Panama free zone la zona libre colon country of panama free zone panama
0% Taxes and 100% Opportunities

That is what the Colon Free Zone is all about!

Founded in 1947 with 50 hectares of land of the City of Colon, at the entrance of the Atlantic side of the Panama Colon, today is an emporium of 500 hectares with over 1800 companies that operate from it, where over 14,000 people are employed.

The Colon Free Zone's activities represent about 10% of Panama's GNP.

It was created to offset the lack of economic activity of the Atlantic City after World War II taking advantage of the maritime route.

The Colon Free Zone is served by three ports in the Atlantic entrance of the Panama Canal, Manzanillo International Terminal "MIT", one of the most modern and competitive ports in the area; The Colon Container Terminal, and the Panama Ports Company, S. A. On the Pacific side, there is another port run by Panama Ports Company. In terms of air transportation, the Airport of Tocumen is 80 miles from the Free Zone where international carriers have a hub.

Finished goods arrive from industrialized countries in the Far East, Europe and North America, mainly by ship.

They are then re-exported to countries in Latin America and the Caribbean. Sales amounted to US$ 6 billion a year before the crises in Colombia, Ecuador and Venezuela.

The goods imported by the Colon Free Zone Users (companies authorized to operate there) come into the area free of any duties and/or tariffs. When re-exported, the buyers have the responsibility of paying the taxes in their respective countries.

0% TAXES means that all profits earned from re-exporting (that is sending merchandise to other countries) are totally free of tax. Only profits made to sales to the fiscal territory of the Republic of Panama, are subject to Income Tax.

100% OPPORTUNITIES means that, the fiscal advantage, coupled with the strategic position of the Colon Free Zone allows companies to store merchandise at a closer distance to their market. As merchandise comes in containerized form and in bulk, the freight costs are considerably cheaper.

Since the Colon Free Zone Users serve a market of 500,000,000 consumers in the Latin America and Caribbean markets, buyers can be served with smaller quantities, according to their own particular markets, making a better use of their working capital.

The best example of this symbiosis is explained the example of some medicine manufacturers, who import medicine in bulk from two or three factories, and re-ships, after repackaging and re-labeling in full compliance with Health Authorities, in more than 5 languages, re-exported in smaller parcels as the markets need.

There are three types of companies that operate in the Colon Free Zone. These are Distributors, who have a distribution contract from manufacturers to distribute their goods in certain or all markets served.

The other one is the Multinationals who have established their own companies in the Colon Free Zone as logistics center serving their distributors in the region. Some of them, such as the electronic companies, have also parts warehouses as well as training centers for their clients.

The last one are those companies, which offer third party logistics, service to multinationals companies. They store, label, repack; re-ship goods according to the requests made by the company who contracts their services.

The obvious advantage for those buying from the Colon Free Zone are, for starters:

  • 1. Wide assortment of goods

  • 2. Consolidation Facilities

  • 3. Credit

  • 4. Efficient use of working capital

As part of anyone's travel in the Republic of Panama, the Colon Free Zone is a must see place!

Written by Victoria H. Figge
Former General Manager of the Colon Free Zone Administration