Exporting to Panama

Panama’s location and openness to trade have made it an economic hub for Latin America. It hosts regional headquarters for more than 140 multinationals including British giants such as GlaxoSmithKline, Diageo and JCB (Panama Ministry of Commerce and Industry, 2019). Panama has also experienced tremendous economic growth, averaging 5.6% annual growth from 2013 to 2017 (IMF, 2018).

Political and economic stability

One of the most politically stable countries in Latin America, Panama is to over 90 local and international banks (World Bank, 2017). Its currency is the US dollar and there are no foreign exchange controls.

Regional hub and strategic location

Some of Latin America’s most important ports are located in Panama. The Panama Canal cuts across the country connecting the Atlantic and Pacific oceans, and is one of the world’s biggest shipping routes.

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).

Ease of doing business

79th

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

5.9%

(IMF, 2018)

Time zone

GMT -5

Opportunities for exporters

There are opportunities for UK companies across a broad range of industries. Our trade advisers in Panama have identified particular opportunities for UK businesses in the following sectors.

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’re 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, 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 in order 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
  • copyright issues

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

Using agents and distributors

You’re advised 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.