PANAMA CITY, PANAMA. I am writing today from the Playa Bonita Resort on the banks of the Panama Canal, just outside Panama City where I am a speaker at International Living’s “Live and Invest in Panama” seminar.
It is only a coincidence that the big news here in today’s edition of LaPrensa is that the new conservative government of President Ricardo Martinelli (left)) has decided to take a strong stand against the anti-tax haven bullying of the Organization for Economic and Community Development (OECD).
No to the OECD
And Panama will not agree to the automatic exchange tax information demanded by the OECD and that group’s high tax, G-20 nations sponsors. Currently Panamalaw makes it a crime to release any financial information unless under court order and action by the new conservative dominated National Assembly would be necessary to change that law.
At a meeting yesterday of a special commission charged with developing the strategy for dealing with the OECD it was determined that Panama will hold firm to it's financial privacy laws only doing that which is beneficial for Panama.
That means Panama will be pleased to negotiate double taxation treaties that will benefit companies doing business in Panama, but the government refuses to go along with wide open tax information agreements demanded by the OECD.
Not a Tax Haven
Panama also has defined its national strategy which aims to remove the label of "tax haven" that has been hung by the Organization for Economic Cooperation and Development (OECD).
Part of their strategy is to re-emphasize that Panama is not a “tax haven” in that, while it does tax all income produced within its borders, it does not tax income earned outside its borders by those who are based within Panama. That more equitable “territorial tax” system contrasts with the highly unfair U.S tax system that requires all U.S. persons to pay taxes no matter where they live or earn income.
National Priorities
The High Level Commission for the Defense of Financial Services International together with the Cabinet Council approved a policy that is grounded "on the basis of national priorities," and not on political demands by other countries.
The official policy goes even further, and restates the government’s intention to apply the existing “law of retaliation” to countries that discriminate against Panama on the basis that it is a tax haven. This law allows sanctions and trade restrictions for those countries that discriminate against Panama. Countries mentioned were Spain, Mexico, Argentina, Peru, Ecuador and Venezuela.
Not content to stop there, Panama will also file complaints with the World Trade Organization (WTO) against nations that place Panama on phony "blacklists" and also raise the issue at the International Monetary Fund.
International Campaign
The Panama Chamber of Commerce has come out in support of this new initiative. According to its chairman, Adolfo Linares, it is a first step "properly and sustained" in order to deal with the unjust OECD attacks on Panama. Linares advised "very seriously" and selectively applying Panama’s law of retaliation.
From all appearances, a very independent Panama, home to one of the world’s essential commercial waterways, is not going to allow the OECD and its high tax backers to walk all over them.
This should be quite a fight. May the best tax haven win!
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