Many vets formerly stationed in Panama remember Howard AFB, named after Maj. Charles H. Howard (1892–1936), who flew in Panama during the period 1926-1929 and who had been part of the crew on a flight of B-10 bombers to Alaska in 1934. With the decommissioning of the base in 1999, Panama realized that leaving it to private enterprise was better than having any government run it, so it has become a low-tax zone for service exporters called Panama Pacifico.
The Panama Pacifico Special Economic Area is an area assigned for the production of goods and services with high added value and technology. It is located in the former Howard Air Station. Panama Pacifico governs its relations with the Panamanian State by means of Law 41 of 2004.
Incentives are granted for the following activities:
- Corporate Main Offices
- Back Office operations
- Call Centers
- Multimode and logistics services
- High technology products and manufacturing through processes
- Aircraft maintenance, repair and reconditioning
- Services transfer to the aviation industry
- Offshore services
- Movie-making industry
- Transmission of data, radio, television, audio and video
- Transfer of inventories between companies established in the area
- Transfer of goods and services to ships, airplanes and their passengers
- Sale of merchandise not manufactured in Panamá Pacífico, destined for export, when manufactured by multinationals or any other of its affiliates, subsidiaries or companies of the same economic group.
- Exemption of any tax, fee, tariff, encumbrance or customs duties on any merchandise, product, equipment, service and other goods in general that are introduced in Panamá Pacífico.
- Exemption of Transfer Taxes of Real Estate transfer and Services Taxes (ITBMS).
- Exemption of any tax, customs duties, tariff, fee or charge with respect to the movement or storage of fuel or other hydrocarbon and its byproducts.
- Exemption on any commercial or industrial license or registration tax.
- Exemption of the Fiscal Stamp Tax.
- Exemption of the Real Estate Tax on lands and commercial/industrial improvements, as well as improvements as of Real Estate Transfer Tax.
- Exemption of the export/re-export tax of any other type of merchandise, product, equipment, goods or services.
- Exemption of any tax, fee, customs duties, encumbrance, retention or other charges of similar nature applied to foreign creditor payments, for the interest, commissions, royalties and other financial charges generated by the financing or re-financing granted to companies of Panama Pacifico and for the financial lease of the equipment necessary for the development of the activities, businesses and operations that take place within Panamá Pacífico.
- Fixed tariffs for overtime (25%) and work in laborers holidays (50%).
- Flexibility for assigning holidays to the employees.
- The companies can open on Sundays and other holidays.
- Foreign laborers: possibility to exceed the percentage rule of the Labor Code. The companies can request additional expat employees in excess of 15% if local labor is unavailable.
- Higher Education Training Center.
- Justified cause for dismissal due to losses and/or market fluctuations.
- The one-stop-shops of the site handles all the procedures related to visas and labor permits for their employees.
- Special visas are available investors and laborers (3 to 5 years is the standard period of time).
- The visa benefit is extended to the immediate relatives of the laborer: spouse, dependant children up to 25 years of age, dependant parents over 62 years of age.
- Introduction, only once, and tax-free of any personal and domestic belonging (up to US $ 100,000).
Important: Panama Pacifico has a One-Stop-Shop, where the process is promptly attended for the establishment of a business in the Howard area. This process joins the coordination of 15 government offices within the one sole site, and includes the paperwork of the visas and labor benefits which saves time and money to the companies.