mail and order the service of corporate structure registration in Panama.

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