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Located at the Atlantic Sector Entrance of the Panama Canal is Colon Free Trade Zone, offering access to both Atlantic and Pacific Oceans. This free trade zone is the second biggest free zone in the world after Hong Kong. What makes Colon unique is that nearly all the world routes pass through it. |
The Colon Free Zone is served by four major ports all within a few kilometres. Currently there are over 1,600 companies with over 14,000 operating here.
US dollar is the legal tender here and the national currency Balboa is permanently at par with the American dollar, with no exchange restrictions. The free zone handles almost $12 billion* in imports and re-exports each year.
In this age of globalization of the world’s economy, the colon free zone aims to be the main commercial distribution center for the hemisphere. To stay ahead, the free zone continuously reconstructs and modernizes the warehouse, shipping and transit systems.
This unique commercial expanse is demarcated in two big areas, one located in Colon City, segregated from the city itself by a wall and the other relatively new, in the France Field area, which is designated for warehouses covering 130 acres and at a distance of only 400 yards from the Colon commercial sector. The services offered by Colon Free Trade Zone include facilities for importing, storing, assembling, re-packing and re-exporting products from all over the world: from all types of electric appliances to pharmaceutical products, liquor, cigarettes, office and home furniture, clothing, shoes, jewelry, toys, etc. It is considered the "Trading Showcase" of Central and South America as well as for the Caribbean region.
The Free Zone also supplies goods to other free zones in the region such as the one on San Andres Island (Colombia) and Margarita (Venezuela), and also the Aruba Trade Center. Hence it can be rightly called "The First Free zone of the Western Hemisphere".
Dividends arising from external operations or from those operations that are executed or consumed abroad are tax-free. There are no Capital Investment Taxes. Municipal or Local Taxes do not apply to firms operating in the Free Zone and there are no taxes on shipments to or from the Free Zone from or to anywhere in the world.
Operations
A company can build its own store, warehouse or industrial plant on lots leased from the Free Zone Administration. A minimum of 60% of the merchandise has to be exported.
Lot lease agreements are signed for 20-year periods and the commercial buildings are leased for one-year renewable periods.
A representative or agent, whose clients can be any number of companies, may build a warehouse under the same terms and conditions as an individual company.
Any particular company may enter into a private agreement with a representative or agent who is already established in the Free Zone, so they can receive, store and distribute its merchandise or product in accordance with the instructions given by the companies. The ownership title stays with the company that owns the merchandise. In this case, also 60% will have to be exported.
Companies or natural persons can rent spaces in the public warehouses in the Colon Free Zone, at a monthly rate of ½% on the F.O.B. value of the stored merchandise.
Every year, over 13,000 cargo vessels cross the Panama Canal under the flags of over 84 nations. Panama has the world’s largest merchant fleets, many of which stop for cargo and buy their supplies from the Colon Free zone. Finally, Panama’s International Banking center with over 110 banks from around the world and about twenty banks have branches within the Free zone.
Required documents
Any person or company can set up operations in the Colon Free Zone by applying to the Administration. The person has to supply commercial and bank references as well. In the case of setting up a company, a Panamanian Government tax clearance and the articles of incorporation are also required. There is no requirement for a commercial license and there is no stipulation on the minimum capital investment. The only condition is that a minimum of five Panamanians are to be employed.
* $ = US Dollar
(Source: www.panamatours.com)
