The Colón Free Trade Zone is a free port in Panama dedicated to re-exporting a wide variety of merchandise to Latin America and the Caribbean. It is located on the Caribbean coast, near the Atlantic entrance to the Panama Canal, in the province of Colón, within the city of Colón though outside its municipal jurisdiction and operates as an autonomous entity of Panama. Location and size The Colón Free Trade Zone is the largest free port in the Americas, and second largest in the world. It started operations in 1948 and occupies about . It is divided in two large areas: one located in Colón, segregated from the city by a wall, and the other relatively new, in the harbor area, which is designated for warehouses, covering and from Colón's commercial sector. Issues Exports from the free trade zone into neighboring countries are still subject to local rules, regulations, and payment requirements of the importing country. Venezuela, one of the larger buyers from the zone, has had difficulty meeting its obligations to exporters from the zone resulting in unpaid debts. Colombia implemented a series of tariffs which had the effect of reducing imports, primarily from Asia. The Zone was created by Decree Law No. 18 of 17 June 1948, as an autonomous entity to develop the country's competitive advantages. Recently, the legislation for the Zone was modernized by Decree Law No. 8 of 4 April 2016, to allow for new businesses, such as electronic commerce, construction and operation of ports and other commercial activities. Tax aspects Profits from foreign operations are totally exempt from income tax. Dividends that come from external operations or those carried out abroad are subject to dividend tax of 5%, as established by law 8 of 2010: Legal persons or companies established or established in the Colon Free Zone or in any other zone or free area established or that is created in the future are obliged to retain the Dividend Tax or participation fee of five percent (5%) of the profits that it distributes to its shareholders or partners when they come from: 1. Panamanian source or internal or local operations; 2. Foreign source or foreign or export operations; 3. Income exempt from Income Tax, provided for in paragraphs f, l and n of article 708 of the Code. Companies domiciled in the Colon Free Zone are subject to pay 1% per year on the