An executive decree addresses a special, comprehensive and simplified regime for free trade zones, as originally allowed under a 2011 decree.
The benefits for participants in the free trade zone program include tax incentives—including certain exemptions from income tax or property tax, and reduced rates of tax on dividends, the “complementary tax” (impuesto complementario), and the annual tax on the capital of the company.
Under the program, the importation of finished products into the free trade zone is not allowed for re-export without any processing that implies that value was added to the products in Panama.
The 2017 executive decree regulates the procedures applicable to the installation, administration, maintenance, and operation of free trade zones in the national territory of Panama, and defines terms such as, international free trade area, internal operations, product input ratio, logistics services, among others. There are measures concerning the requirements to qualify for the special free trade zone regime, and that establish the evaluation procedure for a free trade zone license application.
Read a June 2017 report (Spanish) prepared by the KPMG member firm in Panama
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