Panama and the United States Sign an Agreement for Tax Cooperation and Tax Exchange of Information Relating to Taxes
Contributed by Icaza, Gonzalez-Ruiz & Aleman
07 December, 2010
On the 30th day of November of 2010, the governments of the Republic of Panama and of the United States of America (USA) signed an Agreement for Tax Cooperation and the Exchange of Information relating to Taxes (the Agreement).
It is important to emphasize that the Agreement can only be applied to cases related with USA federal taxes and Panama national taxes. Therefore, it is just applicable to the information related to tax payers of both countries.
The requests of information that one of the States file, through its competent authority to the competent authority of the other State must be accurate and must always detail in writing, among other things, i) the complete identity of the taxpayer investigated; ii) the accurate time period that covers the investigation; iii) the nature of the requested information; iv) the legal basis of the request and v) the name and address of the person or entity that is presumed to be in possession of the information. The requests that do not comply with these requirements shall not be accepted, which shall prevent the indiscriminate requests or fishing expeditions.
The State that requests the information must comply with the requirements of the Agreement and follow before the competent authority of the requested State, the procedure that the legislation of said State provides for.
The competent authorities shall be for Panama, the Ministry of Economy and Finance and for USA, the Secretary of the Treasury.
This Agreement sets forth that the party that requests the information can only make it, if it is not possible to obtain said information by other means, having the obtained information confidential nature, therefore could only be disclosed to the competent authorities of the country that request it. Neither the authorities of Panama, nor the authorities of USA may deliver the obtained information to other countries, unless there is an authorization in writing to that effect of the country that has provided the information.
The Requested Party may refuse to the delivery of the information if the request that has been filed does not comply with the terms set forth by the Agreement or if the Requesting Party has not exhausted the means to obtain the information by other channel or if the requested information violates the public policy principles of the country to which the information is requested.
This Agreement does not oblige the Parties to provide information if under the laws of the Party to which said information is requested: (1) is subject to legal restrictions (such as information that discloses confidential communications between lawyers and its clients) or (2) contains commercial, industrial, business or professional secrets or commercial proceedings (excluding information in possession of banks, other financial institutions and persons acting as agents or fiduciaries).
The Requested Party shall not be obliged to obtain and provide information that under the same circumstances and pursuant their laws, the Requesting Party could not obtain in their own country.
The Agreement shall only come into force when both Parties have completed the implementation of the internal procedures that allow them the compliance thereof. The Agreement shall cover the information that correspond to the fiscal periods that started up to three years before the signing date of the Agreement, that is fiscal periods starting from November 30th, 2007.
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