Yesterday Panama and Colombia come to a middle ground and were given 1 year for the purpose of negotiating an agreement to avoid the issue with double taxation, which can include provisions for sharing financial information from both countries. With a memorandum of understanding between governments settled, issues from the bilateral trade agendas will come to agreements.
The big issue for Panama was the classification as Tax Heaven by the Colombian government and was added to their grey list. After this meeting, President Juan Manuel Santos signed a decree that stipulated the exclusion of Panama from this list, which was a requirement imposed by the Panamanian government to negotiate a tax deal on equal terms and without coercion.
The Vice President of Panama Isabel Saint Malo stated that with these measures of discrimination being removed, they had agreed to an agenda of conversations to fight the money laundering and the financing of terrorism and to stop double taxation. We were signing the decree through which we will remove Panama from the list of tax havens, after they sign a memorandum of understanding where they commit to a date by which to negotiate a deal," President Juan Manuel Santos said.
On the exchange of tax information from the accounts of Colombians in Panama, which is the primary objective of the neighboring country, Saint-Malo said “we are of the opinion that it is in the best interest of our country to explore the feasibility of an agreement to avoid double taxation which guarantees the users of our platform that services will be preserved and Colombian investment is encouraged in our country. "
The withdrawal of Panama from the list of tax havens of Colombia sent a couple of messages to the rest of the world, first, respect for our tax system; second, that Panama will claim the space for dialogue to evaluate alternatives; and third, that we are not willing to negotiate under pressure or to the race. "
For its part, the Government of Colombia said in a statement that the memorandum of understanding is the basis for negotiating a double taxation agreement and will include a clause of financial reporting standards of the Organization for Economic Cooperation and Development (OECD).
Colombia also referred to the agreement to cooperate on money laundering through the Unit of Financial Information and Analysis (FIAU, equivalent of the Financial Analysis Unit) and cooperation with international organizations. "This agreement reinforces that we seek and have established with all neighbors, to cooperate on all issues," said Colombian Foreign Minister.
"It's what we wanted from the start," Santos said. "It's good news for everyone."
With this being settled for now, we can move on knowing that Panama’s reputation is still protected and that even though some countries from around the world want to consider Panama as a tax heaven, it will continue to be what it is and regulations will take place in due time.