Exporting to Panama

Panama has been one of the fastest growing economies in Latin America, with an average annual growth rate of 4.6% over the last 5 years. Due to its privileged geographic location and its sophisticated logistics infrastructure, the country has emerged as the region’s business hub, connecting 1.3 billion consumers (ProPanama).

Political and economic stability

One of the most politically stable countries in Latin America, Panama is a dollarized economy since 1904. There is no central bank and limited levels of inflation are registered. Panama has one of highest GDP per capita in Latin America.

Regional hub and strategic location

The Panama Canal makes the country a regional logistic hub. According to the World Economic Forum, Panama ranks seventh in the world for the efficiency of its port infrastructure; thirteen in the world for the efficiency of its air transport services and first in Latin-American for the sophistication of its financial services (World Economic Forum 2019).

Generous tax incentives

Panama has one of the lowest corporate tax rates in Latin America (25%), as well as the lowest sales tax in the region (7%) (World Bank, 2019). Withholding on dividends are 5% or 10% depending on the source. Interest is subject to withholding of 12.5%.

Ease of doing business

86th

out of 190 countries (World Bank, 2019)

Currency

US dollar

Business language

Spanish

You may need a translator

GDP per capita

$15,697

UK is $42,558 (IMF, 2018)

Economic growth

3.0%

(IMF, 2019)

Time zone

GMT -5

Opportunities for exporters

Panama geographic position, its connectivity, and a sophisticated set of incentives has made a hub to 157 multinational companies including British giants such as GSK, Aggreko, Biwater, Diageo, JCB, G4S, BT and others.

Doing business in Panama

Preparing to export

Taxation

The UK and Panama have signed a double taxation agreement, meaning the same income is not taxed twice.

Panama offers all available incentives equally to Panamanian and foreign investors.

VAT

If you are registered for VAT, it may be possible to zero-rate the goods you export to Panama, provided certain conditions are met.

All imports into Panama and some services are subject to 7% VAT (ITBMS). Certain items are exempt, including pharmaceuticals and food and school supplies.

Import duties

Duties are assessed and set in proportion to the value on the cost, insurance and freight (CIF) value. The Panamanian government has reduced tariffs to meet the requirements of the World Trade Organisation (WTO) membership.

Operating in Panama

Risks

There are some challenges for doing business in Panama. These include:

  • bureaucracy
  • lack of clarity and transparency in the public tendering process
  • slow judicial system

Read the overseas business risk for Panama for more guidance on the challenges of doing business in Panama.

Using agents and distributors

You are advised to use a representative, distributor or commission agent with a commercial license. Securing exclusivity for a buying agent can be hard due to the competitive conditions of the market.

You must have a local counterpart or direct presence to participate in any Panamanian government procurement bidding processes.

Language

The national language in Panama is Spanish. English is spoken by some people in government and business but is not universally spoken.

Most business documentation must be completed in Spanish.

Intellectual property

As a first step, we advise you to speak to an intellectual property (IP) lawyer if you think you need patent protection when exporting.

Panama’s Copyright and Neighbouring Rights Law 1994 protects original literary works. However, there are serious flaws in protection for copyright works.

Piracy, particularly of sound recording and movies, remains a problem.

Next steps

DIT can advise you on doing business abroad, and help put you in touch with other people who can help such as lawyers and distributors.