Draft of Tax Information Exchange Agreement Between the US and Panama
Monday, November 29 2010 @ 12:57 PM UTC
Contributed by: Don Winner
AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF PANAMA and THE GOVERNMENT OF THE UNITED STATES OF AMERICA
FISCAL COOPERATION AND EXCHANGE OF INFORMATION WITH RESPECT TO TAXES
Whereas the Government of the Republic of Panama and the Government of the United States of America ("the Parties") wish to establish the terms and conditions governing tax cooperation and exchange of information relating to taxes;
Accordingly, the Parties have agreed as follows:
ARTICLE 1 - SCOPE OF AGREEMENT
The competent authorities of the Parties shall provide assistance through exchange of information that might be relevant to the administration and enforcement of domestic legislation of the Parties concerning taxes covered by this Agreement, including information that may be relevant for identification, assessment, enforcement or collection of taxes with respect to persons subject to them, or for investigation or prosecution of criminal tax matters.
ARTICLE 2 - JURISDICTION
The information is provided in accordance with this Agreement by the competent authority of the requested Party, regardless of whether the person to whom the information relates is a resident, or if the information is held by a resident of a Party. However, the requested Party is not obliged to provide information that is not in its custody or possession or control of persons within its territorial jurisdiction. For purposes of the preceding sentence, "authorities" includes all government agencies, political subdivisions and local authorities.
ARTICLE 3 - TAXES COVERED
1. This Agreement shall apply to the following taxes imposed by the Parties:
(A) in the case of the United States, all federal taxes, and
(B) in the case of Panama, all national taxes.
2. This Agreement shall apply equally to all identical taxes established after the date of signature of this Agreement to be added or to replace existing taxes. This Agreement shall also apply to substantially similar taxes that are imposed after the date of signature, to add or replace existing taxes if the competent authorities of the Parties so agree. The competent authority of each Party shall notify the other of any substantial change in taxation and in the information gathering measures covered by this Agreement.
3. This Agreement shall not apply to taxes imposed by states, municipalities or other political subdivisions, or possessions of the Parties.
ARTICLE 4 - DEFINITIONS
1. In this Agreement the term:
(A) "competent authority" means, for the United States, the Secretary of the Treasury or his representative, and Panama, the Ministry of Economy and Finance or his representative;
(B) "criminal tax matters" means tax matters involving intentional conduct which is liable to prosecution under the criminal laws of the Requesting Party;
(C) "criminal laws" means all criminal laws designated as such by national law, irrespective of whether contained in the tax law, penal code or other laws;
(D) "information" means any act, statement, document or record in whatever form;
(E) "information gathering measures" means judicial, regulatory, criminal or administrative action to allow the requested Party to obtain and provide the information requested;
(F) "national" of a Party means:
i) any natural person possessing the nationality or citizenship of that Party;
ii) any legal person, partnership or association to obtain that status in accordance with the laws of that Party.
(G) "person" means a natural person, corporation or any other organization or group of persons;
(H) "requested Party" means a Party to this Agreement who has been asked or has provided information in response to a request; (I) "Party" means a Party to this Agreement submits an application or who has received the requested information, and (J) "tax" means any tax covered by this Agreement established national or federal level by a party, not including customs duties.
2. For the purposes of determining the geographic area within which can be exercised jurisdiction to compel the delivery of information, the term "United States" means the United States of America, including Puerto Rico, the Virgin Islands, Guam, and any other possession or territory of the United States.
For the purposes of determining the geographic area within which can be exercised jurisdiction to compel the delivery of information, the term "Panama" means the territory of the Republic of Panama, according to its legal and international law.
3. Any term not defined in this Agreement, unless the context otherwise requires a different meaning, or the competent authorities agree on a meaning in accordance with the provisions of Article 9 of this Agreement, shall have the meaning attributed to it by law party seeking the application of this Agreement, any meaning assigned by the tax laws of that Party on the meaning given to that term in other laws of that Party.
ARTICLE 5 - EXCHANGE OF INFORMATION ON REQUEST
1. The authority of the Requested Party shall provide upon request of the competent authority of the requesting information for the purposes referred to in Article 1 of this Agreement. This information will be exchanged regardless of the requested Party may not need such information for its own tax purposes or the conduct being investigated would constitute a crime under the laws of the Requested Party if it had occurred on the territory of the requested Party . The competent authority of the requesting party may lodge a request for information under this Article when it is not able to obtain the requested information by other means, unless the use of such media lead to disproportionate difficulties.
2. If the information held by the competent authority of the requested Party is not sufficient in order to comply with the request for information, the competent authority of the requested Party shall take all relevant information gathering measures to provide the party requesting the information requested , although the requested Party may, at that time, no need such information for its own tax purposes. Privileges under the laws and practices of the requesting Party shall not apply to the requested Party to execute a request for information and such matters are reserved for resolution by the requesting Party.
3. If specifically requested by the competent authority of the Party, the competent authority of the requested Party shall, to the extent possible under its domestic law
(A) specify the date and place for taking testimony or the production of books, documents, records and other tangible property;
(B) take an oath to the individual to give testimony or produce books, documents, records and other tangible property;
(C) protect the books, documents and original and unpublished records, and other tangible property;
(D) obtain or submit true and correct copies of books, documents and records original works
(E) to determine the authenticity of the books, documents, records and other tangible goods produced and provide certified copies of original documents;
(F) examine the individual submitting the books, documents, records and other tangible property in relation to the purpose and manner in which the respective element is or was maintained;
(G) to allow the competent authority of the requesting party provide written questions to which the person making the books, documents, records and other tangible property is liable in relation to the items produced;
(H) any other act that is not in violation of the laws or administrative practice fight with the requested Party;
(I) certify the procedures as requested by the competent authority of the requesting Party were followed or that the procedures requested could not be followed by an explanation of the deviation and why were not followed.
4. Each Party shall ensure that has the power to give effect to the provisions of Article 1 of this Agreement and, subject to Article 2 of this Agreement, to obtain and provide, through its competent authority and upon request:
(A) information held by banks, other financial institutions and any person, including nominees and trustees, acting in a representative or fiduciary, and
(B) information relating to the ownership of companies, partnerships, trusts, foundations and others, including the limitations set forth in Article 2 of this Agreement, the ownership information of all persons in an ownership chain , in the case of trusts, information on settlors, trustees and beneficiaries and in the case of foundations, information on founders, members of the board of trustees and beneficiaries.
However, as provided in subsection 4 (b) above, this Agreement does not impose an obligation for parties to obtain or provide information about publicly traded companies or public funds or collective investment schemes, unless such information can be obtained without incurring disproportionate difficulties.
5. All requests for information made by one party must be made with the highest degree of specificity possible. In all cases, such requests must specify in writing the following:
(A) the identity of the taxpayer whose taxes or criminal liability which is under investigation;
(B) the time period over which information is sought;
(C) the nature of the information requested and the manner in which the requesting Party would prefer to receive it;
(D) the matter under the tax laws of the requesting Party for which the information is requested;
(E) the reasons that subscribe to the belief that the requested information may be relevant to the tax administration requested and the execution by it in relation to the person identified in subsection (a) of this paragraph;
(F) reasons for believing that the information requested in the requested Party or is in possession or control of a person within the jurisdiction of the Requested Party;
(G) to the extent they can be determined, the name and address of any person believed to be in possession or control of the information requested;
(H) a statement whether the requesting party may obtain and provide the information requested if a similar request was made by the requested Party;
(I) a statement that the requesting party has exhausted all reasonable means at their disposal in their own territory to obtain the information, except in cases this leads to disproportionate difficulties.
ARTICLE 6 - POSSIBILITY OF REFUSE AN APPLICATION
1. The competent authority of the requested Party may refuse a request for assistance:
(A) when the application is not made in accordance with this Agreement;
(B) where the Party has not exhausted all reasonably available means in their own territory to obtain the information, except that resort to such means to rise to disproportionate difficulties, or
(C) if disclosure of such information is contrary to public policy of the requested Party.
2. This Agreement shall not impose upon any Party the obligation:
(A) provide the information under the laws of the requested Party is (i) subject to professional secrecy or (ii) contains any trade secret, industrial, commercial or professional secret or trade process, provided the information described in paragraph 4 (a) of Article 5 of this Agreement shall not be treated by that fact alone as a secret or trade process, or
(B) administrative measures at variance with its laws and administrative practices, provided that nothing in this paragraph (b) impair the obligations of a Party under paragraph 4 of Article 5 of this Agreement.
For purposes of paragraph 2 (a) (i), the term "information subject to professional secrecy" means information that would reveal confidential communications between a client and an attorney, when such communications are made to seeking or providing legal advice or intended to be used in existing or anticipated legal proceedings.
3. A request for information may not be refused on the grounds that the tax liability giving rise to the application is contested by the taxpayer.
4. The requested Party may refuse a request for information if the information is requested to administer or enforce a provision of tax law of the requesting Party, or any requirement connected to it, which discriminates against a national of the requested Party, compared with a national of the requesting Party under the same circumstances. Shall be deemed a tax provision or a requirement for it discriminates against nationals of a state required when, in similar circumstances, the standard becomes more onerous for them than it was for national of the requesting state. For the purposes of the preceding sentence, a national of the requesting Party that is subject to tax on their worldwide income is not in the same conditions as nationals of the requested Party, which is not subject to tax on their worldwide income. The provisions of this paragraph shall not be construed as preventing the exchange of information with respect to taxes imposed by the Parties on the profits of branches or on premium income of foreign insurers.
5. The Party shall not be obliged to obtain and provide information to the requesting Party would not be able to obtain under its own laws in similar circumstances in order to administer or enforce its own tax laws or in response to a request by the party required under this Agreement.
6. The statute of limitations in the law of the requesting Party concerning taxes described in paragraph 1 of Article 3 of this Agreement, governing the application of information exchange. The expiration of the limitation period established by the laws of the requested Party relating to such taxes shall not prevent the requested Party to obtain and provide the requested information.
ARTICLE 7 - CONFIDENTIALITY
Any information received by the requesting Party under this Agreement shall be treated as confidential and be disclosed only to persons or authorities (including courts and administrative bodies) in the jurisdiction of the requesting party responsible for the identification, collection, enforcement, prosecution or resolution of Appeals for the taxes to which this Agreement, or supervisory bodies to the extent necessary for individuals, authorities or bodies to fulfill their respective responsibilities. Such persons or authorities shall use this information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. The information received by the requested Party, along with the request for assistance under this Agreement shall also be treated as confidential by the requested Party. The information will not be disclosed to any other person, entity or authority, or used for purposes other than those set forth in Article 1, except in cases where the requested party's prior written consent provided that the information can also be used to the purposes permitted in accordance with the provisions of the existing Mutual Legal Assistance Treaty in Criminal Matters between the parties, signed on April 11, 1991, under the same may be amended. In any case the information provided under this Agreement is disclosed to another country without the express prior written consent of the competent authority of the Party providing the information.
ARTICLE 8 - COSTS
Unless the competent authorities of the Parties agree otherwise, the recurrent costs of assistance shall be borne by the requested Party and the extra costs incurred in providing assistance shall be borne by the requesting Party.
ARTICLE 9 - MUTUAL AGREEMENT PROCEDURE
1. Where difficulties or doubts arise between the parties on the application or interpretation of this Agreement, the competent authorities will do their best to resolve the matter by way of mutual agreement.
2. The competent authorities may adopt and implement procedures to facilitate implementation of this Agreement, including additional forms of information exchange to promote more effective use of information.
ARTICLE 10 - PROCEDURES FOR MUTUAL ASSISTANCE
If the competent authorities of both Parties deem it appropriate, may agree to exchange expertise, develop new audit techniques, identify areas of noncompliance, and jointly study areas of noncompliance.
ARTICLE 11 - ENTRY INTO FORCE
The Parties shall notify to reciprocate when they have completed their internal procedures necessary for entry into force of this Agreement. This Agreement shall enter into force on the later of the dates of such notifications. Once the Agreement enters into force, it will have effect for applications to be made on or after the date of enactment, with respect to matters pertaining to fiscal years beginning on or after three years prior to signing this Agreement.
ARTICLE 12 - TERMINATION
1. This Agreement is effective until terminated by either party.
2. Either party may terminate this Agreement by written notice to the other party. Such termination will be effective the first day of the month following the expiration of a period of three months after the date of receipt of notice of termination.
3. If either Party terminates this Agreement without prejudice to such termination, both Parties shall be bound to comply with the provisions of Article 7 of this Agreement with respect to any information obtained under this Agreement.
IN WITNESS WHEREOF the undersigned duly authorized for this act by the respective Parties, have signed this Agreement.
DONE at Washington, in duplicate, in English and Spanish languages, both texts being equally authentic, on November 30, 2010.
FOR THE GOVERNMENT OF THE REPUBLIC OF PANAMA FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA
JUAN CARLOS R. VARELA - Vice President and Minister of Foreign Affairs
Timothy Geithner - Treasury Secretary
(End of Translated Draft Agreement)
Now The Lawyers Will Argue: This is how the game is played. The rats run away with the cheese (you guys are the rats) and then the cats try to find new ways to plug the loopholes they've behind. Once they do something like this and plug up a bunch of loopholes, then the rats run to a new loophole, maybe this time in Africa somewhere. Panama is no longer a sleepy little backwater third world banana republic, and every day they take strides toward becoming more respectable on the world scene. Maybe Hugo Chavez will create offshore structures and investment opportunities lathered in privacy protections where you can hide your money from Uncle Sam. But for now, it looks like Uncle Sam is getting into bed with Tio Ricardo Martinelli. This one is a game changer. And, I have to admit, this is a tremendous surprise. I didn't think they were going to do this.
Copyright 2010 by Don Winner for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Salud.