U.S. And Panama Sign Tax Information Exchange Agreement

Dec 02, 2010   

On November 30, 2010, the United States Department of the Treasury announced that the U.S. and Panama have signed a new tax information exchange agreement (“TIEA”). A copy of the Department of the Treasurys press release can be read in full here.

Under the terms of the TIEA, both the United States and Panama will be able to gather information, including information related to bank accounts, from each other in both criminal and civil tax matters for tax years beginning on or after November 30, 2007. Federal taxes covered not only include income taxes, but also employment, gift, estate, and excise taxes. Additionally, while the information exchanged is to be used primarily for tax purposes, it may also be used for purposes allowed under the provisions of US-Panama Treaty on Mutual Legal Assistance in Criminal Matters provided that the country which is producing the documents gives written consent. The full text of the U.S.-Panama TIEA can be read here.

The U.S. – Panama TIEA comes at a time when countries around the world once thought of as tax havens are moving away from tight bank secrecy laws and into an era of openness and transparency. By using bi-lateral tax information exchange agreements, countries can ensure that taxpayers are left without a place to hide their assets and income. A complete list of tax information exchange agreements has been published by the Organization for Economic Cooperation and Development (“OECD”) and can be found here.

The OECD is one of the leading groups calling for more transparency in banking laws. With the backing of the G20, the OECD has taken steps to encourage tax information exchange agreements by proposing a model tax exchange agreement. The OECD also maintains its “blacklist” of uncooperative tax haven nations, its “grey list”, which names nations that have committed to OECD standards but have yet to fully implement the required changes, and its “white list” of countries that have substantially implemented the tax rules. As countries commit to transparency and enter into fully enforceable information exchange agreements, the OCED reclassifies nations.

Uruguay provides an example of what the OECD hopes to accomplish. In April of 2009, OECD placed Uruguay on its blacklist as a nation that had not committed to internationally agreed tax standards. However, due to the swift action of the government of Uruguay in entering into 12 tax information exchange agreements with nations around the world, Uruguay was re-classified as a gray list country. It is expected that when all 12 agreements are fully implemented Uruguay will be removed from the gray list and placed the white list of OECD nations.

If you have any questions regarding the potential impact the US-Panama TIEA may have on your business or any other tax provision, please contact Fuerst Ittleman at contact@fidjlaw.com.