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IMPORT-EXPORT
TRADE REGULATIONS AND STANDARDS
trade barriers
custom valuation
Import Licenses
Export Controls
Import-Export Documentation
Temporary Entry
Labeling/Marking requiremement
Prohibited Imports
Standards
Warehouses
Colon Free Zone
Special Import Provisions
Membership in Free Trade Agreements
TRADE
BARRIERS (TARIFFS, NON-TARIFF BARRIERS AND IMPORT TAXES)
Traditional policies on trade and economic incentives directed agricultural
and manufacturing production toward import- substitution until the end
of the 1980's. Today, Panama's nominal tariff duties remain the highest
in the region. Panama averages 40% in tariff rates, whereas, its Central
American neighbors average 20%. The country has made some progress in
lowering its duties and restrictions.
From 1991 to 1994 the Government of Panama enacted a trade liberalization
program, with the following objectives: - To reduce the ceiling on import
tariffs to 40 percent for industrial products and to 50 percent for
agro-industrial products.
- To eliminate all specific import tariff rates.
- To eliminate quantitative import restrictions for agricultural products
and replace them with tariff protection.
The Government met the majority of these objectives. However, there
are still some products subject to tariffs outside these limits such
as processed tomato products, beer and cigarettes. Other products, such
as textiles and shoes, continue to have specific import duties. Various
other agricultural products remain subject to quantitative restrictions
e.g., dairy products and certain grains. Panama is currently negotiating
its accession to the World Trade Organization (WTO). Tariff duties are
expected to decline and most of the non-tariff barriers will be eliminated.
CUSTOMS VALUATION
Panama assesses most import duties on an ad valorem basis, except for
a number of products that are still using a dual ad valorem and specific
system. The Government is, however, still in the process of eliminating
this dual system. The ad valorem system uses the declared C.I.F. value
as the basis for import duty calculations and utilizes historical price
information as a reference. This method has been criticized by major
private business organizations in the country. In addition to the import
duty, all imports into Panama are subject to a 5 percent transfer or
value added tax (ITBM) levied on the C.I.F. value, plus import duty
and other handling charges. Pharmaceutical, food products and school
supplies are exempt from ITBM tax.
Panama has recently changed its international trade classification system
from the Customs Cooperation Council Nomenclature (CCCN) and Brussels
Tariff Nomenclature (BTN) to the Harmonized System (HS). Also, entry
into the WTO will improve the present situation to provide a customs
valuation system that conforms to international standards.
IMPORT
LICENSES
No import licenses are required in Panama to engage in import activities.
Any company holding a commercial license can freely import goods into
Panama. A commercial or industrial license is issued to individuals
or companies engaged in commercial or industrial activities.
EXPORT
CONTROLS
The Fiscal Code regulates all matters concerning the country's exports.
The Code establishes that all national products may be exported, except:
- drugs, with the exception of those having pharmaceutical or scientific
purposes. - staple products determined by the Government on a temporary
basis due to scarcity in the country; and, - those products the GOP
determines not for export for reasons of convenience or in the economic
interest of the country. Exports subject to the payment of export taxes
require an Export Authorization, which is issued by the National Customs
Directorate, Ministry of the Treasury. Exports subject to taxes are:
bananas, metals, raw sugar, natural resources and foreign currencies.
Exports of textiles are also subject to an export authorization.
IMPORT\EXPORT
DOCUMENTATION
Import Documentation The processing of customs documents in Panama for
the purpose of importing raw materials or finished goods is fast, efficient
and reliable. Merchandise imported into Panama must be cleared through
customs by a customs broker licensed by the Government of Panama. Exceptions
are made for goods which are imported duty free, consigned to national
and municipal governments, imported by foreign diplomats, for sales
to the authorities of the Canal Area, sold to vessels transiting the
Canal, or intended for reexportation.
Basic import documentation required by the Panamanian Customs office
is:
- Import Declaration (Prepared and signed by a Customs Broker),
- Commercial Invoice (To be presented in English or Spanish in quadruplicate),
- Airway Bill,
- Bill of Lading (To be presented in triplicate),
- Commercial License Number,
- Tax Clearance Certificate (Stating that the importer does not owe
any taxes to the Government),
- Phytosanitary Certificate (In case of meat and meat products, to be
obtained from the U.S. Department of Agriculture), and,
- Certificate of Free Sale (if required)
Any food product or other items used for human consumption (including
for use on human skin or clothes may be subject to the Certificate of
Free Sale (CFS) documentation requirement. The main purpose of the CFS
is to prevent the dumping of inferior goods, especially for human consumption,
to the Panamanian market. The CFS must verify that a product is sold
freely and used widely in the U.S.
Potential exporters of items subject to the CFS documentation requirement
may wish to either contact:
(1) their trade association which may provide the service issuing the
documentation, or,
(2) the Food and Drug Administration, Division of Programs and Enforcement
Policy, 200 C Street, SW, Washington, DC 20204.
If for any reason the bill of lading or any other required document
cannot be presented within 24 hours after the shipment has arrived,
clearance of the goods will be permitted by posting a bond equal to
the amount of import duties. The bond is cancelled if the prescribed
documents are presented in due form within a period of 90 days. The
bond may be extended, extendable in justified cases, an additional 90
days. Export Documentation A licensed customs broker is also required
to handle the export paperwork related to merchandise exports.
The Panama Trade Development Institute (IPCE), a government organization,
was created in 1984 to promote exports and investment. IPCE facilitates
the processing of export documentation through a "One Stop" (ventanilla
unica) office which can reduce the export process to a few hours from
a process that can take days or weeks.
Export documentation required by Panamanian Customs authorities is:
- Commercial Invoice,
- Export Declaration (Prepared and signed by a Customs Broker),
- Certificate of Origin (Issued by the Chamber of Commerce, Industry
and Agriculture of Panama or the Panama Trade Development Institute),
- Bill of Lading,
- Airway Bill,
- Veterinary, Sanitary or Phytosanitary Certificate (when applicable).
TEMPORARY
ENTRY
The Panamanian Fiscal Code establishes a temporary entry regime, up
to one year, for all types of merchandise. There are two options. First,
the goods can enter the country under a guarantee payment equivalent
to the total value of the import duty. This payment will be reimbursed
at the time the goods leave the country. Second, an insurance company
issues a bond guarantee covering the import duty value if the goods
fail to exit the country in a pre-determined period of time. Special
temporary provisions apply in the case of trade shows and exhibitions
taking place at the Atlapa Convention Center, Panama's exhibition and
convention center. Goods can enter the Atlapa Convention Center with
no warranty payment or bond required. Samples with commercial value
are subject to temporary entry requirements. Samples with no commercial
value are admitted duty free. If samples arrive in large containers,
they will be dutiable even though they may be marked as free sample.
LABELING,
MARKING REQUIREMENTS
Panama has no special regulations for labeling and marking. Labels are
required to have basic information regarding the name and address of
the manufacturer, expiration date, list of ingredients, lot number,
and the product form, e.g. powder, liquid, etc. Labels in English are
accepted, except medicines, household products and special foods which
require special instructions. In these cases instructions regarding
dosage, usage, warnings, etc., must be in Spanish. All goods arriving
in Panama intended to be reexported immediately must be marked "PANAMA
IN TRANSIT" on each box or outside container. In general, products which
comply with U.S. labeling and marking requirements, will also meet local
requirements and are suitable for sale in Panama.
PROHIBITED
IMPORTS
The following products cannot be imported into Panama: - Counterfeit
coins or printed material that imitates monetary currencies, - Equipment
or instruments for manufacturing coins, - Liquors, wines, beers or medicines
with labels that describe false or deceiving contents, or of any kind
of harmful preparation, - Certain firearms or war materials, - Foreign
lotteries or raffle tickets, - Opium in the form of gum or for smoking,
- Obscene brochures, books, newspapers, magazines, or postcards containing
negative portrayals of the country's culture, civilization or dignity,
and, - Plants, seeds, or animals when determined by the Ministry of
Agriculture.
STANDARDS
(E.G. ISO 9000 Usage)
While the Government of Panama has not designated a domestic registering
authority for participation in the International Standards Organization
ISO-9000 program, there is no legal limitation in Panama on participation
in ISO-9000 by firms doing business here. Panama is a member of the
Pan American Standards Commission (COPAN), headquartered in Venezuela.
FREE
TRADE ZONES/WAREHOUSES
The Colon Free Zone
The Colon Free Zone (CFZ), the largest in the Western Hemisphere and
second to Hong Kong's, is located in the City of Colon, five kilometers
from the Port of Cristobal on the Atlantic side of Panama and 90 kilometers
from Panama City.
Goods (except firearms or petroleum products) may be imported, stored,
modified, repacked and re-exported without being subject to any customs
regulations. Generally, most merchandise is trans-shipped from Panama
to other parts of the Western Hemisphere and Europe.
Imports into the CFZ come mainly from the Far East. The largest individual
supplier of the CFZ in 1994 was Hong Kong, followed by Japan, the United
States, Taiwan and South Korea. These five countries supply 67.5 percent
of all imports through the CFZ. In descending order of exports from
the CFZ, Colombia is the largest purchaser of merchandise, comprising
nearly one quarter of all CFZ exports. Other principal buyers are Ecuador,
Panama (domestic market), Venezuela, Aruba, the United States, Costa
Rica and Chile. These countries buy 60% of all exports from the CFZ.
The CFZ is administered as an autonomous institution of the Panamanian
Government. It has been in operation since 1953. Today it is completely
developed, and covers 300 hectares, including 45 hectares designated
as an industrial zone.
The CFZ offers free movement of goods and complete exemption from taxation
on imports and re-exports. There are no taxes on the export of capital
or the payment of dividends. In addition, there are reduced income tax
rates on earnings from re-export sales. Furthermore, firms located in
the CFZ are exempt from import duties as well as from guarantees, licensing,
and other requirements and limitations on imports.
Due to its geographic location, the CFZ is a major factor in facilitating
the supply of goods from large industrialized countries to the consumer
markets in Latin America. Unfortunately, the CFZ is also used by the
Colombian drug cartels for money laundering and drug trafficking. Other
suspicious CFZ transactions include trade in pirated intellectual property
and stolen vehicles. The CFZ is operated and managed by its Board of
Directors, an Executive Committee and the General Manager of the institution.
Corporations or individuals of any nationality may establish operations
in the CFZ without requirements of a commercial license or a minimum
investment of capital. Firms interested in operating in the CFZ must
file an application and provide a copy of its articles of incorporation
and bank references.
There are four basic ways of doing business in the CFZ:
1. Leasing lots on which the firm builds a warehouse or other facilities
as designed by the firm. The land lease arrangements are granted for
a 20-year period;
2. Purchasing an existing facility from the Zone Administration;
3. Reaching an agreement with a company already established in the CFZ
as the operator's representative. The cost of this service is set by
mutual agreement between the parties concerned. Representation agreements
shall be subject to the approval of the Zone Administration; or,
4. Leasing a public warehouse operated by the Zone Administration.
The firm receives its goods and stores them like any other company there.
There are no fixed costs and the payment of services is based according
to the weight or volume of the goods stored. Companies operating in
the CFZ are engaged in four types of sales operations:
1. Foreign Trade Operation, involving the re-exportation of goods from
CFZ warehouses;
2. Internal Trade Operation, consisting of sales to clients located
within Panama's customs territory;
3. Direct Sales, those made to foreign clients in which goods are shipped
from the manufacturing sources without physically arriving in the CFZ
territory; or,
4. Transfer Operation, in which sales are made to other CFZ firms. Companies
operating from the CFZ enjoy numerous trade advantages along with special
tax incentives such as tax credits, depending on the number of Panamanian
employees, and special income tax rates on foreign trade operations.
Companies in the free zone pay a maximum corporate income tax rate of
15.0 percent on income derived from export sales. Dividends paid on
profits from foreign trade operations and from direct sales are not
subject to the dividend tax. Merchandise arriving at, stored in, or
leaving the CFZ destined for a foreign country is exempt from taxes,
charges or any type of fee. Also, CFZ companies are not subject to any
type of federal or municipal tax.
For more details, write to:
Lic. Jorge Fernández Colon
Free Zone General Manager
P.O. Box 1118 Colon,
Republic of Panama
Fax: (507) 245-2165
Export Processing Zones
On November 30, 1992, Panama passed a Law No. 25 allowing for the establishment
and development of Export Processing Zones (EPZ) within the country.
EPZs are well-defined areas for the establishment of industrial, commercial
and service facilities which operate in a free trade system. All its
production is export-oriented and a range of incentives has been created
to attract companies into the EPZ.
Companies allowed to establish operations in EPZ are those engaged in:
manufacturing, assembly (maquila), high technology, and specialized
and general services, e.g. computer data entry, reinsurance. The EPZ
law defines two different parties associated with the zone. The first
is as developer of the EPZ. The second is as the tenant company located
in the EPZ.
The GOP offers the developer the following tax incentives: Tax exemption
during the life of the contract (the maximum is 20 years), from taxes,
duties and other charges related to the importation of machinery, equipment,
accessories and material used in the construction of the facilities.
Exempt from property and income taxes, and taxes on capital or assets
for the first ten years of operation. From the 11th year until the end
of the contract, the developer is exempt from income tax on net earnings
reinvested in the development and expansion of the EPZ, provided that
the amount reinvested exceeds 20 percent of the net taxable income for
the fiscal year the reinvestment is made. Lastly, the developer may
carry over losses from the year the loss takes place.
The tenant companies exporting from an EPZ are offered the following
benefits: Exempt from taxes, duties and other charges related to the
importation of machinery, equipment, raw materials, semi- processed
goods and other materials such as packaging, fuel and lubricants used
in the manufacturing process. Exemption from income tax on profits arising
from exports, and exemption from export sales taxes, as well as from
taxes on capital and assets of the export industry.
The EPZ law also includes specific labor and migratory provisions for
employees of EPZ firms which are more favorable than the current Panamanian
Labor Code. Presently, there are four EPZs approved by the GOP. Each
is in various stages of development. Contact the Panama Trade Development
Institute (IPCE) for information on EPZs.
Petroleum Export Zones
The Government of Panama enacted Decree No. 29 (Executive Decree) dated
July 14, 1992, allowing the creation of Petroleum Export Zones (PEZ)
in specially-designated areas in Panama. Decree No. 29 allows any foreign
or national company to establish operations in a PEZ to produce, refine
and export petroleum products. It also permits direct sales to foreign
vessels transiting the Panama Canal, and to foreign airlines. Companies
operating out of these PEZs are exempt of any municipal or federal taxes
and are not subject to government regulations affecting the local market.
The Government of Panama has authorized the following four PEZ: Petroterminal
de Panama (PTP, the transisthmian pipeline), Refineria Panama (TEXACO),
Autoridad Portuaria Nacional (APN, the Port Authority), and Aeropuerto
Internacional de Tocumen. Contact the Ministry of Commerce and Industry,
Direccion Nacional de Hidrocarburos for more information. (Refer to
Appendix E for contact information on the Ministry of Commerce and Industry).
SPECIAL
IMPORT PROVISIONS
Special import permits are required for all types of firearms and ammunitions.
Import permits can be obtained from the Ministry of Government and Justice.
Also, certain agricultural and agroindustrial products are subject to
import authorization by the Ministry of Agricultural Development (MIDA).
Examples are: wheat, flour, animal fats, vegetable and animal oils,
soybean protein, and frozen corn. (Refer to Appendix E for contact information
on the Ministry of Agricultural Development).
MEMBERSHIP
IN FREE TRADE ARRANGEMENTS
Panama is not a
party to any agreements providing completely free trade, but does have
bilateral preferential trade agreements with Costa Rica, El Salvador,
Honduras, Guatemala, and Nicaragua; these accords are quota-based and
deal with a limited number of specific products.
A more inclusive preferential agreement has been signed with Colombia.
There is also a limited preferential agreement with Mexico. Negotiations
are under way to sign a preferential agreement with Ecuador. Panama
is a beneficiary of the Caribbean Basin Economic Recovery Act, better
known as the Caribbean Basin Initiative (CBI), which provides for one-way
free trade access for specific Panamanian exports to the U.S.
Recently the U.S. government has been contemplating new legislation
(e.g. the Crane-Gibbons bill) that would enhance the CBI program. In
return for NAFTA-like treatment for textiles and other miscellaneous
items to the Caribbean Basin nations, the ITP would require from the
Caribbean Basin Countries, on a bilateral basis, to make commitments
mainly in the following areas: bilateral investment treaties, intellectual
property rights, workers rights, and the environment.
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