Internet and Ecommerce

Panama Internet and ecommerce. Investment opportunities in strategic data storage centers.

Highlights

One of the greatest advantages that Panama offers is that internet is widely available throughout the country. There is access almost everywhere, with different levels of connection speeds.

E-Commerce in Panama is estimated to reach USD 700 million in 2018, according to a study of e-Readiness conducted by Visa Inc., prepared by Euromonitor. In 2014, e-commerce in Panama stood at about USD 330 million, which can easily be interpreted that it will continue to grow in the coming years.

In Panama, smartphones and other mobile devises are highly used, and people now days can purchase goods and services from the internet regardless of the location. It is becoming an increasing trend the use of these devises to find information, educate ourselves about a purchase process, read articles, recommendations and rating of a store or item. Also, businesses now days have online apps that can easily be downloaded for free in order to purchase goods and services, including hotels, supermarkets, department stores, online courses, movie theaters, and even to reserve a spot in a popular nightclub in Panama City.

Investment Opportunities

Panama Strategic Center for Data Storage

The fact that companies from the sector have invested about USD 250 million to settle in the country, is a clear indication Panama has become a strategic center for data storage in America.

With $35 million as an initial investment and an area of 6,000 square meters, KIO Networks has opened its data center in Panama Pacific, constituting the company's first technology campus in Central America. With the technological complex, the Mexican company is looking to Panamanian and regional companies to access technologies and processes and applications services, business continuity, security and document storage.

"Furthermore, the company Telecarrier has its IDC 12/10 data center, which has 500 square meters of technical space, which is added to the 1,300 in the Telecarrier IDC in Clayton, Ciudad de Saber, which allows them to offer customers the availability of 1,800 square meters in total. Telecarrier's investment is near to $25 million. "

Benefits

Why anyone should move its e-commerce activities to Panama?

       1. Main Advantages

  • US dollar based economy
  • Earthquake free
  • No active volcanoes
  • No hurricanes
  • No taxes on foreign source income
  • Excellent living conditions
  • Fully bilingual certified engineers
  • Best submarine fiber optic access of the region
  • No pollution

       2. Telecommunication infrastructure

Panama has the best access to multiple high-bandwidth continental fiber optic networks in telecommunications infrastructure. The extremely low risk of natural disasters (hurricanes etc.), gives the Panama telecom sector security and reliability of service as well as a competitive advantage over other offshore jurisdictions.

       3. Accessibility for installation and maintenance

Panama is extremely easy to access from almost anywhere, due to its central location in the middle of the Americas. Its proximity to large cities in the US and Europe makes it relatively cost effective to bring in specialist know how for installation and maintenance.

       4. Relevant technical know-how and human resources

Panama’s long history as an international banking and services jurisdiction, has resulted in the availability of technical know-how in internet technology and information technology as well as sufficient human resources to install and maintain e-commerce operations.

       5. Location

Accessing Panama is easy from anywhere in the world. Living conditions are very similar to the US, but the cost of living is one-half.

       6. Favorable tax regime

Panama is a zero tax jurisdiction. There are no double tax treaties that can be used for commercial activities. No VAT is payable on good or services exported from Panama.

       7. Hub for Cyber Commerce

All the preceding advantages, incentives and infrastructure place Panama as an ideal location for:

  • Internet Service Providers
  • E-Commerce Providers
  • Applications Outsourcing ASP
  • Broadband Content Providers
  • New Media Content Providers
  • Exchange Traffic

       8. Panama’s Continental Fiber-Optic Network Link

The MAYA and ARCOS ring systems link the continental Americas and the Caribbean Basin.

Total investment for the two fiber--optic trunk systems is targeted at USD 217 million, and is to be divided between a mainly 14-member consortium, including world-class carriers such as AT&T, CTC Mundo, France Telecom, MCI, SPRINT, Star Telecom, Swisscom, TelMex WorldExchange and Cable & Wireless.

The MAYA-1 ring features relays in Florida, Mexico, Guatemala, Costa Rica, Panama, Colombia, Puerto Rico, Jamaica and Grand Cayman Island and, in addition to its own communications structure, provides a restoration path for the Pan-American cable. The ARCOS-1 trunk spans Florida, Mexico, Belize, Guatemala, Honduras, Nicaragua, Costa Rica, Panama, Colombia, Aruba, Puerto Rico, the Dominican Republic and the Bahamas.

The GLOBAL CROSSING project connects Asia, the US, goes through the Panama Canal, the Caribbean countries, and Europe.

These submarine networks give Panama four (4) international connections via high-bandwidth, fiber-optical trunk routes, superseding the current satellite link--feed system that is now in operation. This in turn is already enabling fast and reliable connections for B2B, banking, e-commerce and other businesses as well as additional high-speed consumer activity units.

The OXYGEN network links the US Caribbean, goes through the Panama Canal, and connects to the Pacific Ocean within Colombia, Peru, Ecuador, Chile, Brazil and Europe.

Ultimately, the main benefit of MAYA, GLOBAL CROSSING, OXYGEN, PANAMERICAN and ARCOS will be lower international prices for consumers. In addition, these new cables incorporate New Wave Division Multiplexing Technology that will allow extraordinary ultra-high speed bandwidth applications, such as multimedia and digital video.

The MAYA 1, GLOBAL CROSSING, OXYGEN and ARCOS-1 projects represent yet another building block in Panama’s quest to become Latin America’s Telecom Hub, which the United Nations Education, Science and Culture Organization (UNESCO) has predicted will occur within the next few years.

In Panama, there is an electronic commerce law that ordered the creation of the Electronic Commerce Directorate of the Ministry of Commerce and Industry. It also establishes that the Comptroller General is the certifying entity in the transactions that are made with the State. Other issues to which this law refers to are the electronic signature of documents and the certifying entities.

International Techno Park of Panama

The Techno Park is attracting interest from a diverse group of businesses that may be divided into three separate, but interconnected areas:

  • Biotechnology, Marine Resources, Reforestation, Tropical Medicine and Aquaculture.
  • Information Technology, Telecommunications, Geographic Research and Data Transfer.
  • Multimodal Transport, Automobile, Aviation and Marine Technology

A special legislation applies to all businesses operating within the Techno Park. This legislation includes significant fiscal benefits, immigration advantages, and an established infrastructure requiring reduced startup investment. However, it is important to present the specific benefits that the Techno Park offers.

The Panamanian Government granted the Techno Park and all entities established therein, the following benefits for an extendable 25 year period:

  • Exemption of all taxes, contributions, duties or import fees on all machinery, equipment, furniture, vehicles, appliances, or materials necessary for the development of the project.
  • Exemption of the movable property transfer tax (VAT) on machinery, equipment, vehicles, appliances and material acquired and necessary for the development of the project.
  • Exemption of any tax duty, or lien imposed on the remittance of money abroad, when such remittance or transfer of funds takes place in relation to the purposes of the project.

In addition, special immigration rules are in place to promote the installation of hi-tech business in the Techno Techno Park. Special visas will be granted to expatriates who may enter the country with the purpose of participating in the development of listed projects.

Private Hi-Tech Parks

The most relevant incentives granted to High-Tech Parks are:

  • Exemption of all taxes, contributions, duties or import fees on all machinery, equipment, furniture, vehicles, appliances, or materials necessary for the development of the project.
  • Exemption of any national direct tax on capital.
  • Exemption of income taxes.
  • Exemption of any national direct tax on dividends and interests originated from securities issued by the company and traded in local or international markets.
  • Special immigration and labor regime.

The Republic of Panama is especially attractive to foreign investors for its tax benefits, particularly those referring to income tax. Income tax is levied on all revenues produced within the territory of the Republic of Panama, with the exceptions that the law establishes. This concept of territoriality is one of the determining factors making Panama a center of international operations.

For ecommerce, this is extremely important for companies planning where to set up a permanent establishment for their sales and payments for future tax planning.

Panama motivates potential investors to base their e-commerce operations in Panama as a virtual nation with an environment where international business is welcomed. Panama continues to encourage foreign capital to enter its domain. Of course, this imperviousness to change cannot be attributed to accident or chance, and there are, indeed, several most solid reasons on which the extraordinary stability of Panama as ideal basis for foreign investment continues to rest.

For example, a company can have its headquarters in the US, its manufacturing facility in Mexico, its distribution from the Colon Free Zone of Panama; its e-commerce and payment transactions out of Panama and its customers in North and South America, Europe, and Asia.

The extraordinary facilities afforded to any foreign investor in various hi-tech industries and immigration of technical and professional people, as well as in a wide variety of other activities from high-tech parks to continental fiber optic networks can be envisaged under investment incentives designed to prevail in a very competitive regional environment.

The BusinessPanama Group together with Pardini & Asociados, an international law firm with 35 years of experience, provide a convenient One Stop Shop offering the services of:

  • Setting up or acquiring the business
  • Locating office and living premises for the company and its executives
  • Forming a company, llc or branch
  • Legal services for setting up all operations, contracts, permits, etc.
  • Accessing special tax incentives
  • Applying for visas, work and residence permits for expats
  • Relocation services
  • Others

For more information, please contact us.

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