Panama Set to Retaliate Against ‘Unfair' Tax, Trade Partners

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By David Haskel

Aug. 11 — Panama intends to retaliate against countries that “discriminate” against it on tax and trade issues.

Retaliatory legislation sent to the Assembly Aug. 11 “will help us better safeguard Panama and defend ourselves from discriminatory steps that have been adopted by other countries over the past few years and those that may eventually come up in the future,” Economy Minister Dulcidio De la Guardia said in a statement.

The bill contemplates substantially raising taxes on dividends and remittances sent by citizens of those countries from Panama, as well as royalties, interests, tariffs on certain goods, and implementing limitations to immigration of citizens from countries included in the list.

The legislation would restrict “contracts with the government” and “issuance of new licenses or concessions to companies from those countries,” as well as other measures the government deems adequate, the minister said.

In addition, under a decree effective Aug. 16 through year's end, the government is to increase import duties on fresh cut flowers, mineral coal, clinker, and garments. Excluded from the increase are nations that have a free trade agreement with Panama as well as members of the Central American Economic Integration Subsystem and some Latin American Integration Association (ALADI) members.

Stiglitz Quits

The moves come on the heels of the resignation of Nobel-laureate economist Joseph Stiglitz and the ex-chairman of the OECD's Working Group on Bribery in International Business Transactions, Mark Pieth, from an eight-member panel set up in April to help the country boost its financial and legal transparency in the aftermath of the Panama papers scandal.

“Having a committee on transparency that is not transparent itself makes no sense,” Stiglitz told the Spanish news agency Efe Aug. 6.

The Panama chapter of Transparency International Aug. 10 lamented the move, saying that without their presence the report that the remaining six local members of the panel are expected to issue soon will lack credibility.

“We have missed a chance to have a document that had generated great expectation and to show the government's commitment to transparency,” it said in a statement.

The Central American nation has been under international pressure after its financial and banking image was badly tarnished by the leak in April of 11 million documents from the local law firm Mossack Fonseca & Co., which triggered the scandal of global proportions widely known as the Panama Papers (70 ITM, 4/12/16).

To contact the reporter on this story: David Haskel in Buenos Aires at correspondents@bna.com

To contact the editor on this story: Rita McWilliams at rmcwilliams@bna.com

For More Information

The Ministry of Economy and Finance's announcement is at http://www.mef.gob.pa/es/noticias/Paginas/leyderetorsion.aspx.

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