After one month the new Panamaian government has taken office, steps are already being taken to open its finanical records from decades of banking secrecy, according to USA Today. The governments' motiviation is said to be because it wants to help strengthen the world's economic recovery. Another reason is the impending U.S. trade deal and trying to maintain its image as the leading offshore finanical center. The proposed U.S. trade deal would eliminate tariffs on all U.S. exports to Panama.
Panamanian officials say the U.S. has its own corporate secrecy issues, such as the "limited liability corporation" that can be established under Delaware law, and insist that the trade and tax issues should be kept separate. But political environment in D.C. has already created a hurdle for them. President Obama discussed with Panama's newly elected president, Ricardo Martinelli, the tax and other remaining issues shortly after the former businessman was sworn in July 2. Obama co-sponsored legislation to crack down on tax havens while still a U.S. senator.
The popularity for investors to use Panama as it's finanical center is because of its banking secrecy, particlarly those individuals living in politically volatile countries.
Investors also can establish corporations in Panama using a device called "bearer shares," which shield the owner from disclosure. "The secrecy laws there are very, very strict," says Shawn Carson, director of international tax at accounting firm CBIZ Mahoney Cohen.
In 2002, Panama agreed to practice more transparency with its tax information, but has yet to do so. Unwelcome attention from the financial crisis prompted several countries that had been identified as tax havens, such as the Cayman Islands, to sign information-sharing agreements with other countries. Panama so far has done little in response to the growing international chatter.
"I certainly wouldn't put them as one of the more forthcoming countries. ... Panama is beginning to look increasingly like an outlier," said Jeffrey Owens, director of the OECD's Centre for Tax Policy and Administration.
The OECD meeting in Mexico on Sept 1st is the deadline Panama has given itself to take action on its finanical plans.
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