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I had been following Panama for awhile and was surprised when the Panama Law.org group got out of Panama about a year ago and set up shop in Guatemala so this latest news is not that surprising.
[ http://www.panamalaw.org/panama_and_USA_to_sign_tax_treaty_for_exchange_of_tax_information.html ]
Panama and USA to Sign Tax Treaty for Exchange of Tax Information
Executive Summary – Panama and the USA will in November 2010 sign a treaty allowing for the exchange of tax information. In return it seems Panama will get a free trade agreement with the USA. This treaty has been negotiated and concluded. US Treasury Secretary Timothy F. Geithner will be signing the treaty on Nov. 30, 2010. This means that any American signing on any bank account in Panama can have their bank records turned over to the USA. This will include Foundation and Corporation Bank Accounts where a US resident or citizen is the signer on the account. If the account is closed before the enactment date of the treaty then the treaty would not apply since it would be a retroactive law.
Panama Corporation Law – Panama has announced that it intends to diminish the secrecy of the bearer share corporations in January, 2011. Panama looks like it is going to be relying on the Panama Canal for their revenue and not the banks. A substantial amount of international clients in Panama Banks are American. We have no firm statistics but if we were to take a guess we would say between 25% and 40%. The percentage of deposits that these Americans hold is too difficult for us to even guess at. Panama has signed tax treaties with 13 other countries. Panama seems to be leaving the arena of tax havens. How the Panama banks will fare is a good question. In our opinion there is a distinct possibility that the Panama banks may experience capital flight as Americans leave and close their bank accounts. Only time will tell what impact this treaty will have on the banks in Panama.
You can download the Panama Tax Information Exchange agreement at:
[ https://www.welovecostarica.com/members/programs/fileinfo.cfm?id=103&action=display ]
For those you wondering why this is important…
There are many high net worth individuals from various countries living in Costa Rica who have assets invested in multiple offshore jurisdictions.
Structuring your assets in an offshore trust in Singapore or a Panama foundation has been a common strategy however, each year there are fewer and fewer options available…
It would appear that trying to protect you assets in Panama – in a Panama foundation or whatever kind of a structure – is probably not the safest thing to do now…
IMHO this was not a smart move for Panama.
Scott
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