Panama is not a signatory to any double tax treaties with regard to commercial activities. Additionally, Value Added Tax (VAT) is not levied on good or services exported from Panama. Therefore, Panama is a zero tax jurisdiction, which provides many benefits for e-commerce businesses.
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Panama became the first country to adopt a law specific to electronic commerce in Central America. On August 1, 2001, Panama enacted Law 43 of 2001, which "defines and regulates electronic documents and signatures and certification authorities in electronic commerce, and the exchange of electronic documents". Law 43 was a collaborative effort between the public and private sectors and represents an advance for the legal recognition of electronic documents and signatures, which are the basic elements necessary to increase public confidence in electronic transactions. The provisions of the Law 43 on electronic documents are based on the United Nations Commission on International Trade Law (UNCITRAL) Draft E-commerce Law.
Law 43 provides for the maintenance of correspondence, invoices, ledgers, corporate books and other records that were previously regulated by the Code of Commerce and Tax Code. The Law only allows online transactions with users from outside of Panama, so that their income would be tax-exempt.
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Staff Attorneys, IBLS Editorial Board