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Friday, October 24 2014 @ 07:57 AM EDT

Panama Signs Tax Information Exchange Agreement With the United States (IRS)

Money MattersDespite the dissent, Panama and the United States yesterday signed an Agreement on the Exchange of Tax Information. The signing, which took place in Washington DC, was held behind closed doors. The document was signed by U.S. Treasury Secretary Timothy Geithner and Vice President of the Republic of Panama, Juan Carlos Varela. "The agreement with the United States complies with the essential principles defined in its strategy, as the banking center of Panama will benefit from the country's removal from discriminatory lists," said the Minister of Economy and Finance, Alberto Vallarino. After the signing, the document must be approved by the Panamanian Cabinet Council, and thereafter be sent to the National Assembly for ratification, the Vice Minister of Economy Frank De Lima told Panama America. With this agreement, Panama has signed ten of the twelve treaties necessary to be removed from the "gray list" of tax havens. (Panama America)

Editor's Comment: Politics in Panama are obviously domestic. Martinelli and most Panamanians simply don't care to protect US citizens who are using Panama's laws to evade taxes they owe to the US government. What matters more are the overriding strategic economic issues, and continuing to remain defiant on these issues would eventually cause more harm to the nation, and the "good" they were getting by having those funds on deposit. Back in the old days, when the Panamanian economy was much smaller and weaker, these funds were important. But now that Panama has taken over the management of the Panama Canal, what matters more are the big boy ratings - such as having all three houses rate Panamanian debt as investment grade, and staying off things like the "tax haven" lists of the OECD and others. I expect there are some people who will pull up stakes and move their operations to another country because of this agreement. However I also think the Panamanian lawyers will now get even more creative, and come up with new and better ways to still play within the rules, and continue to avoid the new swinging bats. Let's see how this works out over time. Anyway, if Panama rolled over, they did so because that was what was best for Panama. You can now expect the ten newly arriving IRS agents who are working at the US embassy in Panama City to crawl right up your ass and set up camp.

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Panama Signs Tax Information Exchange Agreement With the United States (IRS) | 1 comments | Create New Account
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Panama Signs Tax Information Exchange Agreement With the United States (IRS)
Authored by: susangg on Saturday, December 04 2010 @ 09:23 AM EST

Don, I'm not so sure that the IRS agents who are now working in Panama (and who got here before this agreement, by the way) are going to be "camping up our ass." The fact is that most US expats are of little interest to the IRS because most of us don't make any significant money in Panama.
Of course, government folks have been known to take on the easiest targets first. And it would be very easy for them to target ordinary expats, because they are already know who most of us are, because we're filing those foreign-bank-account/foreign corporation forms,or we are getting social security or military retirement deposited to our Panama bank accounts, or we are actually "working" in Panama at a regular job (and taking advantage of the foreign earned income tax exemption), etc. And its true that government folks are usually lazy and its easier to go after little guys than big bad guys.
But my suspicion is that the target of this agreement is not ordinary Americans who are living in Panama, but rather, criminals (like drug dealers and money launderers), people who have established "offshore" subsidiaries of US corporations (especially when no actual work is performed here), and people who have no connection to Panama at all other than they decided to form an "offshore" entity because some huckster told them it would protect them against paying taxes. Having a bank account or holding property in a corporation if you actually live here is not a red flag. Having a bunch of "offshore" entities when you've never even set foot here is.
I hope I'm right.