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Panama Still Dragging Its Feet on Tax Haven Policies

The global financial crisis and subsequent G20 meetings have spurred a multilateral effort to eliminate tax havens and share taxation information among countries, according to a new report released by the OECD.
"In 2009, more progress toward full effective exchange of information has been made than in the past decade," the 30-nation Western economic think tank said in a report issued Tuesday. Jeffrey Owens, head of the OECD's Tax Center, told reporters at a briefing that by the end of 2009, 195 countries had signed tax agreements, up from just 23 the year before.
It seems that a true global consensus against tax havens has developed. There are a few stubborn holdouts, however:
Still, eight countries have no tax agreements to date, Owens noted, saying the OECD is working on bringing them into the fold.
These countries are Liberia, Nauru, Belize, Niue, Guatemala, the Philippines, Vanuatu, and Panama, though the OECD did not list Guatemala and the Philippines as tax havens like the others.  Despite the OECD’s effects to bring Panama “into the fold”, as recently as October 2009 Panama explicitly refused to sign a tax information exchange agreement (TIEA) that the U.S. Treasury has demanded (see Inside U.S. Trade Oct. 23, 2009).

It is puzzling, then, that some in the Obama administration believe that the Bush-era Panama FTA should be the next trade agreement put to a vote in Congress, according to an Inside U.S. Trade article published today (subscription only).  Supporters of the Panama FTA in the administration said things could go one of two ways:

If the administration is demanding that the tax issue be addressed in a tax treaty, it would be complicated matter, both because it would be politically hard for Panama to accept and because it is not clear when the Treasury Department would find the time to conduct the negotiations, they said. But if the U.S. settled for addressing the tax issue in a letter that pledged Panama would live up to its obligations in the Organization for Economic Cooperation and Development, it would be easier to achieve, one business source said.
The tax treaty route would be a real improvement (if, for instance, Panama agreed to an automatic tax information exchange agreement); the “letter” would mean zero change from the status quo.  The OECD already lists Panama as one of the “jurisdictions that have committed to the internationally agreed tax standard, but have not yet substantially implemented”, so Panama’s “pledge” would mean nothing more than what it has already said it is going to do…eventually…when it feels like it.  For more background on Panama’s tax haven policies, see our report here.
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Comments

Teresa

Actually tax haven outside US is way better There is a site called http://www.taxhavens.us/ they have a lot of info and if anyone is interested should investigate more.

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