Menu

Panama will adopt International Standards to prvent Tax Evasion

European governments are raising the pressure on Panama to strengthen the transparency of its financial and legal systems.

France and Germany have issued action plans to fight against tax evasion and singled out Panama as one of the protagonists in that arena.

France returned Panama to its list of states and territories not cooperating with tax inquiries and asked the country to share all financial information related to French taxpayers.

In addition, it has sought to renegotiate the current tax agreement between the two countries.

For its part, the Ministry of Finance of Germany also sought Panama's cooperation.

"Panama needs to join the system of automatic exchange of information as quickly as possible," it said.

In addition, it requests the country make adjustments to make it easier to find out the owners of Panama companies.

"Shareholders or managers should be required to provide regular reports of the economic activities that their companies engage in. We require complete transparency," it said.

The German government warned that: "if Panama does not cooperate quickly, we will promote the idea that certain financial activities that are carried out in Panama should be scorned internationally."

France, Germany, Spain, the United Kingdom and Italy, Europe's five largest economies, called on the G-20 to create a blacklist of tax havens, and sanction countries that do not cooperate in the fight against tax evasion.

"We want lists that allow the implementation of sanctions against countries that do not respect the rules," French Finance Minister Michel Sapin said.

Yesterday, Panama announced that it would adhere to standards created by the Organization for Economic Cooperation and Development. Panama had rejected signing that agreement, most notably because the United States has refused to do so. But revelations in documents leaked from the Panama law firm Mossack Fonseca have placed pressure on Panama to act, which prompted it to agree to the OECD demands.

Vice President Isabel de Saint Malo de Alvarado said the country would "immediately begin with the implementation of the automatic exchange of tax information."

Told about the statement by Panama, OECD officials said it was "really good news."

Read more...

Law firm will continue operating as normal - Mossack Fonseca

The global investigation into the practices of the Panamanian firm Mossack Fonseca would not have resulted in a change to the way the firm does business, said one of its founders and partner, lawyer Jürgen Mossack.


"At this moment, I would say that there should be no repercussions," said Mossack in an interview with the U.S. newspaper The Wall Street Journal.

This is the first time that Mossack has talked publicly since the scandal began Sunday. So far, Ramón Fonseca Mora, the other founding partner, was the only one to appear in the media.

In recent days, the firm has been accused of malpractice as detailed in millions of documents obtained from an anonymous source by the German daily Süddeutsche Zeitung and shared with other 109 other media through the International Consortium of Investigative Journalists (ICIJ).

Mossack, a Panamanian lawyer of German origin, was also confident that people will continue participating in the business of the creation and management of companies.

"We won't suspend our services to grow bananas. People make mistakes. We have also made mistakes. But they were the exception and not the rule," he said from his office in Marbella.

Our brand "needs to be protected. We feel that the best way for that is to do things ourselves and not rely on others," said Mossack.

MF Legal Affairs Director Sara Montenegro said the leak of the documents needs to be investigated.

“The only crime is the violation of privacy,” she said.

Read more...

No thanks France - Panama on gray list

France will put Panama back on its blacklist of uncooperative tax jurisdictions, its finance minister said on Tuesday after media revelations about a Panamanian law firm specialised in setting up offshore firms.


"Panama is a country that wanted us to believe that it could respect the main international tax principles and thus it was taken off the tax haven blacklist," Michel Sapin told lawmakers during question time in parliament.

"France has decided to add Panama back on the list of uncooperative countries with all of the consequences that that will have for those who have dealings with Panama," he added.

Panama is a far bigger financial center than the other jurisdictions on France's tax haven list, which currently includes Botswana, Brunei, Guatemala, Nauru, Niue and the Marshall Islands.

Panama has come under fire from the Paris-based Organization for Economic Cooperation and Development for back-tracking on a commitment to automatically share tax information with other countries.

The country increasingly stands out for its failure to push ahead with automatic tax information exchange since all other major offshore financial centers having committed to it in the coming two years.

Of the 7,800 tax regularization cases French authorities dealt with last year, 515 involved a shell company registered in Panama, the Finance Ministry said on Monday.

Following a massive leak about clients of Panama law firm Mossack Fonseca, France's financial prosecutors opened a preliminary investigation into aggravated tax fraud to establish whether French taxpayers are concerned.

The leak could prove to be a boon for the Socialist government in the midst of a tax evasion clampdown that netted over 12 billion euros ($13.6 billion) last year.

Read more...

Resignation of Iceland's Prime Minister

Iceland's embattled prime minister has resigned amid a controversy over his offshore holdings, a Cabinet minister said Tuesday as outrage over the accounts roiled the North Atlantic island nation.

Prime Minister Sigmundur David Gunnlaugsson, who had denied wrongdoing, is stepping down as leader of the country's coalition government, Agriculture Minister Sigurdur Ingi Johannsson told Icelandic broadcaster RUV.

No replacement has yet been named, and Iceland's president has not yet confirmed that he has accepted the prime minister's resignation. Crisis meetings continued as several hundred protesters gathered outside parliament Tuesday in Reykjavik to protest the offshore accounts set up by Gunnlaugsson and his wife.

Opposition lawmakers say the holdings amount to a major conflict of interest with his job. If his resignation is accepted, Gunnlaugsson would be the first major figure brought down by a leak of more than 11 million financial documents from a Panamanian law firm showing the tax-avoidance arrangements of the rich and famous around the world.

Gunnlaugsson said he and his wife paid all their taxes and have done nothing illegal. He also said his financial holdings didn't affect his negotiations with Iceland's creditors during the country's acute financial crisis. Those assertions did little to quell the controversy.

The prime minister sought at first to dissolve parliament Tuesday and call an early election, but President Olafur Ragnar Grimsson said he wanted to consult with other party leaders before agreeing to end the coalition government between Gunnlaugsson's center-right Progressive Party and the Independence Party.

"I need to determine if there is support for dissolving (parliament) within the ruling coalition and others. The prime minister could not confirm this for me, and therefore I am not prepared at this time to dissolve parliament," Grimsson said.

The president met with Independence Party lawmakers later Tuesday to discuss the governmental crisis. Gudlaugur Thor Thordarson, chairman of the Independence Party, criticized the prime minister for unilaterally seeking to dissolve parliament.

"It was a total surprise for us to see that. I don't think it was the rational thing to do. I've never seen it done before in Icelandic politics and I hope that I will not see it again," he said.

The impact in Iceland from the leaks has been the most dramatic, but leading officials in Russia, Ukraine, China, Argentina and other countries are also facing questions about possibly dubious offshore schemes used by the global elite.

The leaked documents allege that Gunnlaugsson and his wife set up a company called Wintris in the British Virgin Islands with the help of Mossack Fonseca, the Panamanian law firm. Gunnlaugsson is accused of a conflict of interest for failing to disclose his involvement in the company, which held interests in failed Icelandic banks that his government was responsible for overseeing.

Arni Pall Arnason, leader of the opposition Social Democratic Alliance, said Gunnlaugsson's position was not tenable.

"I think it's obvious that we cannot tolerate a leadership that is linked to offshore holdings," he said. "Iceland cannot be the only western European democratic country with a political leadership in that position."

Iceland, a volcanic island nation with a population of 330,000, was rocked by a prolonged financial crisis when its main commercial banks collapsed within a week of one another in 2008.

Since then Icelanders have weathered a recession and been subjected to tough capital controls — another reason the prime minister's offshore holdings rankle many.

Read more...

Government of Panama is not to be related with the Mossack Fonseca Case

Vice President and Chancellor Isabel de Saint Malo de Alvarado said today that the country should not be judged by the failings of a law firm.


"We won't allow Panama to be judged by articles related to the actions of a law firm," she said in response to the wave of articles from around the world focusing on the activities of Mossack Fonseca, whose files were leaked to the German newspaper Süddeutsche Zeitung and subsequently shared with the International Consortium Investigative Journalists.

"You have to separate the actions of a firm from the actions of the Republic of Panama," said the vice president in an interview on Telemetro.

She mentioned that the policy of the administration of President Juan Carlos Varela is adherence to transparency and zero tolerance for "irregular actions." He stressed that Ramón Fonseca Mora and Jürgen Mossack - co-founders of the law firm - no longer have ties to the government: the first resigned as minister-counsellor and the second is no longer part of the council on foreign relations. She acknowledged that a son of Fonseca Mora is a consul in Dubai, but she stressed that he is not an attorney at the firm.

On Wednesday night, Varela announced the creation of an "independent committee" of national and international specialists to evaluate existing practices and propose measures to strengthen the transparency of the financial and legal systems.

The vice president said she hopes that "the allies with whom we have diplomatic relations recognize the efforts" being carried out by the country.

Read more...

New President of the Chamber of Commerce

Members of the Chamber of Commerce Tuesday selected Jorge García Icaza as the new president of the business Guild for 2016-2017.

They also chose the new members of the executive board during its first regular meeting of the General Assembly.
Garcia Icaza replaces Carlos Fernández. He was the only candidate. After his election, he thanked the members of the guild for giving him the opportunity to win the post.
"We will continue to be good partners in actions executed by the government to the benefit of the nation and also manifest respectfully our timely disagreement when so required, fulfilling our mission to promote the responsible economic development of Panama," he said.
Garcia Icaza is an engineer by profession and has been a member of the guild since 1995.

Read more...

Varela has been asked to suspend the contracts with Odebrecht Company

President Juan Carlos Varela is being pressured to suspend contracts his government has awarded to the Brazilian construction firm Norberto Odebrecht due to its links to corruption scandals.


The president of the company, Marcelo Odebrecht, was sentenced to 19 years and 4 months in prison in Brazil this week for corruption and money laundering. y The company has been awarded two major projects by Varela's government, the Colón urban renewal project and the construction of line 2 of the Metro.

Pro-government Deputy José Antonio Domínguez said that the sentencing of Odebrecht should mean that the company is not allowed to participate in any public bid in the country. Maribel Jaén, of the Justice and Peace Commission, warned that deals with the company generate "suspicion."

Odebrecht and the company Fomento de Construcciones y Contratas are in charge of the construction of line 2 of the Metro, valued at $1.8 billion.

In addition, the Brazilian company is partnering with CUSA for the Colón project, valued at $537 million.

Domínguez said these contracts set a bad precedent.

"It sends a bad message to the rest of the country," he said.

Former Panama Stock Exchange Director Roberto Brenes said that previous projects done by the company should be audited to ensure that no economic damage was done to the state.

Read more...

San Francisco Building permits have been Frozen

The Panama City Municipal Council has unanimously approved a resolution that instructs the planning department not to approve any building permits in San Francisco.


The measure was submitted by the representative of that jurisdiction, Carlos Pérez Herrera, and will be in effect until the Directorate of Works and Buildings and the National System of Civil Protection finish a report concerning the entire infrastructure of the city.

On Tuesday, during the ordinary session of the council, residents testified about problems caused by the numerous construction projects in the neighbourhood.

Damaris Young said that projects have failed to comply with safety, environmental, maritime and health regulations which have impacted people living near them.

Mayor José Isabel Blandón shared the concerns of the inhabitants and said that the main problem is a lack of planning.

He added that today's problems are ones "that we have inherited."

To remedy the situation, Blandón said that he recently tendered a land-use plan for San Francisco. The goal of the initiative is to determine, among other things, what is the capacity for new projects and the type of construction that may be approved.

Read more...

Foreign Investment top's 5 Billion!

Panama received just over $5 billion in direct foreign investment, an increase of 16.9 percent compared to 2014, according to the Office of the Comptroller General.

Rogelio Alvarado, director of economic analysis at the Ministry of Economy and Finance, said that a great deal of this amount is re-investment, or money brought into the country by entities that already have an existing stake in the country.
"Instead of looking for an investment in another country, investors prefer to stay in business here because they have confidence in the country. In addition, foreign investors are expanding production capacity in this country," he said.
According to the Economic Commission for Latin America and the Caribbean, Panama was the country in the region with greatest amount of foreign investment in relation to the size of its economy in 2015.
According to the UN agency, Panama "is well positioned to continue to receive investments."

The expansion of the Panama Canal, and the expansion of the maritime industry as a whole, and the promotion of free trade zones are important magnets for investment.
There have also been large sums of foreign capital invested in sectors such as renewable energy and mining.

Read more...

Minimum Wage set to increase 8.5% on Jan 1st

Minister of Labor Luis Ernesto Carles announced the approval of an 8.5 percent increase in the minimum wage for most sectors.

The increase does not include employees of small businesses, banana farms and domestic service. Those employees will have their increase set by the Executive Branch.
The increase will take effect Jan. 1.
It was approved by a negotiating committee consisting of representatives of workers and employers.
The wage only applies to private businesses, however, the National Minimum Wage Commission recommended to the Executive Branch to implement a $500 monthly minimum wage for employees of municipalities, governments and community boards.
The current minimum wage is $488 for rural workers and $624 for workers in urban areas.

Read more...