I must say that I was surprised like a lot of folks that Panama actually moved forward with this agreement. Since I invested and moved most of my funds to Panama several years ago, I made the determination that I would remain transparent to the United States (IRS) and have filed the annual reports necessary for full disclosure. While I know a lot of folks think that it is not necessary, I would like to share a story with you where many years ago I was at a firm’s headquarters when some agents showed up with IRS flak jackets and side arms to lock down the company. “No sir, I am not an employee” I said as they kindly asked me to leave. Since then I have respected the policy of “it is better to knock on their door than to have them knock on yours. I found out later that the owner of the company was charged and sent to prison. He lost most of his money and later died of a heart attack. So on that cheerful note here is a story from Don Winner and as usual a colorful editorial comment.
Contributed by: Don Winner
Despite 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.
And another link to the actual agreement for your reading pleasure