Panama
Double Tax Treaties
Since
Panama does not levy taxes on foreign source
income, it has no double tax treaties.
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Panama Other International Agreements
Mutual
Assistance Treaties: Panama has concluded
mutual legal assistance treaties with the
US, Costa Rica, El Salvador, Guatemala,
Honduras, Nicaragua and Colombia. The treaties
operate at the administrative level: in
other words, Court procedures are not required,
although there is an appeal procedure. The
treaties cover serious crime, but do not
include fiscal crime. The Panamanian authorities
do not entertain requests for information
on fiscal matters.
Panama's
Inclusion on FATF Blacklist: In June
2000, Panama was identified by the FATF
as a non-cooperative tax haven in the global
fight against money-laundering. The result
of this was that Panama was one of fifteen
tax jurisdictions placed on an FATF blacklist.
Each offending tax haven had a year in which
to correct its regulations and legislation.
The
FATF released its annual report in June
2001, in which the organisation revised
its list of countries and territories deemed
non-cooperative. Only four were removed
from the list, including Panama (the other
three being the Cayman Islands, Liechtenstein
and the Bahamas). Panama was praised by
the FATF for its substantial efforts to
conform to forty recommendations set out
in a code of good practice governing money
laundering.
In
2000 Panama had adopted four anti-money
laundering decrees: Legislative Assembly
Law No. 41 of October 2, 2000, entitled
"Capital Laundering" and amending the Penal
Code by imposing harsh penalties of up to
ten years imprisonment for publicly breaching
the secrecy of information or carrying out
unlawful transactions related to capital
laundering; Legislative Assembly Law No.
42 of October 2, 2000, setting down Measures
for the Prevention of the Crime of Capital
Laundering; Ministry of the Presidency Decree
No. 136 of October 3, 2000, creating the
Financial Intelligence Unit for the Prevention
of Capital Laundering; and Executive Decree
No. 213 of October 3, 2000, amending the
1984 Decree relating to the practice of
trusts and making it compulsory for banks
and certain financial institutions to render
information on "suspicious transactions".
US
Treasury Advisory Information
Consequent
to the original FATF blacklisting of Panama,
the US Department of State issued an Advisory
against the country. The US Treasury Secretary,
Larry Summers, warned that the Advisory
was a caution to US financial institutions
to give extra scrutiny and caution to transactions
with Panama.
However,
with the news that the FATF had found Panama
to be fully compliant with all forty of
the organisation's recommendations and the
country's subsequent removal from the blacklist,
the Treasury Department announced that the
advisory was no longer necessary. Thus US-based
banks and other institutions no longer needed
to apply enhanced scrutiny to transactions
involving Panama.
Free
Trade Agreements At the conclusion of
the fourth Taiwan-Latin American leaders'
summit in Taipei in October, 2003, the Presidents
of Panama and Taiwan signed a Free Trade
Agreement that saw tariffs abolished on
many goods from 2004, making provision for
greater market access between the two nations,
as well as reduced duties on agricultural
and industrial products, investments, services
and telecommunications.
Under
the terms of the agreement, 6,200 categories
of goods, or 71% of exports from Taiwan
to Panama are exempt from duties, whilst
4,160, or just under 50%, of goods exported
in the opposite direction are free from
tariffs.
It
is expected that by 2014, 97% of exports
from Taiwan to Panama, and 95% of trade
flowing from Panama to Taiwan will be free
from duties.
A
trade agreement between the United States
and Panama appeared to be on course in August,
2003, after President Bush informed then
President Mireya Moscoso in a meeting that
he wished to move negotiations forward.
In
the first positive step towards the crystallizing
of a deal between the two nations, Mr Bush
assigned then US trade representative Robert
Zoellick to the case, stating that he wished
to "accommodate" Panama in any future deal.
President
Moscoso told reporters following the meeting
that: "There's good will, and that's what
we wanted to hear," adding that the trade
deal may help Panama clear its massive trade
deficit with the United States, which currently
stands somewhere around $665 million. However,
the US government has rejected the idea
of giving Panama a seat at the free trade
pact of Central America negotiations.
Further
progress was reported in November, 2004,
when the fifth round of free trade talks
took place. After the meeting, at which
the issues of intellectual property, rules
of origin and sanitary standards were discussed,
Panamanian negotiator Estif Aparicio revealed
that the two parties "came closer in their
proposals". He went on to add that: "There
has been significant progress and (some
chapters) are virtually wrapped up."
By
2007, both sides had reached agreement on
the FTA, which was signed in June of that
year by the two governments, and ratified
by the Panamanian congress in a 58 to 3
vote in July 2007. At the end of 2007, the
package awaited ratification by the US Congress.
This comprehensive free trade agreement
covers trade in goods and services, intellectual
property rights, investment, telecommunications,
labor and environment, and government procurement.
Bilateral
ties between Panama and Singapore were further
strengthened in March 2006 by the signing
of the Panama-Singapore Free Trade Agreement
(PSFTA).
The
PSFTA is a broad-based and comprehensive
agreement, covering issues such as trade
in goods and services, customs procedures,
financial services, investment, telecommunications,
e-commerce, competition policy and government
procurement. It also provides for collaboration
between Panama and Singapore in areas such
as investment promotion and science and
technology.
The
PSFTA will provide Panamanian and Singaporean
companies with enhanced access to each other’s
markets, and will boost the growing trade
and investment links between Singapore and
Panama, according to a statement from the
government of Singapore.
Under
the Trade in Goods chapter, tariffs on 98%
of Singapore’s domestic exports will
be eliminated upon entry into force of the
agreement. Key exports that will benefit
include orchids, beer, processed foods,
refined oil, chemicals, paints and varnishes,
auto parts, engines and electronics. For
its part, Singapore has committed to providing
duty-free access to all Panamanian goods
immediately upon the entry into force of
the FTA.
Under
the Cross Border Trade in Services chapter,
service suppliers from Panama and Singapore
are guaranteed non-discriminatory access
to each other’s markets. Singapore
companies in sectors such as computer &
related services, real estate services and
distribution services are among the key
beneficiaries of this chapter. The chapter
also contains an annex on maritime transport
services which grants Singaporean vessels
the same treatment as Panamanian vessels
in Panamanian ports and vice versa.
The
Investment chapter grants investors from
Panama and Singapore greater certainty over
their investments in each other’s
markets with safeguards against unreasonable
expropriation, and provisions for non-discriminatory
treatment and dispute settlement.
In
May 2006, the European Union announced plans
to launch free trade agreement talks with
six Central American countries and four
countries of the Andean Community. The negotiations
will initially involve Guatemala, El Salvador,
Honduras, Nicaragua, Costa Rica and Panama.
In
June 2006, Chile and Panama signed the free
trade agreement they reached in February
2005. The agreement opened up 92.5% of the
Chilean economy to Panamanian producers.
The
10-year negotiation process was interrupted
between 1998 and 2004 due to differences
over financial services.
Alejandro
Ferrer, Panama's Minister of Commerce and
Industry said that most Panamanian products
would enjoy a zero tariff when entering
Chile's market.
Chile
is Latin America’s heaviest user of
the Panama Canal, with 50% of the country’s
external trade reliant on the thoroughfare.
Last year, exports from Chile to Panama
totaled $111.5 million, while imports from
Panama reached $10.8 million.
The
agreement includes protection for several
Panamanian industries, including many agricultural
products such as coffee, rice and sugar.
Other agricultural products are still excluded
from the agreement; and talks on financial
services are also continuing.
In
July 2007, Panama also agreed a free trade
deal with Costa Rica. The agreement will
result in the removal of tariffs on 93%
of industrial and agroindustrial products,
although barriers on certain industrial
goods are not scheduled to phase out completely
for eleven years, while some agricultural
products will have schedules for reduction
of duties as long as 16 years.
The
agreement also opens up Costa Rica's monopolistic
telecoms market to Panamanian operators,
and the the Instituto Costarricence de Electricidad
will be able to offer services in Panama.
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