How to Profit From Panama’s Duty-free Zone

The tax-free zone in Panama, where many of Panama's self-made millionaires started their businesses.

Tuesday, May 13, 2008
Panama City, Panama

Learn more about Panama in International Living Postcards—your daily escape

Ah, dirty, sexy money; unfortunately, we can’t live without it. I know from your e-mails that many of you plan to retire early and continue working once you relocate to Panama. But what to do? Start a new business? Look for a job? Expand your current business overseas? There are plenty of options for those who need to make a living here.

Readers of the Panama Insider already know about one industry that is desperately in need of investors…so much so that newbies are practically guaranteed success. The Colon Free Zone is also a veritable gold mine…but waiting lists for showroom and office space are unbelievable. Space here is so much in demand that you might never get in…but there is a way to do business through the Free Zone without having to deal with all the waiting-list rigmarole. And I can tell you exactly how to do it—without any overhead or capital investment costs.

What if I told you that you could start a business in Panama and pay:

• Zero tax on income derived from export activities
• Zero tariffs and quotas on imports and exports to foreign countries
• Zero sales and production tax
• Zero capital gains tax on the sale of assets (if you own them for two years before selling)
• Zero capital investment tax
• Zero local/municipal taxes?

That’s a lot of zeros…and we’re talking the good kind. But this is no pipe dream. Start an import-export business in the Colon Free Zone and zero is exactly what you’ll pay on these and other taxes. And you're virtually guaranteed success. Panama is an import-export paradise, thanks to its strategic location and the symbiotic relationship shared by the Colon Free Zone and the Panama Canal.

The Colon Free Zone (CFZ) is the second-largest duty-free zone in the world, second only to that of Hong Kong. Here, businesses reap some of the world’s best tax and financial benefits and gain easy, cost-effective access to over 500 million consumers in Latin America and the Caribbean. Many of Panama’s self-made millionaires got where they are today thanks to the CFZ. You can follow their example and make the Free Zone work for you.

If you’re interested in selling, you should know that anyone can set up operations here. You can apply to the CFZ administration provided you have commercial and bank references (and if you are applying as a company, articles of incorporation). No commercial license is required and there is no minimum capital investment…but you will have to search for shop space for rent or you will need to lease land via a leaseback program. Demand for CFZ space is very high and the waiting list for both these options is very long. But don’t give up hope, there’s a better solution…

The easiest way to use the CFZ is to choose an existing company to represent you. There are many companies that offer this service, and you’ll have no capital investment or overhead costs. All your goods will be received, stored, packed, labeled, and dispatched for you. The company representing you will arrange for the transportation and receipt of your goods, provide you with inventory and expense reports, and complete all necessary paperwork.

Jessica Ramesch
The Panama Insider, International Living

P.S. The Colon Free Zone isn’t the only opportunity in Panama. A new mega-project is in the works and, once completed, it’s expected to attract 7 million potential buyers every year. If you’ve got a product to pitch, this will be a perfect venue…but I’ll tell you more about this in Panama Insider.

Editor’s note: Jessica will be attending our upcoming Live and Invest in Panama Seminar along with Dudley Connell, an expat who successfully used the CFZ to import a unique product for sale in Panama: electric eco-bikes. Dudley will tell you everything you need to know about using the CFZ to your advantage at the Live and Invest in Panama Seminar in Panama City, July 31–Aug. 2.

Read related articles:

- How to Profit From African Beads

- The Truth About Investing in Panama City

- The Return of Panama’s 20-Year Property Tax Exemption