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this Page:
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PANAMA
INTRODUCTION
- PANAMA
FACILITIES
- PANAMA
LEGISLATION
- PANAMA OFFSHORE
ACTIVITIES
- PANAMA CASE
STUDIES
Panama
Introduction
http://www.businesspanama.com/investing/opportunities/telecommunication.php
Panama,
which has the ambition of becoming an e-commerce
hub for the Central American region, is beginning
to make progress towards this goal, with its Internet
user base increasing monthly.
The
Government has established the City of Knowledge
Technopark in the former Ft. Clayton US Military
base. The Tecnopark is a mixture of commercial
space, offices, technical facilities and ancillary
residential properties. The Government supplied
20 hectares of land with complete infrastructures
and buildings worth an estimated $50m for the
project. The Tecnopark project was unveiled in
August, 2002. By 2008, 45 companies had signed
up as tenants and more than 40 were expressing
interest including Oracle, Cisco, Microsoft, and
C&W.
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Panama
Facilities
The
telecommunications market was privatized in 1997,
and in 2003 it was de-regulated. Although many
of the changes that were brought about as a result
of these two processes have not been entirely
positive, many of changes have been beneficial
to both individuals and businesses.
Since the opening
of the fixed telephony market in Panama, the number
of service lines in the country has increased
70% while international long distance call costs
have dropped by about 50%. There are 10 companies
providing local telephone services, 15 for long
distance national calls and 16 for long distance
international calls. Cable & Wireless Panama
is the dominant operator with 90% of fixed lines
in the country.
The
telecommunications infrastructure has greatly
improved. As a result telecommunication companies
are installing Network Operation Centers in Panama,
taking advantage of the geographical location
and the abundant supply of submarine fiber optic
communications circuit on both coasts which makes
possible interconnection to north and Latin America,
Asia, Europe, Africa and the world, over redundant
routes.
These
submarine networks give Panama four international
connections via high-bandwidth, fiber-optical
trunk routes. 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.
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
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. The MAYA and ARCOS ring systems link the
continental Americas and the Caribbean Basin.
Total investment for the two fiber-optic trunk
systems was targeted at $217 million, 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.
Since
the telecommunications market was opened in 2003,
the Ente Regulador de los Servicios Publicos has
granted more than 1,422 licenses to 182 operators.
The primary objective for most of the new players
is international long distance and the use of
services such as VOIP and VON.
In
January, 2004, the National Assembly approved
Law No 98 to eliminate a $1.00 tax on every International
Call and replace it by a 12% tax on all International
Calls using any technology. Demand for licenses
for Call Centers increased following the elimination
of the $1 tax on international calls.
Total
cellular phone users reached 1.352 million by
2005 with good chances for continued growth in
the future, especially in pre-paid services.
In
2003, Cable & Wireless launched an aggressive
campaign to penetrate the Internet market with
ADSL technology. The Kilobyte price for dedicated
Internet access dropped significantly, as the
main providers such as Cable & Wireless, Telecarrier
and Cable Onda lowered their rates. The new pricing
structure benefited both residential and corporate
markets, reaching a level of $39 per month for
a dedicated 128K connection. Internet access,
hosting and first tier IP services represented
approximated a US$27 million market, showing an
increase of 18 % over the prior year.
Panama
has already 3 world class internet data centers.
The first one is Altec1, the only independent
organization, and the other two are from Cable
& Wireless and TeleCarrier. They all provide
basically the same quality of services including
redundant access to several submarine fiber optic
networks, security, fire detection and fire suppression
system, access control, CCTV, electrical generator
and UPS, co-location space, rack, cabinet and
private suite, scalability, reliability and convenience
for companies looking to reduce their IT cost
in 24 x 7 secure facilities.
To
see an article by
Pardini and Associates describing the prospects
for Panamian e-commerce called The Panama Canal
Silicon Valley, CLICK HERE
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Panama
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
fee 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, in place of the
previous $1 levy per international call. The move
came in response to a revenue drop of around $12
million for the Panamanian government which has
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 USD8m was invested
in 2009. according to government estimates.
Just over one-quarter of
Panama's population has internet access. This
equates to 116,000 subscribers out of a population
of 3.3 million.
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Panama
Offshore Activities
The
natural bonding of the Internet and Offshore stems
from the fact that both, of their nature, manage
to avoid tax. Businesses which can operate on
the Internet without, so to speak, touching ground
in a high-tax jurisdiction will naturally migrate
to offshore jurisdictions; while businesses that
already have offshore existence will find it highly
convenient to be able to use the Internet to trade
with their high-tax customers without having to
make a landing in their countries.
By
locating websites in offshore jurisdictions to
carry out functions previously based in high-tax
jurisdictions such as sales and marketing, treasury
management, supply of financial services, and
most of all, the supply of digital goods such
as music, video, training, software etc, businesses
can take advantage of low rates of taxation for
increasingly substantial parts of their operation.
As
a major 'low-tax' jurisdiction with tens of thousands
of enterprises already installed, including many
collective investment funds, banks and other financial
institutions, Panama certainly has the opportunity
to become a centre of e-commerce activity. There
are already a number of Internet Service Providers
in Panama, and this sector can be expected to
grow rapidly. The country's geographical location,
its good telecommunications links and its sophisticated
business infrastructure add to its suitability
as an e-ntrepot.
No
one particular sector dominates the growth of
e-commerce applications in Panama, which are quite
diverse.
Important
players like Global Crossing, MCI, Sky Online,
new world communication, Cable & Wireless,
Nautilus and Telefonica have decided to install
Network Operation Centers in Panama, taking advantage
of the geographical location providing an abundant
supply of submarine fiber optic communications
circuit on both coasts and which makes possible
interconnection close to North and Latin America,
Asia, Europe, Africa and the world over redundant
routes
For
information about the impact of e-commerce on
a number of the main offshore activities which
take place in Panama, click on a link below to
go to our specialist E-commerce site Offshore-e-com.com
Sales and Distribution of Physical Products
Sales
and Distribution of Digital Products
Banking
and Financial Services (including Investment
Funds)
Corporate
Support Functions
To
see an analysis of the current state of legal
and tax issues surrounding offshore e-commerce,
click
here.
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Panama Case Studies
This section will contain case studies of e-commerce
solutions applied to offshore business activities
carried out from Panama.To be kept updated as
to our progress click here.
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LOWTAX.NET
13/07 
