Panama: A Tax Haven Or Platform For International Services And For Doing Businesses?

Last Updated: 4 November 2016
Article by Eduardo Morgan Jr.

Colombia´s Decree

Decree # 1966 of 2014.
The President of the Republic of Colombia considers:
That as part of harmful tax competition between jurisdictions, tax havens offer attractive tax advantages for capital, financial activities of non-residents and other activities susceptible to geographical mobility, by means of a lax legislation and controls with little or no transparency in relation to services provided to third countries, with inexistent or nominally low tax rates compared to those applicable to similar operations in Colombia; the existence of laws or administrative practices that restrict sharing of information; the lack of transparency at legal or regulatory level or in administrative functions; the no demand of a substantive local presence or real activity of economic substance; all of which can cause distortions in both, investment and commercial decisions, and because of its effect erode the tax base of the Colombian State.

President Santos- Statement

The president of Colombia, Juan Manuel Santos, stated that the measures taken by his government, to declare Panama a "tax haven" is not "a decision against" the Central American country, but a measure to prosecute tax evaders.
Colombia, he added, has to implement a policy that includes these type of measures because Colombia wants to be recognized as "a serious country which fights tax evasion."
This policy is part of the Colombian commitments in order to join the Organization for Economic Cooperation and Development (OECD).

OECD Organization for Economic Cooperation and Development

Comprised by 34 countries.

What is it?

The Economist magazine calls it a "Rich Countries Club" and Paul Krugman sees it as a Think Tank. I identify as a CARTEL.

The Cartel

It seeks to eliminate competition of countries like Panama, to their financial centers.
So they confessed:
In paragraph 36 of "Improving Access to Bank Information" says the OECD:
"The liberalization (of financial markets) was a response to the threat to the financial markets by "Offshore" financial centers". These centers, in the 60s and 70s decades, managed to attract foreign financial institutions offering banking systems with minimal regulation and low taxes ... at a time when technological advances made them of easy access... "

Pascal Saint-Amans – Director: OECD Centre for Tax Policy and Administration

Note: Pascal forgot the existence of the U.S.A. and the fact that it is the world's largest financial center.

The most important note of the report

"Paradoxically, the United States, which set the ball rolling with FATCA, does not want to sign up to the new OECD standard, which would require full reciprocity between countries, preferring to stick to its own law instead."
This was not even mentioned in the local journalist extensive report
Source: Tax Summit in Berlin aims to say goodbye to banking secrecy

Through the administrative act 2014-62 US Federal Government indicates with which countries it has obligations to exchange information and with which ones on the list they actually exchange

  • Países con los que tiene obligación
  • Antigua & Barbado
  • Aruba
  • Australia
  • Austria
  • Azerbaijan
  • Bangladesh
  • Barbados
  • Belgica
  • Bermuda
  • Brazil
  • British Virgin Islands
  • Bulgaria
  • Canada
  • Cayman Islands
  • China
  • Colombia
  • Costa Rica
  • Croatia
  • Curazao
  • Cipré
  • República Checa
  • Dinamarca
  • Dominica
  • República Dominicana
  • Egipto
  • Estonia
  • Finlandia
  • Francia
  • Alemania
  • Gibraltar
  • Grecia
  • Grenada
  • Guernsey
  • Guyana
  • Honduras
  • Hong Kong
  • Hungria
  • Iceland
  • India
  • Indonesia
  • Irlanda
  • Isle of Man
  • Israel
  • Italia
  • Jamaica
  • Japón
  • Jersey
  • Kazakhastan
  • Korea del Sur
  • Latvia
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Malta
  • Marshall Islands
  • Mauritius
  • Mexico
  • Monaco
  • Morocco
  • Netherlands
  • Netherlands
  • Netherlands ilsand territories (Bonaire, Saba, and St. Eustatius)
  • New Zealand
  • Noruega
  • Pakistan
  • Panama
  • Perú
  • Philippines
  • Polonia
  • Portugal
  • Romania
  • Russian federation
  • República Eslovaca
  • Slovenia
  • Sur África
  • España
  • Sri Lanka
  • St. Maarten (Dutch Part)
  • Sweden
  • Switzerland
  • Tailandia
  • Trinidad y Tobago
  • Tunisia
  • Turquia
  • Ucrania
  • Reino unido
  • Venezuela
  • Australia
  • Canadá
  • Dinamarca
  • Finlandia
  • Francia
  • Alemania
  • Guernesey
  • Irlanda
  • Isle of Man
  • Italia
  • Jersey
  • Malta
  • Mauritius
  • México
  • Netherlands
  • Noruega
  • España
  • Reino Unido

Countries the USA gives information:

  • Australia
  • Canadá
  • Dinamarca
  • Finlandia
  • Francia
  • Alemania
  • Guernesey
  • Irlanda
  • Isle of Man
  • Italia
  • Jersey
  • Malta
  • Mauritius
  • México
  • Netherlands
  • Noruega
  • España
  • Reino Unido

We are no Tax Haven
Panama has none of the factors Colombia identifies as tax haven.
1. Our tax law contains no law that gives special treatment for investments in Panama, to foreigners or to foreign investors, in general. Tax law is equal for all domestic and foreigners, whether or not residents. Example: Interest on bank deposits. Both nationals and foreigners are exempted. On the other hand, U.S. nonresident aliens are exempted, not so Americans or residents who do have to pay taxes. This is, clearly, a law to attract foreign investment.
2. We do not have "lax" controls. Our tax laws are transparent; there are no powers to negotiate fiscal agreements on taxes and our banking center is acknowledged as one of the strictest in the world. Our Banking system has the distinction of having survived unharmed the severe crisis during the Noriega's period when banks were closed for several months (no depositor lost neither principal nor interest when the system was reinstated). We also passed without damage the banking crisis that began in 2008 when many banks in OECD countries went bankrupt caused, precisely, by "lax" controls on subprime mortgages.

3. Our income tax is at the same level, and sometimes higher than some OECD States (example: tax on corporations in England 21% vs 25% in Panama; individuals who earn up to 11k pay no taxes; above 50k pay 15% and then up to 25%. We pay property taxes. Sales and service taxes range between 7%-10%.

4. It is untrue to say that foreign enterprises do not have substantial presence in Panama. Some of the most important Colombian companies (banks, cement factories, etc., and more than 106 regional headquarters of multinational companies operate in Panama, some very important. We also have our banking center, (no letterbox banks), the Colon Free Zone, ports, and the Panama Pacific Area where huge global companies like Caterpillar operate.

5. Panama has signed assistance agreements with many countries, including fiscal matters. We are founding members of the United Nations; we belong to the WTO and other authentic international organizations.

6. Our stock corporation system is acknowledged for its public registry and for the obligation of the registered agent (who must be an attorney) to document the identity of their clients. History shows that whoever uses a Panamanian corporation to commit a crime is identified. No one gets away. Such are the cases of presidents of Nicaragua and Costa Rica; the Peruvian, Montesinos and the Colombian, Murcia. This does not happen in England or in the United States where since 2008 they have been trying to pass the law to "know the client" but because of the opposition of some States (Delaware, Nevada and Wyoming, mainly), which are in the business of selling companies.

What is Panama?
It is a platform of services and international businesses built on three pillars:
1. Geographical Position

  • Panama Canal
  • Ports
  • Internet connectivity with five optical cables
  • COPA Air Hub
  • Free of natural disasters (hurricanes, earthquakes, etc.)

2. Legal and financial system

  • The Dollar as currency
  • Territorial Tax System
  • No central bank
  • Well-regulated banking center
  • Registration of ships and registration of companies, both transparent
  • Consular representation in major world ports
  • Colon Free Zone
  • Law or Multinational Headquarters
  • Panama Pacific Area
  • City of Knowledge

3. Panamanian society and its people

  • A friendly country with no tradition of civil wars; without discrimination of any kind, (race, sex or religion, nationality)
  • Excellent schools and health centers


1. Panama does not have, according to our laws, none of the characteristics that defines a tax haven.
2. The aggression received by including us in a list of tax havens with the consequences that entails, had the positive effect of uniting Panama to defend its platform of services and international businesses that account for 82% of its economy, and therefore is a matter of national security.
3. Also, and very important, that before the threats we can apply our law of retaliation which would affect enterprises that participate in options for important infrastructure projects; that uses our platform of services and international business in Panama as well as our own local economy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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