Panama, a small but strategically located country in Central America, is known for its significant role in global trade, largely due to the Panama Canal, which connects the Atlantic and Pacific Oceans. As a key international trade hub, Panama has established a comprehensive and relatively open trade policy to facilitate the flow of goods and services across its borders. Import duties and taxes are essential tools in Panama’s trade policy, and these rates vary across different product categories. The country’s customs system is designed to protect local industries while encouraging free trade, which is facilitated by several international trade agreements.
Custom Tariff Rates for Products Imported to Panama
1. Agricultural Products
Agriculture is a vital sector for Panama, but the country still imports a significant amount of food products to meet domestic demand. Panama’s agricultural imports mainly consist of fruits, vegetables, grains, dairy products, and processed foods. The customs tariff structure for agricultural products aims to balance the protection of local producers with the need to ensure a stable supply of affordable food for consumers.
Key Tariff Categories for Agricultural Products
- Cereals and Grains (HS Code 10)
- Tariff Rate: 0-15%
- Panama imports substantial quantities of rice, corn, wheat, and other cereals. The tariff rate varies between 0% and 15%, depending on the type of grain and origin. In some cases, tariff reductions may apply under regional trade agreements.
- Fruits and Vegetables (HS Code 07)
- Tariff Rate: 0-15%
- Panama imports fruits like apples, bananas, and berries as well as vegetables such as potatoes and tomatoes. The tariff rate on fruits and vegetables ranges from 0% to 15%. However, products imported from countries within the Central American region often enjoy lower or zero tariffs due to the Central American Economic Integration Agreement (SIECA).
- Dairy Products (HS Code 04)
- Tariff Rate: 5-25%
- Dairy products such as milk, cheese, and butter face import tariffs ranging from 5% to 25%. The rates depend on the type of product and its processing level. Import duties on these items help protect the local dairy industry, which faces challenges in meeting domestic demand.
- Sugar and Sweeteners (HS Code 17)
- Tariff Rate: 10-25%
- Panama imports significant quantities of refined sugar, especially from countries with lower production costs. The tariff on sugar products generally ranges from 10% to 25%, depending on the product type and source.
Special Import Duties for Agricultural Products
- Imports from the United States
- Under the United States-Panama Trade Promotion Agreement (TPA), agricultural products imported from the U.S. benefit from reduced or zero tariffs. This agreement covers products such as cereals, dairy, fruits, and processed foods, enhancing trade between the two countries.
- Imports from the European Union
- Panama benefits from reduced tariffs on certain agricultural products from the European Union due to the Association of Central American States-European Union Free Trade Agreement. Products like wine, cheeses, and specific fruits and vegetables may be imported at reduced rates.
2. Industrial Products
Panama’s industrial sector, though not as developed as in some other countries, is growing, especially in areas like construction, manufacturing, and electronics. While the country imports many industrial goods to meet local demand, it has been making efforts to stimulate local production. The tariff rates for industrial products are aimed at protecting local industries while allowing for the free flow of essential inputs.
Key Tariff Categories for Industrial Products
- Machinery and Equipment (HS Code 84)
- Tariff Rate: 5-15%
- Machinery and equipment used in various sectors, including construction, agriculture, and industry, are subject to tariffs ranging from 5% to 15%. Certain types of machinery, such as those used for infrastructure projects, may qualify for exemptions or reduced tariffs under regional trade agreements.
- Automobiles and Motor Vehicles (HS Code 87)
- Tariff Rate: 10-25%
- Imported vehicles, including cars, trucks, and motorcycles, face import duties that range from 10% to 25%. Panama also levies a significant tax on vehicle purchases, which is based on the value of the vehicle. Fully assembled vehicles incur higher duties compared to parts and components, which may benefit from reduced tariffs to promote local assembly.
- Electronics and Electrical Equipment (HS Code 85)
- Tariff Rate: 5-20%
- Panama is a major importer of consumer electronics, including smartphones, computers, and home appliances. The tariff rate for electronics generally ranges from 5% to 20%. Certain high-tech products may be subject to lower duties if they are deemed crucial for technological advancement in Panama.
- Chemicals and Plastics (HS Code 29, 39)
- Tariff Rate: 5-15%
- Panama imports a variety of chemicals, from industrial chemicals to pharmaceuticals and plastics. Import tariffs on chemicals and plastics range from 5% to 15%, with certain categories, such as pharmaceuticals, often benefiting from reduced duties to ensure access to essential medicines.
Special Import Duties for Industrial Products
- Imports from the United States
- The U.S.-Panama Trade Promotion Agreement (TPA) allows for the reduction or elimination of tariffs on many industrial goods, including machinery, electronic products, and vehicle parts. These agreements are designed to facilitate trade and economic growth between the two countries.
- Imports from the Central American Region
- Products originating from Central America, particularly within the framework of the Central American Economic Integration Agreement (SIECA), benefit from preferential treatment. This includes reduced or zero tariffs on industrial goods such as machinery and parts, automotive products, and construction materials.
3. Consumer Goods
Consumer goods, ranging from electronics to clothing, are some of the most commonly imported items in Panama. The country’s consumer market is diverse and growing, driven by a young, urban population with increasing disposable income. Tariff rates for consumer goods are structured to protect domestic industries while ensuring that consumers have access to a wide variety of products.
Key Tariff Categories for Consumer Goods
- Clothing and Textiles (HS Code 61-64)
- Tariff Rate: 10-30%
- Clothing and textiles, including garments, shoes, and accessories, are subject to tariffs that range from 10% to 30%. Panama imports large quantities of ready-made clothing, particularly from countries like China, the United States, and various Latin American nations.
- Furniture and Household Goods (HS Code 94)
- Tariff Rate: 5-20%
- Imported furniture and household goods face tariffs ranging from 5% to 20%. High-end or luxury furniture products are typically subject to the higher end of the tariff spectrum.
- Cosmetics and Personal Care Products (HS Code 33)
- Tariff Rate: 10-20%
- Cosmetics, skincare products, and personal care items generally face import duties ranging from 10% to 20%. The tariff rate can vary based on product type and whether the item is considered a luxury good.
- Electronics (HS Code 85)
- Tariff Rate: 5-20%
- Electronics, including mobile phones, computers, televisions, and home appliances, are imported at tariffs ranging from 5% to 20%. Panama is a large consumer of electronics, especially products from the United States and Asia.
Special Import Duties for Consumer Goods
- Imports from the United States
- Under the United States-Panama Trade Promotion Agreement (TPA), many consumer goods, including clothing, electronics, and household items, benefit from reduced or zero tariffs. This facilitates increased trade between the two countries.
- Imports from the European Union
- Certain luxury goods and consumer products imported from the European Union, including high-end fashion, wine, and perfumes, benefit from preferential treatment under the EU-Central America Association Agreement. These goods may be imported with reduced tariffs to promote trade and investment between Panama and the EU.
4. Raw Materials and Energy Products
Panama’s economy requires substantial imports of raw materials and energy products. The country’s energy sector is particularly reliant on imported petroleum products, and it is also an importer of raw materials for its construction and manufacturing industries.
Key Tariff Categories for Raw Materials and Energy Products
- Crude Oil and Petroleum Products (HS Code 27)
- Tariff Rate: 0%
- Crude oil and petroleum products, including gasoline, diesel, and jet fuel, are essential imports for Panama’s energy needs. These products are generally exempt from tariffs to ensure that energy costs remain affordable.
- Coal and Other Energy Sources (HS Code 27)
- Tariff Rate: 0-5%
- Panama imports coal for use in power generation and industry. The tariff on coal and other energy-related products is generally very low, ranging from 0% to 5%, to keep energy costs competitive.
- Metals and Minerals (HS Code 72-83)
- Tariff Rate: 5-15%
- Metals, including steel, aluminum, and copper, are imported for use in construction and manufacturing. Import tariffs on raw metals and minerals generally range from 5% to 15%, depending on the product type.
- Building Materials (HS Code 68-70)
- Tariff Rate: 5-10%
- Panama imports a variety of construction materials, including cement, steel, and glass. Tariffs on these goods typically range from 5% to 10%, depending on the material.
Special Import Duties for Energy Products
- Imports from the United States
- Under the U.S.-Panama Trade Promotion Agreement, energy products such as petroleum, chemicals, and raw materials from the U.S. may benefit from reduced tariffs or exemptions, fostering closer trade relations.
- Imports from Venezuela
- Due to Panama’s energy needs and historical ties with Venezuela, certain energy products, particularly refined petroleum, may enter Panama at preferential rates.
Country Facts
- Country Formal Name: Republic of Panama
- Capital City: Panama City
- Three Largest Cities:
- Panama City
- Colón
- David
- Per Capita Income: Approx. $16,000 USD (2023 estimate)
- Population: Approx. 4.5 million
- Official Language: Spanish
- Currency: Panamanian Balboa (PAB), U.S. Dollar (USD) is also widely accepted.
- Location: Panama is located in Central America, bordered by Costa Rica to the west, Colombia to the east, and the Pacific Ocean to the south.
Geography, Economy, and Major Industries
Geography
Panama is strategically located at the narrowest part of the Isthmus of Panama, linking the Atlantic and Pacific Oceans via the Panama Canal. The country has a tropical climate, with a combination of mountains, coastal plains, and forests. Panama’s natural resources include rich biodiversity and significant water resources, with many rivers flowing into the Caribbean Sea and the Pacific Ocean.
Economy
Panama’s economy is highly open, and its strategic location has made it a global logistics and services hub. The country benefits from a thriving banking sector, the Panama Canal, and a growing tourism industry. Its dollarized economy, low tariffs, and well-developed infrastructure are key strengths.
Major Industries
- Banking and Finance: Panama is a major financial center in Latin America, offering banking services, international finance, and investment opportunities.
- Transportation and Logistics: The Panama Canal is a global trade artery, and the country’s transport infrastructure is essential for regional trade.
- Tourism: With its rich history, diverse landscapes, and vibrant culture, Panama’s tourism industry has grown substantially in recent years.
- Construction: Infrastructure development, particularly real estate and tourism-related projects, is a major driver of economic growth.
