Panama: E-Commerce Opens New Business Technologies

Last Updated: 15 October 2001


E-commerce becomes one of those words brought by a new era or technological revolution. It has rushed into our lives so fast that not everybody understands what it actually is, how it works and why; is it dangerous or is it a new "El dorado" hi-tech society we are moving towards? In the entire human history, no one invention has ever captured human attention in the way the Internet has. Just to illustrate, compare how many years it took for television to become popular after it was invented in 1926, or electricity, invented in 1887. Literally ten years ago the Internet came into existence and today has captured hundreds of millions of souls. According to estimates, the Internet will reach between US$400 billion and US$3 trillion in the next three years. Nevertheless, being an immature technology, the Internet has not disclosed its full potential.

Privacy and Taxation Issues

The Internet broke borders and limits making the world closer; however, at the same time it broke the individual's privacy. Most of your personal data has already been collected, sorted, and sold unless you had protected your business, your wealth, and your assets. It is no secret anymore that all the data stored on servers are subject to continuous attacks by hackers, or free access for government supervisors. "You already have zero privacy: get over it", announces Scott McNealy of Sun Microsystems. A good example of the privacy assault in the United States is the "Carnivore" project, which is targeting to intercept all email correspondences "to serve" US security. The project recently has been renamed to "DSC1000" due to profuse complaints. Furthermore, the dramatically growing turnover of the virtual world and online operations attracts the attention of government bodies and international organizations which causes numerous amounts of conferences and debates dedicated to Internet taxation. The draft, released by the working group of the OECD Committee of Fiscal Affairs, concerning the permanent establishment of an E-business, states that only a server constitutes a place of business. In most developed countries, this point of view is popular although they are still in the process of looking for a solution.

Where to start

The Internet with all its advantages and disadvantages can be tamed and used as a strong remedy for developing financial freedom as well as a protector of personal privacy. The Internet is not only made of giants such as or To start an e-business no 'special idea' needs to be created. You can move your existing business to the Internet and gain all the advantages of the new technology for yourself and for your business. International opportunities for businesses are limited only by the scope of one's imagination. To end all that, the creation of an offshore Internet presence for businesses provides an excellent vehicle that offers tremendous flexibility and multiple advantages, such as reducing business costs and increasing profits. Tax is a big factor when deciding where to locate a business and so an up-to-date business should search globally choosing where to incorporate. When starting an E-business it is necessary to carefully plan the permanent establishment and thus the "tax home".

E-business that deals with physical merchandise has to split its structure to have all taxable activity outside of highly taxed jurisdiction even though the consumers are located in such a country. It makes sense to set the E-subdivision in secure low or zero tax jurisdictions with minimal regulations to let it focus on business instead of support activity. Intangible types of E-business are more likely to have an even simpler structure when all the transactions for e-casinos, e-wagering and e-banking or other financial services can be done online. What recently arose are the E-commerce Free Zones that could be a perfect ONE-PLACE solution for the E-business people looking for a secure location with all the services available in one source. 'E-com Free Zones' are useful because of the combination of friendly Internet legislation, availability of best-suited legal structures, payment solutions and technical background that provides the highest level of reliability and wide list of bandwidth to choose from.

In our following issues we will review in detail the advantages and disadvantages of E-com Free Zones, the necessity of data encryption, and how to get focused on practical solutions for different types of E-business.


The combination of cutting edge Internet facilities and advanced financial tools creates the business technology of the future. They are global in accessing and managing their financial sources and have no borders in communicating to the clientele or counter-partners making business transactions all over the globe all year round with the most tax-minimized scheme and with the least cost possible.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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