4th November 2016
When many of us think of Panama, the Panama Papers tax scandal is likely to spring to mind above anything else (rather than, say, the fact that it is the only place in the world where you can see the sun rise on the Pacific and set on the Atlantic). However, the Republic has made tax news once again, but for an entirely new reason this time.
Panama joins the fight against evasion
At the end of October, it became the 105th jurisdiction to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Developed by the OECD and the Council of Europe in 1988 and amended by Protocol in 2010, the Convention regulates the exchange of information between states regarding tax matters. Its aim is to safeguard taxpayers’ rights while also providing for all forms of administrative assistance in tax issues, including the automatic exchange of information.
Given that the focus of this Convention is in addressing tax evasion, some have viewed this move by Panama – long considered a popular tax haven – as slightly unusual. However, according to the OECD secretary-general, Angel Gurría, it demonstrates the country’s commitment to changing its reputation:
“Panama’s decision to sign the multilateral Convention is a confirmation of its commitment to take the necessary steps to meet international expectations in the fight against tax evasion. It also sends a clear signal that the international community is united in its efforts to stamp out offshore tax evasion. We will continue our efforts until there is nowhere left to hide.”
What this means for contractors
Given that such a well-known tax haven has joined the fight against evasion, it can certainly be assumed that the no one is safe from the law. If you’re a contractor working across borders, it’s vital that you remain compliant with local legislation in order to avoid potentially hefty fines. Speak to the team today to find out how we can help you.