With the purpose of promoting international trade, manufacturing and complementary services, Panama has created special laws and regulations to allow local and foreign investors to establish companies in specific special areas (special economic zones).
The most popular, due to its impact for international commerce, is the Colón Free Zone (CFZ), created by means of Decree Law 18 of 1948.
Other special economic zones are the City of Knowledge (Ciudad del Saber), a scientific, technological and entrepreneurial park regulated by Decree Law 6 of February 10, 1998; and the Panama Pacífico Special Economic Area (Law 41 of 2004), an area assigned for the production of goods and services with high added value and technology.
The free zones, covered by Law 32 of 2011, also offers a set of tax benefits, migratory and labour incentives that makes the establishment of these special areas within the national territory more attractive, mainly addressed to foreign trade activities.
The licences given by the Ministry of Commerce and Industries referring to the free zones are: license as developers and/or free zone operator; and license as a company to establish and operate within a free zone.
With the sole purpose of promoting international trade, Panama has created a number of laws and regulations allowing both local and foreign investors to establish companies in segregated special areas, with a wide range of tax, migratory, and labour incentives, recognized as special economic zones. These include Colon Free Zones, Panama Pacifico Special Economic Area, City of Knowledge and the Multinational Corporations Headquarters (MCH), among others.
With respect to the MCH, since the entry into force of Law 41 on August 24, 2007, by means of which a special regime for the establishment and operation of the MCH in Panama was created, there are now 105 multinational enterprises with regional headquarters set up throughout the country.
The MCH is able to operate as a foreign company registered in Panama or as a Panamanian company, owned by a transnational company. The companies will be considered multinational even if they operate solely in a certain country as long as they have important operations in different regions inside that country and decide to establish a branch, affiliate, subsidiary or associated company in Panama to carry out transactions in the region. As stipulated, Law 41 grants licenses indefinitely, as long as the holder does not execute any local activity and does not incur in any of the infractions laid out under the regulation of the said law.
