Transfer pricing and double taxation are two of the topics covered in three bills to reform regulations which the Ministry of Finance has put to public consultation.
One of the proposals is the bill on "Informational declaration of transfer pricing".Crhoy.com explains that"...This empowers the tax authorities to check that transactions between related parties are valued at prices similar to those that would be agreed between independent parties in comparable transactions. "
In a seventh round of negotiations, an attempt will be made to lay the groundwork for an agreement that seeks to avoid damage to both countries.
If an agreement is not reached, Colombia will classify Panama as a tax haven, with a consequent increase in costs for bank transactions between the two countries, and exposing Columbia to the measures provided under Panama's Law of Retaliation.
As part of the agreements signed between the two governments the elimination of double taxation has been established.
From a statement issued by the Government of Guatemala:
Within the framework of an official visit by President Otto Perez Molina which will took place on Friday, the Governments of Guatemala and Mexico signed the following bilateral agreements:
Congress has passed the elimination of the provision that payments be made by natural and legal persons when they are shareholders in corporate groups.
According to the liberal congresswoman Gabriela Núñez "... The law is properly applied to individuals who receive dividends as when they receive a profit they must pay their taxes; however, when it relates to a company it becomes a double taxation because the company, when it receives dividends, pays the tax and then when it distributes the dividends among its own shareholders, it once again incurs a tax liability of 10%, which is considered prohibited in the Tax Code. "
The Colombian government announced an understanding to negotiate a double taxation treaty according to OECD standards, allowing it to remove Panama from its list of tax havens.
A statement from the Ministry of Finance of Colombia:
Colombia and Panama Reach Agreement to combat tax evasion
After several days of negotiation, the two nations agreed to the signing of an agreement for cooperation in the exchange of tax information.
The governments of Panama and Israel have signed a treaty to avoid double taxation.
A statement from the Ministry of Foreign Affairs reads:
Panama and Israel sign Treaty to Avoid Double Taxation
Thursday, November 8, 2012
The Deputy Foreign Minister, Francisco Alvarez de Soto, who is on an official visit to the State of Israel, emphasized that holding the first session of political consultations and the signing of a treaty to avoid double taxation, represent relevant bilateral achievements.
The Cabinet Council is supporting a bill to approve an Agreement between the Republic of Panama and the Czech Republic for the avoidance of double taxation and to prevent tax evasion with respect to taxes on income and its protocol.
From a press release from the Presidency of Panama:
Cabinet approves agreement for double taxation and preventing tax evasion number 14
In Costa Rica an agreement with the United Mexican States on the Exchange of Information in Tax Matters is in force.
From la Gaceta 101 of 25 May 2012:
PURPOSE AND SCOPE OF AGREEMENT
The competent authorities of the Contracting Parties will provide assistance through exchange of information that is foreseeably relevant to the administration and enforcement of domestic law with respect to taxes or tariffs covered by this Agreement.
Adherence to the Multilateral Agreement involves sharing tax information with 23 countries, allowing advances to be made in international transparency policies and the fight against tax evasion.
A statement from the Finance Ministry reads:
COSTA RICA SIGNS INTERNATIONAL TAX COOPERATION CONVENTION WITH 23 COUNTRIES
• Efforts have earned the country’s removal from international list of tax havens
The French government has reported that Costa Rica will no longer appear in its list of states and territories who are non cooperative with regards to taxation.
A statement from the Presidency reads:
- Decision conducive to investment climate in the country.
- New information exchange agreements will be signed in the next few days
The Finance Minister of Costa Rica, Fernando Herrero, said Costa Rica was excluded from the list of tax havens drawn up by France in early 2010.
Before April 2012 the country will negotiate double taxation agreements with the UAE and Hungary.
The announcement was made by the Minister of Economy and Finance, Frank de Lima, during the opening of the new ordinary session of the Legislature.
"The head of the Ministry of Economy and Finance stressed the importance of the ratification by the French legislature of the double taxation agreement with Panama signed last December and its departure from the "gray list " collated by the Organization for Economic Cooperation and Development (OECD). He said that the move by France means that later this month, when France makes its list of countries with uncooperative tax policies, Panama should be left out of this category", reported Prensa.com.
In January, the first Convention of Tax Information Exchange could be signed with Australia.
In order for this convention, and others are under negotiation, to be implemented, Congress needs to approve the banking secrecy law, which would allow access to accounts relating to tax matters, a requirement of the Organization for Economic Cooperation and Development (OECD).
If Panama does not efficiently and effectively provide the information required by foreign authorities, it will worsen the current perception of non-cooperation.
An analysis of this thorny issue made by Carlos Barsallo, president of the National Securities Commission, makes clear that since 1949, the adoption of Act 62 of 1938, Resolution 38 October 1949 and the reform of the Tax Code 1957 and subsequent regulations, have the clear purpose of turning Panama into an offshore financial services center (commonly known as a tax haven).