Panamá tiene la razón moral

By Roberto González Jimenez

Published by La Prensa

September 3rd, 2014

Panama must present moral arguments in order to resist the pressure from organizations such as the Organization for Economic Cooperation and Development (OECD) and countries like the United States (EU) on the topic of  tax information exchange.

This is the opinion of Dan Mitchell, an economist and senior fellow at Cato Institute -an American liberal thinking group-, who gave a lecture on Monday on regulatory and fiscal challenges facing international financial centers.

From his point of view, Panama should defend its territorial taxation model and explain that the problem is in other countries with universal systems. Another moral argument in favor of Panama would be “why should we be forced to do certain things when EU is the biggest tax haven in the world and is not doing so.”

In the practical sense, Mitchell recommended that Panama dilates the implementation of the measures required, pending the possibility of political change in the United States in 2014 and 2016, and considers to eventually appeal to the World Trade Organization.

In accordance with the Law on Foreign Account Tax Compliance (FATCA), EU requires financial institutions around the world to automatically submit information on their American clients.

In this regard, Mitchell said that the U.S. has promised reciprocity with countries that sign the intergovernmental agreement for the enforcement of the law. “But America cannot be reciprocal because it cannot collect the information. So countries like Panama should state that they will share information when the U.S. does so. ”

According to him, the administration of President Barack Obama is calling on Congress -controlled by Republicans-  to change the law, “but Congress will not approve. In fact, it is possible that after 2014 Congress will pass legislation to weaken FATCA. ”

During the previous administration, Panama agreed to the terms of the intergovernmental agreement with the U.S. to implement FATCA, and it will be the responsibility  of the current administration to sign it.