Eduardo Morgan Jr.

(English) GDP Outlook: Panama Leads Latin America according to Latin Business Chronicle

BY CHRONICLE STAFF

Panama will have Latin America’s highest economic growth the next five years, according to a Latin Business Chronicle analysis of new forecasts from the International Monetary Fund.

Close behind are the Dominican Republic and Peru.

Meanwhile, Venezuela will see the lowest growth in the five-year period 2011-15.

All in all, Latin America should grow an average of 4.0 percent during that time. That compares with 2.7 percent in the United States, 2.0 percent in the European Union and 3.8 percent in Central and Eastern Europe. However, it does lag the world average of 4.5 percent, which is pushed up by significant growth in Asia, Africa and the Middle East.

PANAMA: LATIN AMERICAN STAR

Panama’s economy will grow an average of 6.6 percent the next five years.

(English) CF&P Renews Call to Eliminate Taxpayer

(WashingtonD.C.Wednesday, October 13, 2010)

The Center for Freedom and Prosperity is renewing its call to end U.S. taxpayer funding of the Organization for Economic Co-operation and Development (OECD). The United States currently provides more funding to the OECD than any other nation, yet the Paris-based bureaucracy constantly works against the interests of American taxpayers.), ,

The recent OECD Global Tax Forum, which was attended on behalf of CF&P by Dan Mitchell, Senior Fellow of the Cato Institute, is a good example. The OECD bureaucracy is continuing its attack on low-tax jurisdictions, and even though it was unable to push through any new initiatives, the ongoing harassment of jurisdictions with pro-growth tax policy is counter-productive and a gross misallocation of resources.

The political environment in Washington is in the midst of a major transformation and this creates an opportunity for CF&P to rejuvenate its efforts to end the use of American taxpayer dollars to subsidize the OECD. “We expect that lawmakers next year will want to demonstrate a new commitment to fiscal responsibility,” said CF&P President Andrew Quinlan. “This will be the time for Congress to step up and stop wasting taxpayer money on this failed bureaucracy.”

Dan Mitchell added that, “OECD bureaucrats are pursuing bad tax policy, pushing for a global tax cartel that would undermine tax reform and lead to higher tax rates.” He concluded by warning that, “It is especially outrageous that OECD officials receive tax-free salaries while advocating what is best characterized as an OPEC for politicians.”

The Center for Freedom and Prosperity also recently released a video highlighting 6 key reasons to halt US funding of the OECD, including: its 1) promotion of a value-added tax in the US, 2) pursuit of an anti-tax competition agenda seeking to establish a global tax cartel, 3) endorsement of failed Keynesian spending in the US, 4) advocation of unpopular Obamacare policies, 5) call for more US spending on everything from welfare to foreign aid, and 6) support of new taxes on energy and financial services.

(English) Panama: Economic Fact Sheet

Presidency of Panama

Secretary of Economic Affairs

GDP (current):

– PANAMA: $24.3 Billion (2009) / $26.0Billion (2010 estimation)

– LATIN AMERICA AND CARIB. COUNTRIES: $4,024.0 Billion (2009)

GDP (annual growth rate):

– PANAMA: 2.4% (2009) / 7.0% (2010 estimation) / 6.0% (2011 est.)

– LATIN AMERICA AND CARIB. COUNTRIES: -1.9% (2009) / 5.2% (2010 est.) / 3.8% (2011 est.)

Despite lower GDP growth in 2009, it was the second best in Latin America and the Caribbean region.

Main projects to support future GDP growth:

i. Pan Canal Expansion: $ 5.3 Billion investment (estimated)

ii. Metro: 1.5 Billion (estimated)

iii. Heavy infrastructure investment by the government.

Unemployment (open):

– PANAMA: 4.2% (2008), 5.2% (2009)

– LATIN AMERICA AND CARIB. COUNTRIES: 7.3% (2008), 8.2% (2009)

Despite a decrease in GDP growth from 10.7% in 2008 to 2.4% in 2009, unemployment increased less than 1.5%.

Inflation:

– PANAMA: 2.4% (2009) / 2.8% (Jan-Aug 2010)

– LATIN AMERICA AND CARIB. COUNTRIES: 5.9% (2009) / 6.1% (1^ST half 2010)

Public sector debt:

– PANAMA: $11.1BILLION OR 43% OF GDP 2010 (E)

– LATIN AMERICA AND CARIB. COUNTRIES: $1,336 BILLION OR 33.2% OF GDP (2009)

External debt

– PANAMA: $10.1 BILLION OR 39.1% OF GDP 2010 (E)

– LATIN AMERICA AND CARIB. COUNTRIES: $426.5 BILLION OR 10.6% OF GDP (2009)

Imports (goods):

– PANAMA: $15.5 BILLION (2009) / $6.1 BILLION (2010 semester 1))

GROWTH: -14.3% (2009), -6.7% (Jan-Jul 2010)

MAIN IMPORTS: Oil derivatives, nondurable consumer goods and raw intermediate goods.

MAIN PARTNERS: USA (27.2%), Costa Rica (4.9%), México (4.6%)

– LATIN AMERICA AND CARIB. COUNTRIES: $642.1 BILLION (2009)

GROWTH: -24.7%

Imports (services):

– PANAMA: $2.2 BILLION (2009) /$1.2 BILLION (2010 semester 1)

– LATIN AMERICA AND CARIB. COUNTRIES: $134.2 BILLION (2009)

Exports (goods):

– PANAMA: $11.6 BILLION (2009) / $4 BILLION (2010 semester 1)

GROWTH: 8% (2009), -18% (2010 semester 1)

MAIN EXPORTS: Fish, banana, watermelons, pineapples, etc.

MAIN PARTNERS: USA (40%), Europe (32%), China (4%)

– LATIN AMERICA AND CARIB. COUNTRIES: $692.0 BILLION (2009)

GROWTH: -22%

MAIN PARTNERS: USA (75%), Europe (7%), China (1%)

Exports (services):

– PANAMA: $5.4 BILLION (2009) / $2.8 BILLION (2010 semester 1)

MAIN EXPORTS: Tourism, Panama Canal services.

– LATIN AMERICA AND CARIB. COUNTRIES: $104.0 BILLION (2009)

Foreign direct investment:

– PANAMA: $1.8 BILLION (2009) / $1.14 BILLION (2010 Semester 1)

– Growth: -26.2% (2009) / 56% (2010 Q1)

Industry

Competitiveness rank (world economic forum):

– Position #53 (2010) #59 (2009), #58 (2008). 134 countries.

We are working on improving Panama’s economic position

Panama canal:

– Transit of ships: 14,412 (2009) or -2.0 growth

– Income from operations: $1.5 Billion (2009) or 7.9% growth

Tourism:

– 3.5 Million passengers (2009)

– Annual Growth: 10.5%

– Spending by visitors: $1.5 Billion (2009) or 5.3 % growth

Raising Our Investment Grade

– Fitch’s rating: improved from BB+ / positive perspective to BBB-/ positive perspective

– Moody’s rating: improved from Ba1 to Baa3 / stable outlook

– S&P rating: improved from BBB- to BB+ / outlook stable

Strategies to Attract International Investment

Special Regimes to establish regional headquarters by Multinational Corps. (Law 41 of 2007)

– More information at: https://sem.mici.gob.pa/

Tax incentives:

– Tax exemption on income, social insurance and educational insurance, when their salaries come from abroad (parent company).

– Import Tariff Exemption for household goods when a worker moves for the first time to Panama.

Immigration benefits:

– Permanent Personnel – 5 years visa (Renewable)

– Temporal Personnel –3 months visa (Renewable)

One stop shops:

– The Ministry of Commerce manages three one stop offices to facilitate international trade, foreign investment and starting a business.

Relevant Projects

Panama Pacifico Special Economic Area:

– designed to encourage free flow and movement of goods, services and funds

– attract and promote investments

– generate jobs and

– make the Republic of Panama more competitive

City of Knowledge: Business, science and technological development park

– Fiscal benefits: Import tax exemptions, transfer tax exemptions (ITBMS), exemptions on money transfers abroad,

– Special visas to foreign personnel

– Affiliated companies with no limits to hire foreign staff.

Population

– Total today: 3.5 Million (1.8 MM men, 1.7 MM women; 1.8 MM in Province of Panama)

– Annual growth rate: 1.6%

Social

Human development index rank:

– Rank 60 of 182 countries (2009) à High Human Develop.

– Source: United Nations Development Programme.

Education

Literacy rate:

– 95% (General Lifestyle Survey, 2008. Contraloría General de la República)

Public spending on education and culture:

– 4.6% of GDP (Contraloría General de la República, 2009)

Health

Life expectancy:

– 76 years; 4^th highest in Latin America (World Health Organization, year 2008)

Quality of Life

Poverty rate:

– 33% (General Lifestyle Survey, 2008. Contraloría General de la República)

Income inequality:

– GINI of 55; zero= perfect equality; 100=perfect inequality (UNDP Human Development Report 2009)

Environment use efficiency:

– rank 18 out of 143 countries (Happy Life Index 2009)

Environmental public health:

– rank 24 out of 163 countries (Yale Environmental Performance Index, 2010)

Homicides per 100,000:

– 12.4 vs. 24.4 average in Central America (United Nations Office of Drugs and Crime, 2005)

Political environment

Political and press freedom:

– 1.5 (1= most free; 7= least free) (Freedom House)

Some useful links

Contraloría General de la República (General Comptroller’s Office):

Main reference for most economic data produced in the country. www.contraloria.gob.pa

Ministry of Economy and Finance:

Very good source for technical analysis and reports about the economic, financial and social environment in Panama. www.mef.gob.pa

Ministry of Commerce and Industry:

Provides relevant legal information relevant to firms operating in Panama. www.mici.gob.pa

Multinational Headquarter Companies site:

Provides specific information relevant to multinational companies headquartered in Panama. Benefits, requirements and permitted activities. www.sem.mici.gob.pa

One Stop Shops:

Website creation is still in process / To be confirmed by Vice Minister J. D. Arias

Panama Pacifico Special Economic Area Agency:

Information about business opportunities and legal requirements to set up business in the Panama Pacifico Special Economic Area. www.aaeepp.gob.pa/index_ingles.php

City of Knowledge:

General information about business and synergetic opportunities at this innovation center. https://www.ciudaddelsaber.org/en

(English) Letter from Dr. Eduardo Morgan Jr. to the editor of The Journal-STEP commenting the article “Banking Secrecy-Where will OECD´s Hunger for Tax Information Stop?” September 27, 2010

Dear editor,

I want to refer to the article BANKING SECRECY – Where will OECD’s hunger for tax information stop?

The OECD is not an international organization but a Think Tank of rich countries. International Organizations are the IMF, the IMO, and othes that were created openly for all countries and have special links or relationships with the UNO. Look at The Economist, September 11, edition and to some of the articles in The New York Times of Paul Krugman. Both refer to the OECD as a Think Tank.

The OECD goes even further than being a Think Tank. It is really a Cartel of Rich Countries. Its aim is to destroy the competency that the so call OFC represents to its members on financial activities. The OECD even accepted that expressly on its paper Improving Access to Bank Information for Tax Purposes (which was kept secret until March 24, 2000) which establishes the following:

“36. One of the elements that has fuelled globalization in the last decade has been the liberalization of financial markets, a trend which the OECD has promoted. This liberalization was in part a response to the threat to financial markets posed by offshore financial centres. Such financial centres in the 1960’s and 1970’s were able to attract foreign financial institutions by offering a minimally regulated banking system and minimal taxation at a time when technological advances made them more readily accessible. As capital flows to offshore financial centres threatened to undermine the traditional financial markets, a number of regulatory reforms were undertaken to level the playing field between onshore and offshore banking. 12 Exchange controls were eliminated. Some countries established markets to compete directly with the offshorefinancial centres. In addition, efforts were made to harmonise the regulation offinancial markets on a global basis. (https://www.oecd.org/dataoecd/3/7/2497487.pdf)”

The number one tax haven in the world is the more influential member of the Cartel. The US do not tax foreign passive investment on its economy, does not give information to third countries on these investments (only to Canada) but also guarantees total anonymity to the investor through the Qualified Intermediary Agreement (QI). Not even the IRS has the name of the investor. The only condition the Foreign Financial Intermediary has to fulfil is always to disclose US tax payers. Apparently the genius of the OCDE are not aware of this, or they are, as we maintain, nothing more than a cartel which aim is to destroy the so call OFC.

I end my comments referring to : IMF Executive Board Integrates the Offshore Financial Center Assessment Program with the FSAP Public Information Notice (PIN) No. 08/82
July 9, 2008
The OFC program began in 2000.2 Of the forty‐four jurisdictions that were initially contacted, 42 were assessed and two jurisdictions received technical assistance in lieu of assessment. The first phase of assessment was completed in 2005. Typically, the assessments reviewed a jurisdiction’s compliance with supervisory standards in banking, and with the anti‐money laundering and combating the financing of terrorism (AML/CFT) , and where applicable also assessed compliance with supervisory and regulatory standards in the insurance and securities sectors. Adherence to all four international standards among OFCs was broadly comparable or better, on average, than other countries, reflecting the higher than average incomes of OFC jurisdictions. All but one jurisdiction assessed in the first phase published the results of their assessments.

Legitimidad y Defensa de los Vehículos Jurídicos Panameños

https://www.morimor.com/files/upload/LegitimacyandDefense-Pan-Legal-Ent-Emjr-Sept10.pdf

(English) Panama, an example to the world

By Eduardo Morgan Jr.

August, 2010

In his presentation before the Banking Convention, Alberto Vallarino, Panama´s Minister of Economy and Finance, detailed the nation´s riches available to support our ambitious development plans for the coming years. He stressed the value of land in the Canal area and other regions, the expansion of public utilities and services, and several active and projected mining ventures. With the recovery of sovereignty over its geographical position and the Canal, these national resources, if properly administered could eliminate poverty and make Panama the Singapore of the Americas within a few years. Today, Singapore’s per capita income is around $ 35,000 and Panama’s is $ 11,400. In less than two decades, with the advantages presented by our geographical position, there is no doubt that we could equal and even surpass Singapore.

The purpose of this article is to point out that other revenue, of significant impact on the national budget, remains invisible for much of our population. This wealth is owed to great Panamanians who had to seek alternatives to avoid isolation fromo the rest of the world as they saw the cities of Panama and Colon turned into ghettos, its ports usurped, and the country blocked from both seas, because the Great Empire also monopolized the inter oceanic communications. Thanks to those visionary Panamanians, we were able to overcome circumstances that would have turned our country into the Haiti of Central America.

The initiative of these great men led to the creation in 1917 of the first Open Registry of Ships, making our country a pioneer of globalization, creating an instrument which promoted the development of maritime trade and reduced the costs of shipping operations. Ten years later, those great men created Law 32 of 1927 on Corporations, and as an essential complement to both, also established a territorial tax system. Today, Panama has by far, the world’s principal merchant marine.

The benefits derived from these instruments have been critical to our economy, and are, perhaps, our most substantial foreign investment. Year after year they provide recurrent income to the government because of new registrations of vessels and companies, as well as annual payments for rights and taxes from the existing portfolio already registered. To give some idea of the magnitude of this resource, it is worthy of note that in 2010, the income from the merchant marine was budgeted at $93 million, and corporate annual tax, at $84 million. The corporate annual tax was established in 1977. Since that time until 2009, it has generated revenues of more than $800 million. There are also additional revenues such as those from the Public Registry (Notaries and transfer tax of goods and services, among others), estimated this year at $32 million, and we must include the income to the private sector for services rendered to both the private and public sectors.. We estimate that our ships and corporations represent a total annual income to our economy of approximately $300 million a year. It is as if the country were the owner of a Trust Fund that at a rate of 3% interest, would represent assets of $10 billion.

This source of enormous wealth is in the sight of the main partners of the OECD Cartel, with the intent of eliminating Panama´s corporations against their corporations and LLC. (Limited Liability Companies from several States of U.S.A.). The Panamanian System with it´s public access to information in the Panamanian Public Registry, the requirement of a lawyer as Resident Agent and the obligation to know his client; guarantees that those who wrongfully use Panamanian societies to commit fiscal crimes are invariably identified. Thus, Panama is one of the few countries whose corporations comply with the rules of the IMF and the FATF on anti money laundering. This can be verified in the IMF 2006 financial evaluation of Panama. The following is an extract from page 83 of the IMF report: “Given the specialization of the country as provider of services for the constitution of offshore corporations, it constitutes (bearer shares) a significant deficiency of its AML / CFT regime, unless there exist enough evidence that the investigative and judicial authorities have been successful in identifying the ultimate beneficiaries of the companies under investigation.” In regard to this statement, the Panamanian Attorney General’s Office, at the request of the International Bar Association, certified in a note dated July 19, the following:

“It is worth mentioning that the Panamanian system gives publicity to those who are the directors, officers and resident agents of any society, through public records, allowing the authorities avenues to investigate who is the ultimate beneficiary of a corporation in Panama, event if has issued bearer shares. An example of this are the cases where, through the resident agent, we were able to locate the last beneficiary of these companies, given the duty the resident agent (lawyer) has to “know his customer”, according to the provisions of Executive Order N. 468 of September 8, 1994. “

In conclusion, Panama is an example to the world, not only for its Canal and its financial system but, also, for the serious manner in which it manages its merchant marine and corporate businesses; in notable contrast to the cartel countries of the OECD, like the United States, whose LLCs are invisible even to the FBI.

(English) World’s Best Tax Havens

FORBES Magazine
by Richard Murphy
July, 2010

Here are the top 10 places where you can hide money from prying eyes rather easily.

https://www.forbes.com/2010/07/06/tax-havens-delaware-bermuda-markets-singapore-belgium.html

(English) GAO (United States Government Accountability Office) – Report on minimal information required for U.S. Corporations

(The US Government Accountability Office, “GAO”, is an independent agency that works for the US Congress, investigating different matters. The Head of the GAO is the Comptroller General of the United States)

View Complete Study U.S. GAO

Continue reading (English) GAO (United States Government Accountability Office) – Report on minimal information required for U.S. Corporations

(English) Panama´s Law No. 42: Measures for the Prevention of the Crime of Laundering of Capitals

LAW No. 42

(English) Guidelines for Better Compliance with the Purposes of the Code of Conduct of The International Lawyers Association and Executive Decree No. 468

DEFINITIONS

Clients of the members of the Association shall be classified into one of the following categories:

– Professional (“correspondents”)

– Final Users (“users”) Continue reading (English) Guidelines for Better Compliance with the Purposes of the Code of Conduct of The International Lawyers Association and Executive Decree No. 468

Eduardo Morgan Jr.

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