Panama yields to pressure concerning its lax banking laws

Although this is the headline from today's La Prensa, based on what is in the story and other sources I am not so sure they will have to give up too much. Sounds more to me like placating rather than real substance. As long as corporate share holder information is kept anonymous in Panama I don't have such a problem with tax treaties and other forms of so-called "transparency". We will have to watch these developments very closely.

From La Prensa; Panama said it would make certain adjustments to its banking system recommended by the Organization for the Cooperation and the Economic Development (OECD) and the G-20 Summit leaders, which have often criticized the country for being a fiscal paradise.

Though in a formal statement the country said it acknowledged that "times have changed" and that it will no longer be able to remain "isolated within the world," Vice Minister of Economy Frank de Lima said that the new administration intends to demonstrate that Panama is not a fiscal paradise and will demand recognition of the domestic tax system.

“We will ask for the Member States of the OECD that respect that concept, but that we are conscious that we must make changes in one way or another," explained the vice minister. One change, he said, would be to follow the route Switzerland has taken through the negotiation of treaties for a more transparen exchange of tax information.

De Lima contended that Panama can no longer risk being blacklisted or subjected to sanctions, as France and the United Kingdom have threatened.

Banks in the country have also consented to change their way of business. 

Federico Humbert, president of Banco General, said it is important that the banking community understand the economic impact of the OECD pressure and explained that it “would be irresponsible” not to take appropriate actions.

“We at Banco General have already adopted stricter measures to be able to eliminate the obsolete principle of the anonymous client that is protected in joint-stock companies," said Humbert. "We will be adapting other policies to better identify the client."

Here is another article from La Prensa that was in Spanish. It has a little more information.

Panama is ready to sign agreements to exchange tax information with the Organization for Economic Cooperation and Development (OECD) and thus avoid being subject to penalties or back to "blacklist" of countries that are considered "tax havens".

  The deputy economy minister, Frank De Lima, reported that there is still no official position, but "the path that could take" is the same as in Switzerland and other countries negotiating treaties for information exchange.

  "Panama is not a 'tax haven', businesses pay taxes under a concept of territoriality, but it is necessary to take decisions because we can not maintain the status quo," he said.

France, United Kingdom and other OECD member countries are advocating that sanctions be applied to so-called "tax havens".  If that happens, will affect about 80% of Panamanian exports and a significant percentage of the $ 7.9 billion of foreign deposits.

  For Federico Humbert, president of General Bank, are "unacceptable" statements "that provide an alternative simply does not do anything" and argued that the public is informed of the implications of these sanctions.

General Bank eliminated the opening of accounts at companies whose capital is issued in bearer shares, which is another issue that is in the sights of the OECD.

  Edward Morgan, one of the permanent Panamanian defenders of the tax system is not opposed to signing an agreement to avoid double taxation, but the exchange of tax information, which only takes colonies or countries that do not have a center as the financial Panama.  "It would be absurd and unworthy of signing a treaty of tax information would be one way in which the country did not win anything but lost," he said.

  Osvaldo Lau, tax consultant, believes that it is not transparent to protect those who have not complied with the laws of your country.  "We must have clear rules to give financial information on the country to ask, but where the legal route," he said.

SEE Panama is ready to change to the OECD