3 Fundamental aspects of Law 32 of Free Trade Zones in Panama

by PLP / April 11, 2018

Enacted on April 5, 2011, Law 32 establishes the special, comprehensive and simple regime for the establishment and operation of free trade zones in Panama. According to the general provisions, it is decreed that the purpose of this law is to contribute to the development of the country and the generation of jobs and foreign currency in order to promote investment as well as technological, scientific, economic, cultural, educational and social development.

In the following section, we highlight 3 relevant aspects of the law regarding the intalation of your industrial operations in a Free Trade Zone in Panama:


1. What are the free trade zones and what is their objective?


Article 11.

Duty free zones are defined as duty free trade areas, having specific boundaries and containing all the infrastructure, facilities, buildings, systems and support services, as well as all the operating organization and the management as may be necessary so that companies from different parts of the world, engaged in the production of goods, services, high technology, scientific research, higher education, logistic services, environmental services, health services and general services may become established therein.

The immediate objective of duty free zones is to provide the best operating efficiency and comparative advantage conditions in order to guarantee, for companies established therein, a high degree of competitiveness in international markets.

Tax exemption and Import Duties. Permit of Permanent Resident as investor. The rotation of workers is allowed.
The promoters of duty free zones are exempt from income tax in the lease and sublease. Temporary resident permit as trusted personnel, executives, experts and/or technicians, valid for the term of the contract. The holiday 
The service companies will be 100% exempt from income tax for their external operations and for their operations among themselves. Short stay visa in merchant and investor quality. The extraordinary day will be remunerated with a single surcharge of 25% on the salary.
Temporary permits for special policies, teacher, student or researcher of a higher education center in a free trade zone. The work during a holiday or national mourning will be paid with a surcharge of 50% on the salary of the ordinary day.


2. Who can be established in a DUTY free zone and what kind of activity can be carried out?


Article 24.

Individuals or corporations, domestic or foreign, may become established in duty free zones, which engage in the production of goods, services, logistics services, higher education, scientific research, high technology, environmental services and any other activity authorized by the Cabinet Council in the following categories:

  1. Higher learning center
  2. Scientific research center
  3. Specialized center to render health services
  4. High-technology companies
  5. Assembling companies
  6. Companies which process finished or semi-finished products
  7. Service companies
  8. Environmental services companies
  9. General services companies
  10. Logistics services companies
  11. Manufacturing companies

Individuals or corporations which will engage in any one or more of the activities included in this article must have a license or authorization to engage in such activity, issued by the competent authority or regulating body.

Article 25.

Individuals or corporations, domestic or foreign, established int he duty free zones in order to engage in the production of goods, services, high-technology, logistic services, scientific research, environmental services and higher learning may: 

According to the nature of their activities
Introduce Store Exhibit Pack Unpack
Manufacture Process Produce Investigate Set up
Assemble Refine Distill Grind Pulverize
Liquify Put together Cut Benefit Purify
Mix Transform Repair Prove Modify
Clean Analyze Destroy Crush Recycle
Package Pack Market Finance Insure
Manage Purchase Sell Exchange Manipulate


All kinds of goods, products, raw materials, components, packaging material and packages and other commercial effects, with the exception of those damaging or which have a negative effect in the local and worldwide ecology or specifically forbidden by the laws of the Republic of Panama.

Likewise, they may produce, create, develop, perfect, and render all kinds of services as may be necessary so that such companies may carry out highly competitive business activities in the global market economy, as well as all such activities pertaining to such companies and not specifically forbidden by the Law.

3. What are companies installed in a duty free zone required to comply with?

Article 28. 

Companies authorized to become established in the duty free zones are bound to:

  1. Invest in their activities a sum of money which is not less than the capital set forth in the application.
  2. Begin investing within a time period not exceeding one (1) year, as of the date of registration in the Official Registry of Companies Established in Duty Free Zones.
  3. Begin operating within a time period not exceeding two (2) years, as of the date of registration in the relevant Registry, except in the case where the nature of the activity requires a longer period of time.
  4. To hire Panamanian workers with the exception of foreign experts, technicians and trustworthy personnel, as may be necessary to develop the business activity.
  5. To offer Panamanian workers technical training facilities related to their area of expertise and related activities.
  6. To comply with laws in force or to be proclaimed regarding the recovery and protection of the environment, control and elimination of pollution, preservation of green and marine areas, hygenic and safety measures at work and provisions decreed for protecting plant and animal life.
  7. Annually send the National Commission of Duty Free Zones, a statistic report with the following information: employments, investments carried out, amount and type of goods or services produced and raw materials used and main destination markets.

If you want to know more about the Law 32 of Free Zones in Panama, or if you wish to determine if a Free Trade Zone is convenient for your company, click on the button below and we will gladly help you.

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