Friday, August 07, 2009

New Panama legislature enacts tax moratorium

The new tax moratorium gives an amnesty on fines on overdue taxes when paid before 2010

The new Panama administration of President Ricardo Martinelli has taken its first major tax initiative by enacting Law 45 of 2009 whereby a moratorium is granted for payment of national taxes collected by Directorate General of Revenue ( Under the law, taxpayers are exempt from paying surcharges, interest and fines on unpaid taxes due by June 30, 2009, if they pay at least 30% of said taxes and agree to pay the rest before September 1 within a period of 6 monhts. Tax payment plans signed after September 1 but before December 31 still would qualify for a exemption of fines and 75% discounts on surcharges and/or interest.

Such a tax plan would benefit owners of corporations and private interest foundations formed in Panama who must pay a US$300 annual tax called "Tasa Unica". While Panama corporations and private interest foundations doing business outside of Panama do not have to pay Panama income tax, they still have to pay the US$300 annual tax. Article 318A of the Tax Code also imposes a US$50 fine for every annual tax paid late and a US$300 surcharge after 2 years of delay in payments. Article 3 of the 2001 Supreme Court of Justice Schedule for Legal Services further provides every year for a US$250 Resident Agent Fee and a US$150 nominee director fee.

Lombardi Aguilar & Garcia ( partner Alvaro Aguilar Alfú finds the moratorium to be useful for investors using Panama entities. "Even if the names of corporate shareholders and private foundation beneficiaries are disclosed to their resident agents under privacy rules, changes in the charter and board of directors must be registered with the public registry. Local laws require that all annual tax payments be up to date when filing said changes, so the moratorium would allow owners of these entities to save on the fines and surcharges which would otherwise have to be paid after 2010," said Aguilar.

The moratorium also covers property taxes due for ownership of real estate at rates of up to 2.1% of the registered value. "Unlike other countries, Panama authorities do not mail or deliver tax statements so property taxes - along with surcharges, fines and interest - may be accumulating without the owner knowing," Aguilar points out. "Many foreign buyers have purchased real estate in Panama, either directly or by purchasing shares of landholding companies or foundations, so this is a good time to ask the local Panama tax office for a statement to pay taxes due without fines and ask counsel in their country of origin about other tax compliance and filing requirements".

About Lombardi Aguilar & Garcia
Lombardi Aguilar & Garcia was created as an alternative for clients worldwide who seek fast, innovative and effective solutions to their legal problems. The firm currently provides services to individual and corporate clients in Panama as well in the Americas, Europe and Asia. Its partners maintain a commitment with professional ethics and social responsibility by participating in the board of directors of groups such as the Panama Bar Association, the German and the American Chambers of Commerce (AMCHAM) of Panama, and the Association of Chinese-Panamanian Professionals (APROCHIPA).

The firm centers its law practice in private client services and asset protection (Private Interest Foundations, Trusts), business structures (Offshore Corporations), tax planning, real estate and e-commerce. It also advices in areas of Law such as Corporate, Commercial, Intellectual Property, Maritime, Tax, and Immigration Law as well as related litigation that may arise.

This release has been prepared for information purposes only. It is not intended to be nor do they constitute legal advice, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

For more information, contact +507 340-6444, e-mail aaguilar (at), or see: Lombardi Aguilar & Garcia


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See also Property tax exemption for 20 years #3 property tax.

Tuesday, August 04, 2009

NY Assistant DA: “U.S. financial transparency: trying to catch up to Panama.”

Adam S. Kaufmann, Assistant District Attorney for New York County State of New York, explained at a hearing why a U.S. company is as good as an offshore company for hiding the identity of its non-U.S. owners:

We regularly speak to law enforcement agents and prosecutors around the world. It is difficult to speak with moral authority in criticizing offshore bank secrecy jurisdictions when they can point an accusing finger back at us. The British Virgin Islands is a well-known (in law enforcement circles) bastion for dirty shell companies, but even the British Virgin Islands can level criticism at the lack of transparency in the incorporation processes in our states. That we were deemed “non-compliant” by the Financial Action Task Force is an embarrassment. That we have made no progress in the three years since then is absurd. Our statement of national transparency standards should be something more than: “U.S. financial transparency: Better than Lichtenstein and trying to catch up to Panama.” Simply put, we lag behind many other countries in the world in this regard, and it makes our statements concerning transparency and tax evasion ring hollow and hypocritical.
Foreign law enforcement authorities even refer to certain states as “offshore U.S. jurisdictions.” And when asked, I am hard-pressed to define why these well-known states are any different from Cayman or the British Virgin Islands. The Committee should also know the imprimatur of respectability that a certificate of incorporation from a U.S. state carries with it, and the access it gives a foreign citizen to open bank accounts and engage in all manner of business, both legitimate and otherwise. And, for many foreign persons wishing to hide their income in an “offshore jurisdiction,” there is no need to turn to a Caribbean hide-away. In one case where we rendered assistance to foreign prosecutors, we were able to connect the head of a foreign central bank to an “offshore” Delaware corporation. He used the corporate entity to open a bank account in Florida. He used black market money systems (prosecuted in New York) to move funds to this secret account he held in Florida. By obtaining a corporate entity, this corrupt official could rest assured that his funds would be safe in the United States, and his name would not easily be linked to the corporation. I am hard-pressed to find a difference between his use of a Delaware corporation to open a Florida bank account and the use by a U.S. taxpayer of a Lichtenstein corporation to open a Swiss bank account. At the end of the day, both systems provide a security blanket of anonymity for those who seek it

Examining State Business Incorporation Practices: A Discussion of the Incorporation Transparency and Law Enforcement Assistance Act
Thursday, June 18, 2009 02:30 PM Dirksen Senate Office Building, room 342 The hearing will examine the impact of the "Incorporation Transparency and Law Enforcement Assistance Act," S. 569, which would create a minimum standard--and greater transparency--for the ownership information businesses have to provide to states when they form a business.
Member Statements
Senator Joseph I. Lieberman [View PDF]
Panel 1
Janice Ayala [view testimony] Deputy Assistant Director, Office of Investigations, U.S. Immigration and Customs Enforcement U.S. Department of Homeland Security
Jennifer Shasky Calvery [view testimony] Senior Counsel to the Deputy Attorney General U.S. Department of Justice
The Honorable Elaine F. Marshall [view testimony] Secretary of State State of North Carolina
Adam S. Kaufmann [view testimony] Assistant District Attorney for New York County State of New York
Harry J. Haynsworth [view testimony] Chair, Drafting Committee on Uniform Law Enforcement Access to Entity Information Act Uniform Law Commission