Retaliation measures in Panama
On October 26, 2016, the Panamanian Legislative Assembly approved the Economic Retaliation Act, which establishes sanctions applicable in case of foreign discriminatory restrictions against Panama Tax Haven status. The rule may be imposed on states, jurisdictions or international organizations that – in some form or another – either discriminate, apply measures that are disadvantageous or limited to any Panamanian natural or juridical person, or organizations established under Panama law.
Such discriminatory actions will merit reciprocal treatment, as well as retaliation mechanisms such as:
- Tax measures regarding the determination of applicable taxes on dividends and remittances abroad that are paid or credited as interest, royalties, commissions or any kind of income produced in Panama
- Measures to increase tariffs to natural or legal persons of States that discriminate against Panama
- Immigration and labor measures to nationals of the jurisdiction included in the List of Discriminating States
- Restriction or suspension of the movement of cargo or passengers by land
- And any other measures that the Cabinet Council may decide to adopt
Under this law, the Ministry of Economy and Finance will be responsible for creating the list of states that discriminate against Panama, in agreement with the Ministry of Commerce and Industry and the Ministry of Foreign Affairs. The Cabinet Council will then assess the facts and background of the discriminatory measures presented by these three Ministries and determine the retaliatory mechanisms to be applied in response to discriminatory measures, as well as their extension, reduction, modification, suspension or retirement.
This measure seeks to remove Panama from the discriminatory lists of countries such as Brazil, Peru, Ecuador, France and Portugal, among others, and to reinforce Panama’s position as a country that meets the highest standards of fiscal transparency, with a robust and stable financial system.
If Panama were to be eliminated from these discriminatory lists, the Law of Retaliation would apply only in cases where reciprocity does not function in a fair manner.
In the past, Panama has been forced to apply retaliatory measures, specifically against France. The Panamanian government decided to suspend, in 2011, a contract with the Compagnie Francaise d’Assurance Pour le Comerce Extérieur, after France insisted that Panama does not cooperate on the issue of tax fraud.
Almanza&Almanza law firm.
Keywords: Retaliation measures in Panama
0 Comments