Back To Top

Your Lowtax Account


Panama: E-Commerce

Legislation

An e-commerce bill was signed into law by Panama's then President, Mireya Mosocoso in July 2001. Believed to be the first of its kind to be implemented in Central Amercia, the new law provided a much needed boost to Panama's e-commerce industry.

The bill established a certification procedure and penalized the non-compliance of contracts. It also envisioned the creation of an e-commerce and data center to be managed by the National Secretariat of Science, Technology and Innovation (Senacyt) and the Ministry of Commerce and Industry, which is also responsible for authorizing certification entities.

In February, 2003, Panama introduced legislation covering on-line gambling operations. Resolution 065 was enacted by the Gaming Control Board and published on February 3, 2003. Under the Constitution gambling is a state monopoly, but local cases have upheld the power of the State to grant gambling concessions to private companies.

The Regulation only allows online transactions with users from outside of Panama, so that their income would be tax-exempt. Online gambling operations must prove economic solvency and previous related experience. There is a initial fee of US$10,000 and a yearly US$20,000 license fee. Operators must comply with money-laundering regulations and notify the Financial Analysis Unit of any suspicious transactions above US$10,000. An account must be maintained to guarantee payment to winners.

In February, 2004, Panama's legislature approved rules to tax telephone calls made over the internet (known as Voice over Internet Protocol, or VoIP) at the same rate as traditional phone calls. The tax imposed a 12% levy on all international calls, regardless of how they are made. The move came in response to a revenue drop of around US$12 million for the Panamanian government which resulted from the increasing use of VoIP technology.

The announcement received a mixed response from the broadband industry in Panama, however. Bryan Weiner, president of the jurisdiction's largest VoIP provider, Net2Phone, expressed support for the government's "one law covers every technology" approach, observing that: "Some might say it's bad news, because it's a tax. As long as it's a level playing field, we're happy."

However, Huw Rees, spokesman for broadband phone service provider, 8x8, condemned the new approach as "confusing and convoluted", adding: "We're not trying to break the law. But some of them are pretty foolish."

In August 2008, the National Assembly passed Law 59, which sets a target of providing internet access to 100% of the country's population. It is estimated that this target will be achieved in 2012. The new legislation requires companies in this sector to invest 1% of their annual gross income into building up infrastructure in rural areas. A total of US$8m was invested in 2009. according to government estimates.

Nearly one-third of Panama's population has internet access. This equates to 959,800 subscribers out of a population of 3.4 million.

 

 

Back to Panama Index »