Global Mindset. Local Instinct.

The Republic of Panama: The E-commerce Logistics Hub to Latin America and the Caribbean: Investment Opportunities

by | Jan 22, 2021 | Anthony Robinson, Emerging Growth & Technology Practice, Latin America & Caribbean

By Anthony Robinson and Nicole Perez

Panama City, Panamá, the Pacific Coast’s oldest European settlement, turned 500 years old on August 15, 2019. For five centuries the Republic of Panamá has connected the Atlantic and Pacific Oceans, and for more than a century Panamá has served as a major world center for international banking. The combined effect of the unique role that the Panama Canal plays in the facilitation of international connectivity, the country’s diverse economy anchored by the US dollar and a constitutional democracy, and the Panamanian Government’s long track record of pro-trade economic policies has made the Republic of Panamá the preferred logistics hub for commerce in the Americas and a nexus of trade between Asia and Latin America. As global markets look to embrace e-commerce to recover from COVID-19, the logistics sector of Panamá will prove to be ready to serve as the preferred hub for growth of e-commerce in Latin America and the Caribbean.



“It is a problem of national security,” commented Edgardo Sandoval, the Director of the Asesoría Legal de la Autoridad Nacional de Aduanas de la Republica de Panamá (“Panama Customs”) during an interview conducted with on December 23, 2020 regarding the amnesty period for courier, express, and parcel (“CEP”) companies operating in the Republic of Panamá to bring their operations in compliance with “Resolución N° 838” (promulgated on December 28, 2020) and the precedent national laws and regulations governing CEP service providers in their capacity as auxiliaries of Panama Customs with respect to the classification and reporting of goods entering the country. “Resolución N°672” (promulgated on October 16, 2020) grants CEP service providers amnesty until January 27, 2021 to submit proof of compliance to Panama Customs.

The current regulatory audit by Panama Customs on CEP services providers not only will increase tax revenues, promote fair competition, and secure national borders, but it also will pay dividends in terms of e-commerce logistics readiness. Regulatory compliance of CEP companies as customs auxiliaries promotes the free flow of goods across national borders and is a critical component of the e-commerce value chain which promises to provide the framework for the economic recovery from COVID-19. Accordingly, “Resolución N°672” and corresponding regulations promote readiness of the e-commerce logistics sector in the Republic of Panamá.

Increased enforcement of the regulations that govern CEP companies will undoubtedly result in a short-term reduction of the amount of CEP companies operating in Panamá, and the consumers of CEP services in Panamá may experience higher prices and reduced services as the market corrects to the current enforcement priorities of Panama Customs. However, the local economy will benefit because a well-regulated CEP industry is an indicator that the logistics sector in Panama has adequate readiness to support the growth in e-commerce that the Panamanian economy needs to recover from the COVID-19 downturn. Also, the economic performance of the entire Latin American region stands to improve if Panamá is truly ready to go beyond the unique role that the Panama Canal plays in the facilitation of international connectivity and commerce to serve as the logistics hub for e-commerce in Latin America.


The Global Center of Excellence (a Collaboration Initiative between DHL and the Panama Ministry of Commerce & Industry) was designed to help fulfill the central objectives of the National Logistics Strategy of Panamá by 2030 to increase international investment in Panama in the areas of logistics and transport.

To that end, the Global Center of Excellence recently prepared a white paper (the “E-commerce in Latin America White Paper”) that communicates the findings of a study that benchmarks the strengths of Panamá and other traditional logistics hub cities in the Americas (i.e., Houston, Los Angeles, Mexico City, Miami, Montevideo, Santiago de Chile, São Paulo,) regarding readiness to serve as the preferred hub for the growth of e-commerce in Latin America (the “Benchmark Study”).

The Benchmark Study concludes that Panamá is the preferred hub for growth of e-commerce in Latin America with an overall benchmark score of 90%. Miami came in second with an overall benchmark score of 80%.

The key logistics services upon which the study was conducted are set out in Chart A. The benchmark that most prominently separated Panamá from Miami is ocean container connectivity to East Asia. Panamá has lower indexed shipping costs from Shanghai for 20-foot containers and faster sea cargo transit time from Shanghai (12 days faster) than Miami. Additionally, Panamá has superior ocean cargo throughput: 3.9 million of TEUs in Panamá compared to 1.1 million of TEUs in Miami. The Panamá Canal is truly the world’s greatest shortcut.

Notably, the E-commerce in Latin America White Paper identifies areas of improvement for Panamá. However, Panamá brings a more comprehensive set of logistics capabilities and geo-political competitive advantages than the other cities included in the study. In addition to superior ocean cargo infrastructure and routes, the Benchmark Study gave Panamá an A- Grade for its several free trade zones.


The Panamanian Government has created several free trade zones and special economic zones (“Investment Regimes”) to attract foreign direct investment. The various Investment Regimes in Panamá include the following:

  • Special Economic Area of Panama Pacífico. Panamá Pacífico is a model of special economic zone aiming to become a hub for high-tech manufacturing, logistics services, commercial activities, and non-traditional services, with an eco-friendly residential area. Panamá Pacífico was designed by a partnership between government and private industry, and includes dedicated areas for warehousing and distribution centers, manufacturing, commercial offices, airport operations, and residential activity.
  • Colón Free Trade Zone (CFZ). CFZ is the premier free trade zone in the western hemisphere. Created in June 1948, the Colon Free Zone has served for more than 69 years as the major trading center for Latin America and the Caribbean.
  • Logistics Parks. The geographical proximity of the various different logistics assets in Panamá enable them to closely interact seaports, airports, railroad, special economic zones and the local market. This proximity of logistics assets facilitates the establishment of specialized and dedicated Logistics Parks for warehousing and other third-party logistics operations that leverage the accessibility to world class transportation services and trading tradition.
  • Panama Free Zones. There are a total of 18 Free Zones in Panamá, of which 12 are currently active with 128 registered companies, mainly operating in Zona Franca Corozal – Marpesca, S.A. (38), Zona Franca de Albrook (24), Panexport (18) and Panapark (18).
  • Ciudad de Saber (City of Knowledge). The City of Knowledge was created in 1995 and is a non-profit managed by the Ciudad del Saber Foundation that provides fiscal and immigration incentives for its corporate users. This Investment Regime is dedicated to research and innovation in the scientific and technological fields, humanistic and cultural transfer of knowledge for use in productive activities, and high-quality programs of higher education.
  • Baru Free Zone. The Baru Free Zone was created in 2001 with the purpose of establishing a special fiscal and customs regime to promote tourism and a logistics multimodal system. It is a commercial, tourist, industrial and logistics area which seeks the growth of the Baru region of Chiriqui province. This Investment Regime is located at the border of Panamá with Costa Rica and provides commercial benefits for the entire Central American region.
  • Special System of Multinational Corporation Headquarters (SEM). Since 2007, SEM has provided tax and immigration incentives for foreign companies that wish to establish in Panamá and offer back-office services to their corporate affiliates located outside of the Republic of Panama. SEM has established Panamá as the destination of choice for multinationals investing in the LAC region (e.g., Maersk, Procter & Gamble, LG, Roche, Caterpillar, Western Union, Halliburton,
    Pan American Life, Hyosung, Heineken Kumho Tire.
  • Multinational Company for the Provision of Services Related to Manufacturing (EMMA). This new Investment Regime created in August 2020 is aimed at both foreign and Panamanian companies engaged in services related to manufacturing, assembly, re-manufacturing, conditioning, maintenance, repair
    of products, and logistics services. EMMA companies may establish themselves in a national special economic area (i.e., Free Trade Zone and Panama Pacifico
    Area) or become a customs control and surveillance area.

See Chart B below that compares the tax regimes provided for in four the abovementioned Investment Regimes.

The Benchmark Study found that these several Investment Regimes enable Panamá to overcome obstacles to economic growth, such as an underfunded public customs authority, onerous trade bureaucracy, and burdensome local tax structures that cannot be reformed fast or thoroughly enough to capitalize on opportunities for meaningful growth. The Global Center of Excellence concluded that the creation of free trade zones or special economic zones, such as those operating in Panamá that operate like separate enclaves within a country, are the only viable platform for hosting a cross-border e-commerce hub economy.


SEM license holders provide back office services for their affiliates located outside of Panamá in Latin America. The chart below shows a sample of the 167 SEM license holders. Unlike SEM, the focus of EMMA is job creation post-COVID through incentivizing companies that engage in services related to manufacturing and logistics. One of EMMA’s priorities must be attracting companies that engage in logistics services at all phases of the e-commerce value chain. The Benchmark Study found that the key logistics services along the e-commerce value chain are inbound transport, warehousing, order-fulfillment, first-mile distribution, returns management, and customer service. See the chart on Page 7 for a more detail description of each service. EMMA has the potential to promote growth in these areas by attracting foreign manufacturers and brand owners of products sold direct-to-consumer domestically and cross-border. For example, foreign manufacturers of consumer-packaged conventional foods, dietary supplements, and cosmetics stand to gain significantly from the tax incentives that EMMA offers.

Companies that qualify for EMMA licenses will enjoy the following benefits:

  • Exemption from the payment of Income Tax of the Republic of Panamá for the first five (5) years from its registration.
  • Reduced income tax rate after the first five (5) years of operation to 5% of net taxable income derived from the services rendered.
  • Exemption from Value Added Tax (ITBMS) for services provided by the EMMA license holder to subsidiaries that do not generate taxable income in Panamá as well as for the payment for the purchase and imports of goods and services in Panamá.
  • Exemption from payment of dividend tax, complementary tax and branch offices tax.
  • Fixed capital gains tax at 2% for the transfer of EMMA shares.
  • Exemption from the Operation Notice Tax.
  • 2.5% withholding on amounts remitted to companies established abroad for financing.
  • Exemption from import tax on all types of merchandise, products and equipment in general, used for the provision of services related to manufacturing.

How can foreign manufactures use EMMA to increase revenues? The following case studies provide two examples.

Case Study A: Use EMMA to increase revenue by reducing the landed cost to retailers in Latin America of goods manufactured in the USA.

  • A U.S. manufacturer of vegan, organic, and natural powdered dietary supplements in 500g plastic containers that sells wholesale to B2B distributors and retailers across Latin America achieves much more competitive landed costs for their B2B customers by participating in EMMA.
  • Instead of shipping finished product from Utah to Latin American wholesale distributors who pass the cost of import taxes and ITBMS on to the end customer, the manufacturer ships the pre-prepared powder inbulk to a corporate affiliate located in the Colon Free Trade Zone.
  • The affiliate holds the EMMA license.
  • The affiliate is the importer of record for the bulk goods, manages the packaging process in Panama, and ships the finished products to B2B clients in Latin America.
  • The imports are not subject to customs clearance in Panamá, and the cross-border shipments to retailers face less customs red tape because they are made from Panamá more frequently and in smaller quantities.
  • The tax savings is passed on to the consumer in order to make the U.S. dietary supplement more competitive with products manufactured and bottled in Latin America by domestic companies.
  • The EMMA licensee is exempt from the following taxes:
    • ITBMS for the purchase of goods and services in Panamá.
    • ITBMS for the import of goods and services in Panamá.
    • Panamá import tax on all types of merchandise, products, and equipment used for the provision of services related to manufacturing (i.e., the bulk powder bottled in Panama), and
    • Income tax of the Republic of Panamá (i.e., income tax on the B2B sales).

Case Study B: Use EMMA to increase revenue by disintermediating through a regional e-commerce strategy in Latin America using Panama as the logistics hub.

  • An EU manufacturer of organic fruit and vegetable shots in 4 oz glass bottles ships the juice concentrate for the shots in large drums to its affiliate located in Panamá Pacífico, one of the several Free Zones in Panamá.
  • The affiliate holds the EMMA license.
  • The affiliate is the importer of record for the bulk juice concentrate, manages the bottling process in Panama, and ships the finished products directly to end consumers in the Latin America and Caribbean region without the obstacles of customs clearance.
  • The EMMA license holder not only benefits from the tax incentives, but also captures the 35%-45% margin that the retailer would earn in the traditional distribution scenario. The tax savings and the increased profit margin are passed on to the end consumers.
  • Also, the manufacturer, through its affiliate located in Panamá, offers two-day shipping to most Latin American destinations, takes responsibility for returns and replacements, and provides customer service in Spanish.

Case Study C: Establishing an EMMA Corporate Affiliate in Panama

GO LATAM is an e-commerce distributor that helps its manufacturers and brand owners position themselves to take advantage of Panama’s role as the hub for e-commerce logistics in Latin America.

  • GO LATAM is the affiliate of a U.S. company and is a Panama corporate entity.
  • GO LATAM is owned by a dual citizen of the USA and Panama.
  • GO LATAM serves as the affiliate of the foreign manufacturer located in Panama that will apply for the EMMA license.
  • GO LATAM serves as the importer of record.
  • GO LATAM manages B2B and DTC logistics.
  • GO LATAM provides LATAM digital marketing consulting services.
  • GO LATAM purchases product wholesale for B2B sales in select countries in the LAC region.


Covid-19 will have a dramatic long-term impact on consumer shopping habits and already has accelerated the shift to online retail, according to the findings of a market survey performed by Kantar of consumers in Europe’s three largest online retail markets: the UK, France, and Germany. Kantar is a leading data, insights, and consulting company, The Kantar survey concluded that retailers have an opportunity to bounce back from the COVID-19 downturn by moving to a more e-commerce-focused model once consumers have been vaccinated and markets return to pre-COVID levels of performance.

  • Kantar found that the share of consumers who undertake 50% or more of their total purchases online has grown by between 25-80% since the virus has developed, and six in 10 consumers intend to continue buying as much online once the pandemic has passed as they do now.
  • Additionally, the study found that while online consumer spending in Europe has mainly been limited to essential items such as groceries during the crisis, 80% of consumers intend to return to shopping online for non-essential products.

Although the macro and micro dynamics of the retail markets in the EU are significantly different than those of Latin American retail markets, the Global Center of Excellence’s Benchmark Study found that global e-commerce players are betting on the Latin American region because the Latin American consumer has demonstrated a strong propensity for digital commerce. For example, the Benchmark Study found that between 2016-2018, Latin America was the fastest-growing region in the world for Uber, Netflix, Airbnb, and Coursera. The Global Center of Excellence opined that the rate of growth in Latin America for disruptive digital commerce sites is a consequence of a growing demand in the region for more variety in service options, improved customer service, and greater value for the cost of goods and services.

EMMA offers foreign manufacturers and brand owners that embrace e-commerce in Latin America
the opportunity to multiply their returns by tapping into the vast potential and opportunity of the Latin America and Caribbean region.


In closing, it is the comprehensive set of capabilities and geo-political advantages that Panamá brings to bear, rather than any one attribute, that makes Panamá the preferred hub for growth of e-commerce in Latin America and the Caribbean. These attributes include numerous free trade zones, superior ocean container connectivity to East Asia, and first-rate express connectivity to Latin American markets, outbound international air logistics activity, and Latin America market professional services support.


If you are a manufacturer or brand owner seeking to boost profits and hedge domestic risk through international distribution, consult with the lawyers in our Latin America and Caribbean Practice regarding a regional e-commerce strategy in Latin America using Panamá as the logistics hub. We will help you determine if the opportunity is right for your business, connect you with potential partners in the region, and advise you on the process for achieving SEM and EMMA licenses. The ROI will be unparalleled because of the tax saving and related benefits offered SEM and EMMA license holders, the above-average projected growth rate of LATAM e-commerce post-COVID, and the role of Panamá as the e-commerce logistics hub to Latin America and the Caribbean.


  • This article relies on information provided by the following sources:
  • “E-commerce in Latin America White Paper”, Global Center of Excellence (Collaboration Initiative between DHL & Ministry of Commerce & Industry in Panama.
  • Georgia Tech Panama Logistics Research and Innovation Center,
  • Proinvex Panama,
  • Kantar Media, “Covid-19: Pandemic will speed up shift to eCommerce,” April 8, 2020.

This article was co-written by
Mr. Anthony C. Robinson
Of Counsel, Head of Latin America and Caribbean Practice
[email protected]

This article was co-written by
Ms. Nicole Perez
Associate, CLD Legal
Ave. Samuel Lewis y Calle 55, Edificio P. H. SL55, Piso 21
Ciudad de Panamá, República de Panamá
[email protected]