Colón Free Zone: Trade and Re-export from Panama

What is it and who manages it?

It is one of the oldest and largest free zones in the Americas, located in the city of Colón, with access to the Atlantic ports and to the railway and highway that connect it with the Pacific. It is managed by the Colón Free Zone Administration, an autonomous state entity that authorizes the companies operating there and controls the movement of goods.

Which activities does it allow?

• Importing and storing goods for sale to other countries.
• Re-exporting, mainly wholesale, to customers in Latin America and the Caribbean.
• Repackaging, labeling, assembling or processing products.
• Providing logistics and distribution services to other companies.

What advantages does it offer?

• Customs: goods enter and leave without paying import duties or ITBMS as long as they are not brought into Panama's tax territory.
• Tax: specific treatment for re-export operations, consistent with Panama's territorial system.
• Logistics: connections with the ports on both oceans and with sea and air routes throughout the region.

The scope of each advantage depends on the operation and the current regulations. Review it before planning your investment.

What does a company need to operate there?

• A Panamanian company or a branch of a foreign company.
• Authorization from the Colón Free Zone Administration to operate as a user of the zone.
• Premises, a warehouse or a storage service inside the zone.
• Declaring every entry and exit of goods in the zone's electronic system (DMCE).
• Complying with anti-money laundering rules: companies in the zone must know their customers and keep the documentation of their transactions.
• Meeting the company's accounting and tax obligations.

What if you sell in the rest of Panama?

Goods leaving the zone for the rest of Panama are treated as an import: they pay the corresponding duties and ITBMS. If you also sell to consumers within the country, you need to operate outside the zone with your own business license, and retail trade is reserved for Panamanians, with exceptions.

Colón Free Zone, Panamá Pacífico or the SEM regime?

• Colón Free Zone: trade, storage and re-export of goods.
• Panamá Pacífico: operations that need facilities, such as logistics, manufacturing or services, with their own incentives.
• SEM regime: headquarters that provide services to the companies of a multinational group.