Analysis of the Panamanian Law on Free Zones

The goal of the new law is to provide optimal conditions for generating maximum efficiency and competitiveness.

Monday, September 12, 2011

In April this year a new law was approved governing the operation of free zones in the country, where many foreign companies have decided to settle because of the benefits the scheme provides.

The new law aims to establish a framework within which these workspaces will operate, ranging from the kind of activities that can be developed there, the systems that can be installed to the legal conditions that must be met.

In the opinion column ‘Ventana Fiscal ‘ published in, the writer notes, "Some special features that make the Law 32/2011 more interesting include: the minimum investment of $250 000, the start of activities required within a period of one year from registration in the Official Register of Free Zones, the special tax regime, the immigration scheme offered and labor regulations especially designed for companies established in free zones. What more could an investor ask for?"

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Free Trade Zones: Economic Hypocrisy

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If free zones -with their tax breaks and other privileges- are good for the economy, why isn't the entire country made into a free zone?


Why not provide companies founded with Central America capital the same benefits and privileges enjoyed by foreign firms operating under free zone regimes? The job creation and contribution to the economy that can be made by companies in free zones because they enjoy these privileges should be able to come from business founded with Central American capital as well, which in contrast to foreign firms, have to deal with excessive regulations and bureaucracy in the States of Central America.

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The draft law has already been agreed by business associations, and is about to be taken to the Cabinet and then to the National Assembly.

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The Foreign Trade Promoter has revealed in a study the benefits that free trade zones contribute to the country, including the 58 thousand jobs that pay 60% above the average private sector salary.

From a press release by PROCOMER:

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Costa Rica's Free Zones require definition of the system

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The Government wants to ensure these conditions through a reform of the free zone law aimed at attracting investment.

However, its early yet and the possibility of taking it to Congress for a vote seems far off.