| COST SAVERS
If we look at the basic key players
in an e-commerce scenario (i.e. the supplier of physical or digital products
and services; the company with its primary and secondary activities,
and the website and the customers) they can all be considered pieces on
a board game.
Depending on the arrangement of
the pieces, the company can save costs in different ways:
a) It can move the website
i.e. the marketing and selling department offshore and save costs on maintaining
the website, because of lower wages and save tax because of the lower or
lack of corporate and individual taxation.
b) Storage facilities can be moved
into a jurisdiction having favorable tax treaties with regard to customs
and transportation costs, depending on the location of the customers, and
link the storage management into the ordering system and billing system
via the internet.
c) Individual activities of the company
(for example online tracking systems, billing systems etc.) can be moved
offshore and save costs on lower or no corporate and individual taxes.
One has to bear in mind that a simple
website might not be sufficient to determine a “permanent establishment”
for tax purposes. Care must be taken to structure the business activities
in a way that actually creates tax advantages based on the jurisdiction
of the e-commerce facility. It is therefore advisable that the server
is located where the permanent establishment of the e-commerce transaction
is desired.
So the key steps to analyze whether
e--commerce is a viable option for a business are:
-
Define the type and location of the
supplier, the primary and secondary activities and the customers.
-
Analyze whether the total costs of the
business (salaries, corporate/individual/other tax, cost of primary or
secondary activities) can be reduced by moving the location of individual
elements into another jurisdiction, as well as linking them to the rest
of the business by applying internet technology.
PANAMA
If internationally-minded e-commerce
companies or entrepreneurs and their bankers or brokers were to be looking
for the ideal centre, it could probably come as a surprise to find that
Panama has no strange sounding name, nor is it located in a geographically
unidentifiable place, and that practically any conceivable requirement
can be met and satisfied by one of the most traditional and reputable sources
of legal and financial services available in the world.
Considering the the key factors mentioned
above, let us examine why anyone should move e-commerce activities
into Panama now that we have established why companies and businesses can
use e-commerce offshore.
Main Advantages
US dollar based economy
Earthquake free
No active volcanoes
No hurricanes
No tax
Excellent living conditions
Fully bilingual certified engineers
Best submarine fiber optic access of
the region
No pollution
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.
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.
Relevant
technical know-how and human resources
Panama's long history as a 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.
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.
Favourable
tax regime
Panama is a zero tax jurisdiction.
There are no double tax treaties which can be used for commercial activities.
No VAT is payable on good or services exported from Panama.
Hub for
CyberCommerce
All the preceding advantages, incentives
and infrastructure place Panama Panama as an ideal location for:
-
Internet Service Providers
-
E-Commerce Providers
-
Applications Outsourcing ASP
-
Broadband Content Providers
-
New Media Content Providers
-
Exchange Traffic
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