Panama: Special Economic Area Panama – Pacifico

Last Updated: 9 May 2017
Article by Jose Antonio Sierra

Regulated by means of Act No. 41 of 2004, Panama suscribed a special regime to Panama-Pacifico area.

The purpose of the Law is to create a special legal, tax, customs, labor, immigration and business regime, designed to encourage and ensure the free flow and movement of goods, services and funds so as to attract and promote investments and the generation of jobs and to make the Republic of Panama more competitive within the global economy.

It also has an autonomous entity called the Panama-Pacific Special Economic Area Agency charged with implementing the regime, regulating the activities carried out and setting down the criteria for contracting with one or several developers or operators of renown and experience on an international level who shall be entrusted with the planning, development and promotion of the Panama-Pacific Area.

To obtain the registration of a natural or corporate person shall submit the following:

  1. Names and surnames, nationality, copy of personal identity card or passport of the applicant, in the case of a natural person; the trade name, the name of the country under whose laws it has been organized, including data regarding its registration at the Public Registry of Panama, as well as the particulars of its Legal Representative and its Registered Agent, in the case of a corporate person.
  2. Description of the activities to be developed, the jobs that will be generated, as well as the initial and future investment.
  3. Copy of the organizational deed and its amendments, in the case of a corporate person.
  4. Recent certificate evidencing the good standing of its corporate personality, directors, officers and Registered Agent, in the case of a corporate person.
  5. Other documents and requirements as may be determined by the Agency
  6. Carrying out economic activities in the Panama-Pacific Area shall be open to both nationals and to foreigners. The requirements, criteria and procedures for reviewing applications for registration shall be applied in a fair, transparent and equitative manner to all applicants, through a non-discriminatory business treatment, respecting the principles of free participation and free financial competition.

The registration or recording of a natural or corporate person on the Register of the Panama-Pacific area shall be ordered through a Resolution issued by the Administrator, which shall grant the title holder, as from the day of its issue, the status of Company of the Panama-Pacific Area, as well as the right to enjoy the benefits and incentives.

Any natural or corporate person that establish themselves in the Panama-Pacific Area may carry out any kind of activities, of any nature, that are not expressly forbidden by the legal regulations in force in the Republic of Panama on the matter of health, security and public order.

There shall be no halls within the Panama-Pacific Area for exhibiting the products that are commercialized wholesale internationally in other free zones or under a special tax treatment.

Panamá Pacifico has a "One Stop Shop" which is an office that represents over 17 government agencies and offers its variety of services onsite, One Stop Shop deals with all necessary permits and procedures for companies moving to and based in Panama Pacifico.

Panama Pacifico as a Special Economic Area provides attractive incentives exclusively for companies based in the area. This includes exemptions from all indirect taxes as well as the potential for exemptions from direct taxes for specific activities. In addition to fiscal benefits, companies in Panama Pacifico enjoy streamlined regulatory processes in a number of areas such as workforce and customs.

Tax exemptions

Dividend & complementary tax
Transfer tax
Import tax
Sales tax
Export & re-export tax
Registration tax, including industrial and commercial licenses
Real estate property tax
Withholding/retention taxes
Stamp tax
Insurance premium tax
Taxes on the storage and movement of fuel or other hydrocarbons and derivatives

Favorable labor regulations

24/7 operations allowed
Fixed rates for overtime (25%) and work conducted on national holidays or during employees' day off (50%)
Flexibility to assign employees' day off
Work termination possible in case of losses or demand fluctuations
A higher ceiling on the proportion of workforce from outside Panama than in the rest of Panama
Special investor and worker visas available, visa benefits also extend to worker's immediate relatives
The rules of the Labor Code and other legal provisions in force on labor matters shall be applicable to the labor relations within the Panama-Pacific Area.

Favorable Immigration regulations

Special visas for investors and workers
Visas available for family members
Expedited procedures for visas and work permits for foreigners
Tax-free, one-time importation of any personal and domestic belongings (up to USD 100,000)
National Migration Service onsite in Panama Pacifico´s One Stop Shop.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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