Mr. Eduardo Morgan of Morgan and Morgan Group spoke to United World to clear up misconceptions about Panama's tax laws.
Panama is not a tax haven. The country has none of the aspects that, according to Colombia, identify a tax haven.
Our tax legislation does not have any law that gives foreign investors a special treatment. The tax law is the same for everyone; locals and foreigners, resident or non-resident. For example, in regards to interest on bank deposits, both nationals and foreigners are exonerated. This the opposite to what occurs in the US, where non-residents are exonerated but not the US citizens or residents who pay taxes. Clearly, that law is aimed to attract foreign investment.
We do not have lax controls. Our tax laws are transparent, there is no manner of negotiating tax agreements, and our banking centre is known to be one of the strictest in the world. Our banking system has survived Norway’s black times, when banks were closed for several months (no depositor lost capital or interests when the system was re-established) and it also thrived in the 2008 crisis, in which many banks from OECD countries went bankrupt, and this was caused precisely by those lax controls on mortgages.
Our income tax is levelled with that of many OECD states.
Our income tax is levelled with that of many OECD states and in some cases it is even higher. (For example, the tax on corporations in England is 21% and in Panama it is 25%, the tax to natural persons is 0 until 11,000, 15% until 50,000 and then it goes up to 25%. There is also a tax on property, and on sales and services, which is around 7 and 10%.
It is not true that foreign companies have no significant presence in Panama. It would be enough to mention some of the many important Colombian businesses, like banks, cement factories, among others. We also need to consider the activities carried out by multinational companies in the 106 regional offices they have in the country. They all have a meaningful presence in Panama. We also have a solid banking centre, our Free Zone, our harbours, and Panama Pacific, where huge global enterprises operate, like Caterpillar for example.
Panama has signed assistance agreements with many countries. We are founding members of the United Nations and we belong to WTO, as well as to other trustworthy international organizations.
Our corporation system is recognised by its land registration and the Resident Agent’s duty (who has to be a lawyer) to know and prove their client’s identity. History has demonstrated that every person who utilizes a Panamanian legal entity to commit crimes is found. No one is saved. There have been cases with former presidents of Costa Rica, Nicaragua, or Montesinos and also Murcia, the Colombian. This does not happen in the US or England. Since 2008 the US has been trying to pass a law in order to know the clients and it hasn’t been possible because of many states’ objection (mainly Delaware, Nevada, Wyoming) which profit from the sale of companies.