Change in Panama

(bauman.sovereignsociety.com) Since our founding 13 years ago the Sovereign Society has recommended the Republic of Panama as one of the best tax havens, asset protection havens and residential havens in the world.

Only hours by air from the United States, Panama offers a variety of lifestyles and geographic diversity with a century-long history of working closely with Americans. Panama’s decade-long real estate boom has cooled, but the multi-billion dollar expansion of the Panama Canal, now well under way, has increased economic growth and the government is engaged in an array of public work projects.
Absolute Privacy No More

Until yesterday I was able to tell you that alone among current offshore tax havens, Panama combined maximum financial privacy, a long history of judicial enforcement of asset protection-friendly laws, a strong anti-money laundering law, plus tax exemptions for foreigners.

What changed suddenly on November 30th was the signing in Washington of a tax information treaty (TIEA) between Panama and the United States.

Having read the treaty terms I can say that Panama no longer offers “maximum financial privacy”. Indeed it now offers little more financial privacy than that offered by any other country that has surrender to the demands of the U.S. government and the Organization for Economic and Community Development (OECD), the high tax mouthpiece of the major welfare states.

Visiting Panama

As you read this I am in Panama, here to get a first hand impression of what’s really happening.

I will return next week after a series of meetings with government officials and private parties active in the offshore banking and financial community. Then I will be able to give you a better estimate of how the government intends to enforce this treaty. Enforcement procedures could make a great difference.

As I arrived today an article in La Prensa quotes unnamed Panamanian officials statements claiming that “There will be no automatic exchange of information, calls or fishing expeditions, and information exchanged will be treated as confidential and not disclosed to other countries.”

The Panama Bankers Association said that the agreement could be beneficial, “provided that the disclosure is made in an objective manner as to affect only the accounts of customers who are under investigation in the U.S. for tax evasion or tax fraud.”

Unfortunately, the treaty terms are ambiguous enough to allow U.S. IRS demands for information about U.S. persons in Panama on almost any basis and pending criminal action in the U.S. is not a stated requirement.
Compromised Bank Secrecy

Up until this treaty agreement I used to say that, thanks to its unique historic and often contentious relationship with the United States, the government of Panama also exercised a high degree of independence from outside pressures, including those from Washington.

The U.S. apparently pressured Panama to agree to the tax treaty as a quid pro quo for the Obama administration’s promise to submit a 2007 free trade agreement (FTA) with Panama to the U.S. Senate where it has been opposed by anti-Panama senators such as Carl Levin of Michigan.

Panama officials claim that that the FTA is important to Panama in order for the current government of President Ricardo Martinelli to obtain additional foreign investment and loans to build his planned infrastructure projects, including completion of the US$6 billion widening and deepening of the Panama Canal.

Several large multinational companies have stated that the U.S. – Panama FTA will allow them to be more competitive in providing services for the canal expansion and other Martinelli public works projects.

Panama still has much to recommend it a residence or base for international business, but as the old American saying goes “It ain’t what it used to be.”

Saludos, BOB BAUMAN

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Original Source: bauman.sovereignsociety.com