Panama has created a series of laws that allow the establishment of companies within specially designated areas. Such areas are known as Special Economic Zones and were created as a mean to contribute to the country's development and to stimulate employment. The Special Economic Zones also seek to provide optimal conditions of operational efficiency and comparative advantages to ensure companies established therein are competitive in international markets.
The legal framework of the Special Economic Zones entail, amongst others, tax, migratory and labor incentives mainly addressed to foreign trade activities, which make the establishment of companies within such areas more attractive.
Although there are many Special Economic Zones throughout the country, the main ones that offers a transit systems designed for imports, exports, re-exports, warehouse facilities and the processing goods are the Colon Free Trade Zone and Panama Pacifico. Both of these Special Economic Zones are defined as free and delimited commercial areas, comprised of the necessary infrastructure, facilities, buildings, systems and support services that are necessary for companies from all over the world to establish themselves in order to carry out activities related to provision of logistic services related with goods.
Law No. 8 of April 4, 2016, reorganized the legal framework and compiled all amendments made to the law that regulated the Colon Free Trade Zone. The Colon Free Trade Zone main objective is to serve as a platform for the redistribution of wholesale and tax-free goods from Asia, Europe and North America to Latin America and the Caribbean. Located on the Atlantic side of the country, this area is supported by a wide variety of logistic and financial services that take advantage of its connectivity to expand the flow of goods to regional markets.
On the other hand, Panama Pacifico is a public-private alliance between the Republic of Panama and London & Regional, created by Law 41 of 2004. Panama Pacifico is located on the pacific side of Panama and its main objective is to be a hub for the production of high technology, logistics services and commercial activities. The public-private alliance developed a master plan that includes areas dedicated to the storage and creation of distribution centers, manufacturing, commercial offices, airport and an ecologically friendly residential area. Such development is set to be carried out over a period of 50 years.