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How you going to keep them paying 50% of their profit out in taxes, when they can host offshore? It may come as a wake-up call to some, but for most of us, there is little question that Offshore eCommerce is the wave of the future. Playing offshore games of hide & seek is no longer de rigor - Today's web-smart cognoscenti turn to offshore webhosting and offshore eCommerce. Once a thing of the future, offshore eCommerce is now a reality in Panama, with many exciting innovations coming online. The author of this article, Dr. Louis Sola is the Managing Director of Berkshire Financial Services and an Adjunct Professor of Finance at Florida State University.  For general questions, you may contact info@berkshire-financial.com -

Panama Banking & Commerce  The Central American Surprise The World's First Virtual Nation

Known as the crossroads of the world due to the canal, Panama has now given notice to other offshore jurisdictions of a powerhouse new player in the offshore e-commerce arena.  Panama is already known as a favored offshore jurisdiction due to its secrecy laws, numerous international banks, and most notably, the country's official use of the US dollar as it currency.

Using the same policy that made the Colon Free Zone (http://www.alphaluz.com/panama/pcfz.html) the largest true free zone in the world (Yes, larger than Hong Kong excluding their port), Panama has all the correct ingredients for a regional and offshore haven for web hosting and e-commerce.  Companies that set up in Panama to do e-commerce can take advantage of the existing tax and reporting laws, which state that companies that have their sales outside of 

. The Corozal Processing Zone - Tax Free Zone

Panama are excluded from any form of income tax or reporting requirements.  This in essence creates a Virtual Free Zone where firms can host their e-commerce companies or divisions. The three largest sectors for these new companies are the Colon Free Zone, the Corozal Processing Zone, and the Technology Park in the City of Knowledge.  As mentioned earlier, the Colon Free Zone is the largest such zone in the world and is in the process on embracing global e-commerce. The Corozal Processing Zone and the Technology Park of the City of Knowledge are located on former US military bases of Corozal and Clayton respectively. All three of these locations offer a tax-free enviroment on sales

and duties for importation.  The Corozal Processing Zone  also offers incentives for companies to provide a finishing or assembling for which products can be shipped safely and efficiently to consumers.

The Technology Park of the City of Knowledge (http://www.ciudaddelsaber.org.pa/en/technopark/) is the newest player but the one making the most noise.  The City of Knowledge, sponsored by the International Development Bank and with help from the European Union, is split into academic and high technology sections.  Some of the residents are: The Smithsonian, Florida State University,  JD Edwards, Cable and Wireless, Citibank, Xerox, and many others.  Time magazine recently published an article about Altec (http://www.altec1.com/news12.htm) and their plans to have the largest web-hosting farm in Latin America.

. The Technology Park & The City of Knowledge

Altec (http://www.altec1.com/) has under construction a system to connect the Atlantic and Pacific fiber optics cables allowing Panama to have the fastest connections to South, Central, North America, Europe, Africa, Australia, and Asia.  A true cross road of the world.

In a effort to draw more pure play internet and brick and mortar companies to Panama, the City of Knowledge has enlisted the service of respected industry experts in offshore structures and banking.  Our firm, Berkshire Financial Services, has been the only financial firm thus far admitted in the Technology Park.  With affiliations in hand with one of the largest banks in Panama, Cable 

Panama City - Sophisticated, Modern & Chic .

and Wireless, and Altec, offshore and regional e-commerce is not only for the fortune 500. Through our subsidiary, First Antilles, a company can have an offshore dollar based e-commerce solution quickly and economically.  So far, average complete set up time has been under 30 days including due diligence.  The service is only offered to Panama based companies so firms will need to incorporate in Panama first. Then companies must undergo a 7-day due diligence period.

If the company does not pass, (no gambling or pornography please,) 80% of the due diligence fee will be returned.  After the company passes the due diligence, the company is processed by the bank for e-commerce processing.  Once the merchant account is set up by the bank, a one time $400 set up fee and thereafter a monthly fee of $50 is levied by the bank.  After which, very competitive processing rates apply depending on the merchant volume and ticket item. Our experience has seen something in the range of 3 to 4.5% with 80 free transactions per month.  After the 80 free transactions, a small surcharge is levied on each transaction, about .20 cents depending on volume.
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