Contents of this guide
What changes with a free zone office
Renting a conventional office is a contract between a company and a landlord. In a free zone, the space contract comes with a public procedure: the company moving in must obtain the Free Zone Company License and be entered in the Official Registry. That is what Law 32 of 2011 provides, the statute that created the special, comprehensive and simplified free zone regime. The license is approved by the National Free Zones Commission, attached to the Ministry of Commerce and Industries (MICI), within a maximum of ninety days (article 26).
The law admits natural or legal persons, Panamanian or foreign, engaged in goods production, services, logistics, higher education, scientific research, high technology and environmental services, among other activities (article 24). For a software, data or technology services company, the categories that matter most are high technology and services, detailed in the table below.
A later amendment, collected by MICI in its document on company categories, allows investors who lease real estate to companies with permitted activities to set up in free zones and be treated like a promoter for tax purposes. That figure explains why a free zone can offer rental offices to companies operating under the regime.
What Law 32 of 2011 sets out
The table summarizes the articles that weigh most when choosing a space. The law was published in Gaceta Oficial 26757 B, and MICI keeps the statute and its amendments on its free zones regulations page. Because the law was amended afterwards (for example by Law 125 of 2013 and Law 66 of 2017), the version currently in force should always be checked. The law is in Spanish and the provisions are paraphrased.
| Topic | What the law provides | Article |
|---|---|---|
| Admitted activities | Goods production, services, logistics, higher education, scientific research, high technology, environmental services and others authorized by the Cabinet. | 24 |
| High technology company | One that produces goods and services with high added value, such as hardware, software, supplies and data centers. | 24 |
| Services company | Includes services to users abroad, among them telecommunications and computer services for data capture, processing, storage and transmission. | 24 |
| Company license | Approved by the National Free Zones Commission within a maximum of ninety days and then entered in the Official Registry. | 26 |
| Promoter certification | Among the documents is a certification from the promoter that the applicant has been authorized to set up in the zone. | 27 |
| Investment | Invest an amount no lower than the capital stated in the application and begin investing within one year of registration. | 28 |
| Foreign operations | Services and high technology companies are exempt from income tax on their foreign operations and among themselves; operations aimed at Panama are taxed. | 33 |
| Charges that remain | A 5 % dividend tax, an annual tax of 1 % of capital (with a minimum and a maximum) and labor and social security contributions. | 32 |
Summary of Law 32 of 2011 in its text published on Legispan and of the categories collected by MICI. It does not replace reading the law in force.
For the general regime of a company outside the free zone, Radar’s guide to the taxes a company pays in Panama serves as a contrast, and the comparison of Panama’s special regimes places Law 32 next to the Colón Free Zone, Panamá Pacífico and other regimes.
What ISD presents on its website
According to ISD’s About page, Innovation Smart District holds a free zone license issued by the National Free Zones Commission of MICI, and the companies and startups located there receive tax and immigration benefits under Law 32 of April 5, 2011. The same site publishes the license document as a PDF, so any interested company can review it. The page describes a 129,872 m² project inside Green Valley Panamá, with 24 buildings planned for innovation companies.
The first building is Marie Curie. The Marie Curie reservation page presents it as the first of 24, with an environment to create, work and share with other founders, and access to networking and innovation ecosystem events. Reservations are made through a form asking for company details, team size and value proposition, after which a member of the ISD team gets in touch. The home page indicates an opening in 2026, and the second building, Leonardo Da Vinci, has construction scheduled for 2027 according to the website. The current status of each building is confirmed directly with ISD.
Floor area, layout, included services and the terms of each space are defined with the ISD team at the time of reservation. That conversation is the moment to apply the list of questions below.
Twelve questions before signing
The list combines what the law requires with what any space contract should put in writing. Questions 2 to 7 and 11 rest on Law 32; the rest are settled with the operator.
- Which free zone license does the developer hold, and can the document be seen? ISD states on its website that it publishes its own as a PDF.
- Which article 24 category matches the company’s activity? High technology, services or another, since the fit within the regime depends on it.
- Who issues the promoter certification and within what time? It is one of the application documents (article 27).
- What documents does the company license require? They include a study of the activity, the initial investment, the projected number of jobs and the schedule, plus corporate and accounting certifications (article 27).
- What capital must be declared and when must the investment begin? The law sets one year from registration (article 28).
- Does the activity need a permit from another regulator? Regulated activities, for example financial ones, need the competent authority’s license before the free zone license (article 26).
- What share of revenue comes from abroad and what share from the Panamanian market? The income tax exemption refers to foreign operations and operations among zone companies; operations aimed at Panama are taxed (article 33).
- What is the floor area and what does it include? Area, layout, shared rooms, internet and hours should be stated in the contract.
- What is the building’s status and the delivery date? If the building is under construction, the date should be in writing.
- What happens to the contract if the company’s license is delayed or not approved? The license timeline and the lease term should match.
- How is foreign staff handled? The law provides a temporary resident permit for trusted, executive, expert or technical staff hired by free zone companies, valid for the term of their contract (article 44).
- What community, events and ecosystem services come with the space, and how are they accessed? A written description should be requested.
ISD presents Marie Curie as the first building of its innovation free zone in Green Valley Panamá, with space to create, work and share with other founders. The reservation form and the building description are on its official page.
Common mistakes when comparing offers
The first is treating the license as the building owner’s procedure. Law 32 distinguishes between the promoter’s license and that of each established company, and the second is the responsibility of the company moving in. The second mistake is reading “free zone” as “tax free”: article 32 keeps the dividend tax, the annual tax on capital and social security contributions, and article 33 limits the income tax exemption to foreign operations.
The third is comparing only the space. Two offers with similar areas can differ in the status of the developer’s license, in delivery dates and in shared services. The fourth is failing to check the activity category: a technology company that serves both the local and the foreign market needs to separate the two operations from the start. For incorporating the company and the Notice of Operation, the guide on how to open a company in Panama covers the earlier steps, and the note on Panama as a digital hub describes the connectivity infrastructure behind technology companies.
This content is informational and does not replace advice from a lawyer or accountant, who can review the activity, the license and the contract before signing.
Frequently asked questions
What is a free zone office in Panama?
It is a space inside an authorized free zone, where the company that occupies it operates under the regime of Law 32 of 2011. The company needs its own free zone company license, approved by the National Free Zones Commission.
What license does a company need to set up in a free zone?
The Free Zone Company License, with registration in the Official Registry. Among the application documents is a certification from the zone’s promoter authorizing the installation (articles 26 and 27 of Law 32).
How long does a free zone company license take?
The law sets a maximum of ninety days for the National Free Zones Commission to approve it (article 26). The actual time depends on the file being complete.
Which technology activities does Law 32 admit?
The high technology company category includes hardware, software, supplies and data centers, and the services category covers telecommunications and computer services for data capture, processing, storage and transmission to users abroad (article 24).
What does ISD offer according to its website?
According to its website, ISD holds a free zone license, is located in Green Valley Panamá and its first building, Marie Curie, offers space to create, work and share with other founders, with access to networking and events. The terms of each space are confirmed with its team.
Related articles
- Panama’s special regimes: Colón Free Zone, Panamá Pacífico, SEM and EMMA
- Taxes a company pays in Panama
- How to open a company in Panama: steps, Notice of Operation and taxes
- Panama as a digital hub: submarine cables and data centres
Sources
- ISD, About: free zone license, Law 32, project area and buildings.
- ISD, Marie Curie reservation and ISD home page: building description, reservation form and planned dates.
- Law 32 of April 5, 2011, MICI and text on Legispan, Gaceta Oficial 26757 B: articles 24, 26, 27, 28, 32, 33 and 44.
- MICI, company categories and license for companies established in free zones.
- MICI, free zones regulations and free zones requirements.
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