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The Colon Free Zone is the world’s second largest duty free zone next to Hong Kong. Located in Colon, Panama near the Caribbean end of the Panama Canal the Colon Free Zone takes advantage of shipping from the Americas, Europe and Asia to buy and sell materials from the entire world duty free.

The Colon Free Zone was established shortly after World War II and became a distribution point for materials coming in and out of Latin America. The Colon Free Zone prospered for years selling duty free goods to Latin Americans especially. Currently the Colon Free Zone takes up 1000 acres at two sites.

However, as more and more free trade agreements are signed in Latin America the Colon Free Zone has had to compete more and more based on efficiency of its supply lines and competitive pricing regardless of duty status.

The Colon Free Zone did about $16 billion in business in 2007 versus $12 billion in 2005 and $14 billion in 2006. Business in the Colon Free Zone accounts for more than 12% of Panama’s gross national product. The Colon Free Zone has roughly 20,000 employees.

Shopping in the Colon Free Zone

Only foreigners and businesses paying a fee are allowed inside the Colon Free Zone. For years foreigners have come to Panama, especially from Latin America, to shop duty free in Colon. With the dropping of tariff barriers in Latin America this may decrease a bit but besides attractive pricing the Colon Free Zone has a huge range and variety of products. Thus people will come to shop in Colon much as planeloads of Europeans come to large malls in North America.

Importers at the Colon Free Zone receive and sell everything from container-sized shipments to individual items duty free. Foreign tourists in Colon, Panama need only show their passport to gain entry and shop in this Colon, Panama duty free zone.

The Colon Free Zone has more than 250,000 visitors a year to the 1,751 companies operating on the premises. At the Colon Free Zone you can buy virtually any type of electronic appliance, pharmaceuticals, furniture and the usual duty items (cigarettes and liquor).

Transshipment through the Colon Free Zone

Much of what passes through the Colon Free Zone goes to other duty free zones such as Hong Kong. Countries shipped to include Taiwan, the United States, Japan, Korea, France, Mexico and many more.

Colombia right next door is the Colon Free Zone’s biggest buyer at 16% of merchandise. However, with the occasional political spat between these two neighbors trade occasionally goes on hold for a few months while differences are ironed out.

Colon Free Zone Advantages

Being on the Panama Canal with adjacent port facilities, the Panama Canal Railway and close proximity to the Pan American Highway all provide the Colon Free Zone with shipping and distribution advantages seen nowhere else in the Western World.

Shortly the new interoceanic highway will be finished also. This connection from Caribbean to Pacific will provide another efficient link to transport goods from the Colon Free Zone to the Pan American Highway.

Tax Advantages for the Colon Free Zone

Businesses operating in the Colon Free Zone pay no capital investment taxies, municipal or local taxes, nor taxes on shipments to or from the Zone.

For more information about the Colon Free Zone or business opportunities in Panama feel free to contact us at ABPanama.