Currently, the globalized world drives foreign investment in different countries. Companies are interested in achieving a higher margin of profit by crossing international borders.
Latin America has become a strategic place for foreign investors since it has shown a diversification of its industries and an internationalization of its strategies. Likewise, the geographical position of the continent is seen as an advantage since it facilitates exchange between countries and has rapid access to natural resources and materials.
Latin american countries have free trade zones that help to boost foreign trade and attract investors and companies by simplifying government restrictions. Each country has its own regulations for free trade zones, but in all of them we can find these common factors:
- Lower taxes on income.
- 0% Value-Added tax.
- 0% on tariffs.
Settling in a Free Zone can allow multiple benefits to help companies position themselves at a high competitive level in international trade. In addition to tax incentives, these areas offer adequate infrastructures, connectivity and a strategic location to carry out industrial operations.
Today, there are more than 2,500 free trade zones in the world. According to a report made by the Latin American Free Trade Zone Association, at the end of the year 2015 and the beginning of the year 2016, the total number of Free Trade Zones in Latin America reached 445 and the number of companies installed in them was over 10,800 generating a total of 1,700,000 jobs. This represented approximately 27,600 million dollars in exports and the value of the introduced goods reached 37,700 million dollars in the region.
Bellow, you will find the statistics from the Latin American Free Trade Zone Association regarding four pioneer countries in Free Trade Zones in Latin America:
|Panama||Colombia||Costa Rica||Dominican Republic|
|Number of Free Trade Zones||20||109||39||65|
|Direct jobs generated||5,115||65,222||82,086||161,257|
|Income tax in the Free Trade Zone||0%||20%||RANGE Year 0-8: 0% - Year 9-12: 50% exemption ; OUT OF RANTE Year 0-12: 0%-Year 13-18: 50% exemption.||0%|
|Dividends in the Free Trade Zone||5%||0%||0%||0%|
When choosing where to install your industrial operations, it is necessary to evaluate various factors such as the requirements of the country, its location and economy in order to take advantage of all the incentives and benefits that they offer.
If you would like to know more information about operating in a free trade zone in Panama, click on the button that appears below and download the Law 32 of April 5th, 2011 or contact one of our experts to help you clear out any doubts you may have by clicking HERE.