The Global Forum on Transparency verified whether the exchange of financial information with authorities in other territories is effective.
If Panama does not change its position on the automatic exchange of information, will remain hostel «dirty money,» said Pascal Saint-Amans, the Organisation for Economic Co-operation and Development (OECD).
The director of the Centre for Tax Policy and Administration Organisation for Economic Co-operation and Development (OECD), Pascal Saint-Amans, warned Panama that if you can not decide to implement fully and without reservation, the exchange model automatic financial information «is exposed to scrutinize him as the suspicion that willingly install home dirty money».
The official international organization based in Paris, France, was speaking to the press the same week in which the OECD included the country back in the relationship of jurisdictions that have not committed in this area, alongside countries like Bahrain , Nauru and Vanuatu.
The Global Forum on Transparency recently verified in Panama if the exchange of financial information to authorities in other territories is effective, but only in October will be announced the results.
The controversy arose when the international body placed Panama as conditions to the adoption of this system that was bilaterally and under a model to ensure strict compliance with rules of confidentiality, protection and proper use of information.
For Saint-Amans the response provided by Panama «is not very convincing,» since – in his opinion the system called «common standard for communication» (in English common reporting standard) – «already includes strict requirements for protection confidentiality of information and its use is limited for tax purposes «.
On the case of the United States than with FATCA (Foreign Account Tax Compliance Act) has adopted a different accepted by the Global Forum of the OECD, involving a bilateral negotiated with each country mechanism, the official explained that «America is much more close to meeting the standards of the OECD that Panama «.
«From the standpoint of reputation, Panama is still the only place where people still believe they can hide their money,» he said.
The OECD called on Panama to reiterate its commitment to exchange information automatically. What are the consequences for Panama implementation of this model?
If Panama adopt the standard proposed by the OECD, the country would join more than 90 countries and jurisdictions that have committed to improve transparency in tax matters. Also it means that Panama would agree to the exchange of financial information automatically with all member countries to respect the requirements for protection of confidential information. This would send a strong message to the world that Panama is not a place where people can hide illicit money.
All major financial centers (from Switzerland to Singapore) have already acceded to this model and this has enhanced its reputation.
However, Panama does not agree to apply this provision holistically, but with reservations. Can the OECD accept your position?
Panama has decided not to commit to the automatic exchange of tax information, but has indicated that it will implement from its own model. The members of the Global Forum on Transparency, which includes more than 130 countries, including Panama, have expressed disappointment with the failure of Panama and this is also true for members of the G20 that have promoted the standard (of regulation of exchange automatic tax information).
The Panamanian Foreign Ministry has shown the president of the Global Forum on Transparency, Kosie Louw, its commitment to the exchange of financial information, but «a model that ensures compliance with rules of confidentiality and proper use of the information.» How do you view these statements?
The system called «common standard for communication» (in English common reporting standard) and includes strict protection for the confidentiality of information requirements and that their use is limited for tax purposes. For this reason the response provided by Panama is not very convincing. Why Panama should be the only major financial center that is not in accordance with these rules? The main financial centers agree and have been part of the standard regulation.
The prospect of Panama can attract money from other countries where the authorities have committed to fully implement the automatic exchange of tax information, but this is not necessarily a good thing. From the standpoint of reputation, Panama remains the only place where people still believe that you can hide your money.
However, Panama has asked the OECD will recognize the conditions that distinguish it from other jurisdictions. Will they accept these features in the future?
It is difficult to understand on what terms Panama could be different from Switzerland, Singapore, Hong Kong, Bermuda, Cayman Islands and other jurisdictions more than 90 have already accepted the automatic exchange of financial information. The world has changed radically in tax matters. Almost all countries have recognized. It is a pity that Panama does not join other countries in their effort to build better international tax cooperation, while ensuring the necessary respect for confidentiality and appropriate use of information exchanged.
This is not just a conversation «OECD-Panama» but a matter between Panama and the rest of the world.
What are the consequences for not adopting Panama unreservedly model automatic exchange of tax information?
The main risk facing Panama’s reputation. If you do not play with the established rules and isolated over other financial centers sends a strong negative message that is truly difficult to understand. Panama is exposed to scrutinize him and the suspicion that willingly houses dirty money is installed. This is a pity, because Panama has made progress towards financial cleanup, but his effort is being overshadowed by the controversy over the automatic exchange of tax information, he said.
So far the international community has adopted a positive approach, focusing on progress rather than taking defensive measures. The OECD has worked with all the other financial centers, and has largely stabilized the playing field worldwide.
We would be very happy to collaborate constructively with Panama and help both political power and the business community better understand the new global environment. The alternative – an escalation in the conflict between Panama and the international community does not interest anyone.
Do you currently how are advancing negotiated with Panama?
The Secretariat of the Global Forum on Transparency Contact Panama regularly. A few weeks ago he took out a review to measure
practice the exchange of tax information upon request of authorities in other territories. I have tried several times to collaborate with Panamanian authorities to advance the process without much success.
CNA: exchange would violate ‘Constitution’
An automatic exchange of tax information is totally violative of the Constitution, warned the National Bar Association (CNA). Through a note sent to the President of the National Assembly, Ruben de Leon, the union raises concern about the «continuing attacks OECD», by the mouth of the second in the body Pascal Saint-Amans.
«We would be in a situation in which fundamental precepts of our Constitution are violated as they are the right to privacy and due process, apart from the principle that Panamanians and foreigners are under the jurisdiction are equal before it would also be violated the law, «he says.
He adds that the OECD is taking advantage of the FATCA US law to justify their actions.
«This law extends its tax jurisdiction to third countries and despite being completely in violation of public international law, this country can apply for its great power of global financial systems.» Panama does not have to fall into this trap, as banks and other subject financial institutions to FATCA may enter into agreements directly with the IRS (now called IgA2) and give information of US accountholders or taxable US, he adds.
The exchange would open the door for other countries, mainly in Latin America, call us the exchange of tax information, which can be fatal to our banking center says. Much of the deposits of local banks migrate to the US banks where they are, as here, exempt from paying taxes.
The note, signing ANC president, Jose Alberto Alvarez, enjoins the President of the National Assembly to consult the Solicitor General on the markings of unconstitutionality of this treaty.
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