BARU FREE TRADE ZONE (BFZ)
Located in the Baru district, on the Pacific side of Chiriqui province, Baru Free Trade Zone was created by Law No. 19 of 2001 with the purpose of establishing a special tax and customs regime to promote tourism, a logistic multimodal system, export processing zones and petroleum development area. Baru has an area of 588.7 sq. km. and population of 60,551 inhabitants. The zone is divided in 5 small villages, which are eager to develop the economic potential of the area. Baru FTZ meets the requirements to be a dynamic place for business, based on the following features:
- Commercial Zone: It is expected to become an important platform for agricultural exports since Chiriqui Province is rich in agricultural production. It enjoys an easy access to ports on the Pacific side, and therefore, enables it to export goods to the whole continent, Europe and Asia, as well as to new markets. It is seen in the future as a regional warehouse and distribution center for all sorts of merchandise. There are duty free shops in the border area of Paso Canoas and Puerto Armuelles, where you can find commodities such as liquors, perfumes, electric appliances, car devices, and so forth.
- Tourism Development Zone: Plenty of virgin natural resources and convenient access ways, Baru provides the opportunity to launch any kind of ecological adventure, while offering interesting and picturesque sightseeing such as Paso Canoas International village, near the border with Costa Rica, in which you can find a multiple variety of shops and commercial establishments. The multicultural nature of Baru adds special charm for visitors. The company Fish on Panama, Inc. has already invested more than US$ 500,000 in developing sports fishing activities. There are incentives to promote tourism development which allow to import free of tax ships, yachts, airplanes and any other vehicle that will be required to develop such activities. Furthermore, companies that invest in the tourism zone will be exempted from the income tax and can receive other fiscal benefits.
- Manufacturing Zone: Baru aims at transforming itself into a manufacture and re-exports zone of agricultural products. Its main objective is to guarantee regular supply of perishable agricultural products to markets in Europe, US, Canada and Asia. It also seeks to boost a regional economic cooperation framework in areas such as transport, classification, management, packaging design, freight handling and warehousing techniques and so forth. For instance, wood manufacturing and exporting firm Tecno Empresarial, S.A. has made an important impact to the region, where it has invested above US$ 1.5 millions. Based on the zone regulations, companies could be exempted from income tax, import tax on equipment and machinery, and be subject to any other benefits for being involved in activities related to manufacture.
- Petroleum Zone: Baru Free Trade Zone is able to store, manufacture, refine, purify, blend, market, transship, transport, pump, process, transform, sell, export, re-export, provide and in general sense, operate and handle crude, semi-crude and any other oil related products. A 204 km-long roadways in the region, and a 131 km-long oil pipeline crosses the Isthmus from the Pacific to the Caribbean Ocean, by which oil from Ecuador is transported to the terminals located in Panama, such as Charco Azul, which allows oil tankers of 300,000 dwt to dock.
INCENTIVES AT BFZ
- A special and simplified procedure for the establishment and operation of a manufacture zone to export, which enables the creation of large factories to export a huge variety of goods.
- Exemption of payment of the Panama income tax, patents, licenses and tax on other goods or capital.
- Exemption of the import tax of raw or semi-elaborated materials, construction materials, equipment, furniture, accessories, appliance, or services that will be used in the operation of the company.
- Exemption of the consumption or sales tax (ITBM)
- Exemption of tax on interests, bonds and stocks.
- Exemption of exports tax.
- Issuance of one-year-valid resident business visa to perform transactions or business, which is also applicable on equal terms to spouse and children of the applicant.
- Use of multiple reentry permit until visa expiration date.
Facilities & Advantages
Baru Free Trade Zone has the following facilities to offer:
- Infrastructure: Airport, docks, paved highways, the second transcontinental oil pipeline built in the Americas.
- Public utilities such as electricity, telephone lines and drinking water.
- Adequate land features for the construction of deep ports.
- Flat and fertile lands.
- Extended beaches for tourism development.
- Abundant fauna and flora.
HOW TO ESTABLISH BUSINESS AT BFZ?
- Power of Attorney addressed to the General Manager of the Baru Free Zone, requesting company registration.
- Notarized copy of the company’s Article of Incorporation.
- Four-month valid Certificate of Public Register of the company.
- Copy of the petitioner’s Lease Agreement requesting the Permit for Operation.
- Valid Certificate of Tax Payment.
- Completely fill out the form ZFB-05 on Permit for Operation Application.
- Copy of personal ID or passport of the Legal representative as well as the Manager of the company.
- Letter of Commercial References.
- Letter of Banking References
- Form ZFB-09 related to the Income Statement of the company’s legal representative.
- Form ZFB-10 related to the Income Statement of the company’s manager.
- Certificate of Tax Payments of Baru Free Zone. Fees for Operation Permits (US$ 1,200, annually) and Operation Code Fee (US$ 200, annually).