such as Liechtenstein, the Cayman Islands and even Switzerland have accepted reforms to pacify the Treasury authorities
of countries such as the United States and Germany. Panama,
so far, has stood firm. Its business and political leaders say that
it is being unfairly targeted by rich countries and is today a
paragon of integrity with banks that are highly regulated and
with a respected watchdog agency that monitors large transactions. This is undeniably true, but while the state taxes
domestic economic activity quite heavily, it does not touch
foreign-sourced income.
Panama’s corporate law allows companies to be created in
hours rather than days and permits them to disguise their
ownership through anonymous bearer shares. Bank secrecy
rules are strict and this, coupled with excellent transportation
and communication links, has given Panama one of the highest numbers of subsidiaries of foreign firms of any country
worldwide and allows it to register upwards of 45,000 new
offshore firms every year. Panama’s free trade zone handles
$19 billion-worth of goods annually, so it is not just the construction industry which has been booming.
There is little doubt that the pressure from the United States
and other “rich countries” on Panama to change its ways and
make itself less attractive to “tax evaders and money launderers” will keep growing and will show increasing results.
Already, many multinationals with regional offices in Pana-
ma are reconsidering and big foreign banks are closing operations because of Panama’s being included in the OECD’s
grey list. As for the United States, the Panamanian-U.S. free
trade pact signed in June 2007 remains stalled on Capitol
Hill, ostensibly due to complaints by U.S. lawmakers that
Panama serves as an offshore tax haven and needs tougher
labor-rights standards.
It also needs to get off the OECD’s “grey
list” of nations deemed to show
“insufficient financial transparency.”
The Martinelli administration, however, is well aware that
even if it gave in to all U.S. demands, it could not move the free
trade pact through the Democrat-dominated U.S. Congressional mill. Besides, for domestic political reasons the government cannot be seen as buckling under pressure from abroad.
Panama “will always take care of its interests,” says Vice Minister of Finance Dulcidio de la Guardia. Indeed so, and it is for
this reason that Panama will do what it can to try to hang on to
its financial and corporate laws for as long as possible. ●
Dr. Belcsák is president of S.J. Rundt & Associates, Inc. He may be
reached at 973-731-7502 or at [email protected]. More
information can be found at www.rundtsintelligence.com.
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