Establishing Your E-Commerce Business in Panama

Nov 9, 2009

If you’re looking to establish an international e-commerce business, consider the Republic of Panama.  One of the key advantages to locating in Panama is that only income from Panamanian sources is subject to taxation under the ‘tax territoriality’ concept.  Earnings from international trade, including your e-commerce business, are not subject to tax.  Now this is all well and good, but an e-commerce business can’t survive without excellent infrastructure. Does Panama offer the infrastructure needed for you to succeed?

Yes, it does, and here’s what Panama offers.  Because of the Canal trade, Panama has well developed international trade and banking systems.  These two sectors depend on technology.  So, Panama has invested in creating what is likely the finest telecom and internet system outside of Europe and the U.S.  The “City of Knowledge” technology and business park is located at the site of the U.S. Air Force’s former Clayton air base just outside of the capital, Panama City.

Five major fiber optic networks cross Panama and provide access to international telecommunications networks.  Panama City, which is overlaid with several fiber optic metropolitan networks, has become a world class mission-critical data and hosting center. This business segment continues to grow as companies from other countries seek to take advantage of this infrastructure.  Panama is often used as a gateway to Central and South American markets.

The human and intellectual capital needed to succeed in an international e-commerce venture are available, and at half the cost of the United States or Europe.  Panama boasts a literacy rate of 91.9%, and has a large supply of bilingual professionals and certified engineers.  The official language is Spanish, but due to American influences, a large portion of the work force speaks English as well.

Panama is a leading edge thinker in developing new methods of e-commerce.  In August 2001, Panama’s government passed new legislation specific to electronic commerce and acceptance of digital filings and signatures.  Both public and private sector input were used in crafting the legislation, with the Panamanian government leading the way.

On their own, the infrastructure considerations should be enough to give anyone good reason to choose Panama as a centre for their e-commerce business.  Add in the benefits of a tax and business-friendly legal and fiscal regime, the use of the U.S. dollar as the de facto currency, no restriction on currency translations, the availability of on-line credit card acceptance and processing, and THAT is the recipe for e-commerce success!

In amongst this talk about infrastructure and technology, we have failed to discuss another huge advantage of Panama: livability. Panama City is a first world city.  Crime is very low, the climate is temperate, and you have a choice of beautiful beaches just a short drive away. The national air carrier Copa Airlines offers 144 daily departures direct to 40 major cities all over North and South America and the Caribbean.  If you need to travel, getting in and out of Panama through Tocumen International Airport is quick, cheap and convenient.

Panama is a highly attractive location for offshore business and e-commerce. If your wealth building strategy includes an e-commerce business, take a look at Panama!