Tuesday, November 30, 2010

U.S., Panama Sign New Tax Information Exchange Agreement

The U.S. has Tax Information Exchange Agreement (TIEAs with the following offshore financial centers:
Cayman Islands
Costa Rica
Netherlands Antilles
St. Lucia

The TIEAs with Antigua and Belize were terminated.

Fortunately, Panama law allows entities to redomicile corporations and foundations to other countries...

In a ceremony at the U.S. Department of the Treasury on Tuesday, November 30, Treasury Secretary Tim Geithner and Panamanian Vice President and Minister of Foreign Affairs Juan Carlos Varela signed a tax information exchange agreement (TIEA) between the United States and Panama.

A press release on the TIEA can be viewed at link; the full text of the TIEA can be viewed at this link; and the TIEA Joint Declaration at this link.

The Department of State has the honor to refer the Embassy of the Republic of Panama to the
Agreement between the Government of the United States of America and the Government of the
Republic of Panama for Tax Cooperation and the Exchange of Information Relating to Taxes
(“the Agreement”), signed today, and to confirm on behalf of the Government of the United
States the following understandings reached between our two Governments (“the Parties”):
With respect to subparagraph 1(a) of Article 3 (Taxes Covered) of the Agreement, it is
mutually understood by the Parties that the term “all federal taxes” includes the following
taxes imposed by the United States:
With respect to subparagraph 1(b) of Article 3 (Taxes Covered) of the Agreement, it is
mutually understood by the Parties that the term “all national taxes” includes the
following taxes imposed by the Republic of Panama:
Income Tax
Real Estate Tax
Vessels Tax
Stamp Tax
Notice of Operations Tax
Tax on Banks, Financial and Currency Exchange Companies.
Insurance Tax
Tax on the Consumption of Fuel and Oil Derivates
Tax on the Transfer of Movable Goods and the Provision of Services
Tax on the Consumption of certain Goods and Services
Tax on the Transfer of Immovable Goods
With respect to Article 9 (Costs) of the Agreement, it is mutually understood by the
Parties that costs that would be incurred in the ordinary course of administering the
(a) Federal income taxes;
(b) Federal taxes related to employment;
(c) Federal estate and gift taxes; and
(d) Federal excise taxes.

domestic tax laws of the requested State shall be borne by the requested party when those
costs are incurred for purposes of responding to a request for information. It is also
mutually understood by the Parties that all other costs are considered extraordinary costs,
and shall be borne by the requesting party. Examples of extraordinary costs include, but
are not limited to, the following:
fees charged by third parties for research and copying documents;
fees for non-government counsel or experts appointed or retained, with the
approval of the competent authority of the requesting Party, for litigation in the
courts of the requested party related to a specific request for information;
fees and expenses of a person who appears for an interview, deposition or
testimony relating to a specific information request. The fees and expenses will
be the ordinary amounts allowed under the laws of the party in which the
interview, deposition or testimony is held or taken.
The competent authorities shall consult with each other in advance if extraordinary costs
are likely to exceed $1,000, or in the case of subparagraph (c) of this paragraph, $100, in
order to determine whether the requesting Party will continue to pursue the request and
bear the cost.
The Government of the United States of America and the Government of Panama intend
that the Agreement enter into force as soon as is practicable following the enactment of
any legislation by Panama that is necessary under its domestic laws in order for Panama
to comply fully with the terms of the Agreement. The Government of Panama expects
that this legislation will be enacted before the end of 2011. As soon as practicable after
such legislation has been enacted, the Government of the United States and the
Government of Panama intend to take such actions, including exchange of notifications,
as are necessary to cause the Agreement to enter into force in accordance with its terms.
The United States understands that, with respect to the necessary legislation referred to in
paragraph 4, Panama intends to enact legislation requiring the identification of the
owners of bearer shares. The United States further understands that such legislation:
will require resident agents acting for Panamanian entities to obtain and
maintain in their records information sufficient to identify the owners of
those entities, even in cases in which shares of those entities are issued in
bearer form, including, where the owner is a legal person, information
sufficient to identify substantial owners of that legal person. For this
purpose, a resident agent will not be required to obtain and maintain
information sufficient to identify substantial owners of legal persons in
cases where the resident agent acts for a professional client that is part of

an organization that is required to maintain information on such entities
and that has agreed to make available such information to the resident
agent when requested;
will require resident agents to produce ownership and client identity
information in their possession in response to a proper request under the
Agreement, whether with respect to newly-formed entities or entities in
existence at the time the legislation is enacted; and
will require resident agents to obtain such ownership information with
respect to entities existing at the time the legislation is enacted within a
five year period from the date of the enactment of the law.
It is mutually understood that under laws currently in effect, each party is authorized to
obtain and exchange information, including information held by financial institutions and
other fiduciaries, pursuant to a request under a tax information exchange agreement,
regardless of whether the requested party has a domestic tax interest in such information.
Under section 274(h) of the U.S. Internal Revenue Code, an individual may deduct from
income expenses incurred with respect to attendance at a conference or convention held in
Panama in the same manner and to the same extent the individual would be permitted to
deduct such expenses with respect to attendance at a conference or convention held in the
United States, provided that there is in effect between Panama and the United States a tax
information exchange agreement meeting the requirements of section 274(h)(6). It is
mutually understood that the Agreement is intended to meet those requirements.
It is mutually understood that the entry into force of this Agreement does not prevent the
Parties from discussing the possibility of an agreement for the avoidance of double taxation
in the future.
The Department has the further honor to propose, on behalf of the Government of the United
States of America, that the present note and the Embassy’s affirmative reply thereto confirming
that the Government of the Republic of Panama shares these understandings shall constitute an
agreement between the two Governments on these points which shall enter into force on the
same date as the Agreement.
Department of State,
Washington, November 30, 2010

Wednesday, November 17, 2010

Say goodbye to your BVI bearer shares on December 31, 2010

Many users of British Virgin Islands (BVI) International Business Companies are not aware that by December 31, 2010 they must have turned in their bearer shares to an authorized custodian. An additional tax of One Thousand Dollars (US$1,000) and a custodian fee must be paid every year. Alternatively, shareholders can amend the company charter to prohibit bearer shares and replace any bearer shares for shares made out to a nominee.

Resident Agent / Offices of British Virgin Islands (BVI) Companies are required to remind customers to comply with the BVI BC Act 2004 in relation to bearer shares and the possible consequences of not complying with the new regime which took effect from January 1, 2010.
The consequences for companies that did not comply with the new regime of bearer shares, as confirmed by the BVI regulator, include among others:
- the loss of all rights which a shareholder may have as such("disabled bearer shares") .
- The payment of the cumulative difference between the rate applicable to government companies without bearer shares and the new government rate for companies with bearer shares in custody.
- Fines by the BVI Financial Services Commission (BVI FSC) for breach of the law.
BVI Service providers and Resident Agents reserve themselves the right to provide services such as restoration, change of registered agent, amendments to the charter and articles of association of companies, or to sign documents for companies with disabled bearer shares.
As for companies which nominee director services are provided, information of the new shareholders must be provided, in order to prepare the necessary documentation and to comply with the requirements of the law. Nominee directors who do not receive said information on time, are likely to resign as directors of these companies.
For more information on BVI companies see :
BVI INternational Financial Center www.bviifc.gov.vg/

7 May 2004


The BVI is poised to take a major step in July towards immobilising bearer shares by starting the applications procedure for custodians of bearer shares.
New legislation will ultimately require all bearer shares in BVI International Business Companies (IBCs) to be held by a custodian and thus immobilised. Companies formed before 1 January 2005 will have until 31 December 2010 to comply.
Companies formed after 1 January 2005 must comply from their date of formation.
To enable custodians to be in place by 1 January 2005, the BVI Financial Services Commission will consider applications to act as custodians from 1 July 2004.
Those eligible to apply as an “authorised” custodian will be service providers licensed under any BVI financial services legislation, as well as bodies corporate incorporated or formed outside the BVI that are not resident in, and do not have a place of business in, the BVI.
Those eligible to apply as a “recognised” custodian will be investment exchanges or clearing organizations that operate securities clearance or settlement systems in a jurisdiction which is a member of the Financial Action Task Force.
All applicants to be “authorised” custodians will have to satisfy the Financial Services Commission that they meet certain “fit and proper” criteria and have the necessary systems in place for safe custody of their bearer shares.
For bodies corporate, the Commission will consider the prudential regulation and anti-money laundering regulations with which the bodies have to comply.
The Commission may attach conditions to its approval and vary or revoke these.
To assist potential applicants for custodian status, the Commission has issued a new Aide Memoire, entitled, Criteria for Approval of Authorised Custodians of Bearer Shares of BVI Incorporated Companies. Besides setting out the criteria the Commission will use when approving custodians, the Aide Memoire addresses, inter alia, the duty of custodians and the grounds on which the Commission may revoke approvals.
Commenting on the new bearer shares regime, Robert Mathavious, Managing Director and CEO of the Financial Services Commission, said, “These measures enable the BVI to comply with all international standards, including the 40 anti-money laundering recommendations of the Financial Action Task Force. They are the result of close cooperation between the BVI private sector, government and regulator. The Commission encourages all potential custodians to apply from 1 July.” NOTES TO EDITORS 1. The Aide Memoire is available on the Financial Services Commission’s website at www.bvifsc.vg 2. The International Business Companies (Amendment) Acts of 2003 and 2004 provide the legal framework for immobilising bearer shares. The Acts are due to come into force on 1 January 2005.
3. The Financial Services Commission (Amendment) Act of 2004 addresses the regulatory framework for immobilising bearer shares, in particular the rules governing custodians. It is due to come into force on 1 July 2004.
4. IBCs will be able to amend their Memoranda of Association to state that they are authorised to issue only registered shares and that these may not be exchanged for bearer shares. They will be required to file this statement with the BVI Registrar of Companies, along with a declaration that they have no bearer shares in issue.
5. The new rules are the result of extensive consultation with BVI service providers. They are based on the recommendations of a private sector panel that the Financial Services Commission convened to examine the issue.
6. Although the IBC (Amendment) Act of 1993 envisaged a deadline for immobilisation of bearer shares of 31 December 2004, the private sector panel recommended a seven-year transition period before the new legislation took effect. A further IBC (Amendment) Act of 2004 gave effect to this recommendation, setting a new deadline for immobilisation of 31 December 2010.
7. Most of the 500,000 IBCs registered in the BVI currently have the power to issue bearer shares. Whether they have in fact issued these and have bearer shares outstanding is not certain.
8. Bearer shares are not unique to BVI IBCs. They are widely used in Europe by non-listed companies and are also popular in Latin America, the Far East and some US states.


If you need a Resident Agent or Custodian for the bearer shares of your BVI company, contact us through our website, by email, Bitwine or Skype

My status

Friday, November 12, 2010

U.S.-Panama Business Group Gears Up For Washington FTA Lobbying Push

Inside U.S. Trade - 10/22/2010
Posted: October 21, 2010

U.S.-Panama Business Group Gears Up For Washington FTA Lobbying Push

A U.S.-Panama business group is planning a new push to lobby the Obama administration and Congress to secure the approval of the long-stalled U.S.-Panama free trade agreement, according to a Panamanian private-sector source.
The U.S.-Panama Business Council will hold meetings in Washington on Nov. 18-19 with U.S. lawmakers, State Department officials and members of the U.S. private sector, this source said. He did not provide further information on what the group planned to discuss during these meetings.
Panamanian sources said the primary obstacle to the passage of the U.S.-Panama FTA remains the demand by the U.S. that Panama sign a tax information exchange agreement (TIEA) with the U.S.
Panamanian Vice President Juan Carlos Varela and U.S. Trade Representative Ron Kirk discussed the tax transparency issue during a Sept. 30 meeting in Washington, according to USTR spokeswoman Nkenge Harmon.
The two officials also discussed U.S. concerns with "certain aspects of Panama's labor regime," Harmon said in an e-mailed statement.
One Panamanian source said during this meeting the U.S. sought to entice Panama into signing a TIEA by saying that in exchange it would allow a tax deduction for U.S. business travelers who visit Panama for conventions, seminars or other meetings.
Such a deduction is currently available for domestic travel, as well as travel to Canada, Mexico, Costa Rica, Guyana, Honduras and some Caribbean destinations, according to Rebecca Wilkins, senior counsel for federal tax policy at Citizens for Tax Justice. However, this deduction is not available if such meetings are held on cruise ships, Wilkins said.
Such an agreement would require the Panamanian government to hand over information on Panamanian bank accounts used by U.S. persons upon request by the U.S. government, which goes against current bank secrecy laws in Panama, they said.
Panama is currently listed on the Organization for Economic Co-operation and Development's "gray list" because of its status as a tax haven. In order to secure removal from the list, a country needs to implement 12 TIEAs or Double Taxation Treaties (DTTs) with full tax information exchange provisions (Inside U.S. Trade, June 11).
As of Oct. 20, Panama had signed nine such DTTs, according to a press release from the office of Panamanian President Ricardo Martinelli. Panamanian sources said three additional DTTs have already been negotiated and their signing is expected before the end of the year.
According to one Panamanian source who opposes the signing of a TIEA with the U.S., a recently passed U.S. law already would require some Panamanian banks to report information automatically on U.S. account holders.
The Hiring Incentives to Restore Employment (HIRE) Act, which President Obama signed on March 18 and is slated to go into effect on Jan. 1, 2013, includes provisions that will require foreign banks that do business with U.S. banks to report information on U.S. account holders in one of two ways, according to Wilkins.
The first option is for these banks to submit a Form 1099 to the Internal Revenue Service that would report the income earned on the U.S. account. The second option is for these banks to fulfill more stringent reporting requirements contained in the HIRE Act, under which the banks would not have to report the total income on the account but would have to provide information on the maximum amount in the account and the aggregate amount of transactions on the account.
In both cases, the banks would have to report the name, address and taxpayer identification number of the U.S. account holder.
Asked if these reporting requirements would make information exchange provisions in the TIEA redundant, Wilkins said this would not be the case. While the HIRE Act provisions would be helpful because they could aid the U.S. in identifying tax evaders by name, the TIEA provisions are also necessary because they allow U.S. authorities to request Panamanian authorities hand over any information about U.S. account holders upon request, Wilkins said.
One Panamanian source said the government had recently implemented a change to its law that would allow Panama's tax agency to gather information on account holders if such information is requested by a foreign government under the DTTs Panama is signing with other countries. He explained that this change was necessary in order to implement the tax information exchange provisions chapters of these DTTs.
TIEAs spell out in great detail the procedure for exchanging tax information between two governments. For example, the TIEA between the U.S. and the Cayman Islands consists of 13 detailed articles in information exchange.
By contrast, the OECD Model Tax Convention Article 26 Panama wants in a DTT with the U.S. is comprised only of five sections outlining basic commitments (Inside U.S. Trade, June 11).

See full text in

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Un Acuerdo con Pocos Beneficios

Monday, November 08, 2010

Nov 17, 2010 'Panama Week' planned in Washington, D.C.

'Panama Week' planned in Washington, D.C.

The new version of "Panama Week" will take place starting Nov. 17 in Washington, D.C.

Félix Carles, president of the U.S.-Panama Business Council, said the motto of this year's event is "Panama, changing world trade."

One of the objectives of the event is to promote the ratification of the free trade agreement between the two countries that is still waiting to be discussed by the U.S. Senate.

It will also emphasize the role of the country as a maritime center, the progress of the Panama Canal expansion and the modernization of Tocumen International Airport.

The Panama Tourism Authority will also discuss its master plan at the event, which is aimed at increasing the number of visitors to the country.

Panama: Changing Global Commerce
Venue: Washington Hilton Hotel, 1919 Connecticut Ave., NW, Washington, D.C

For registrations and sponsorship opportunities contact UNITED STATES-PANAMA BUSINESS COUNCIL (USPA)
5353 Memorial Drive #2041, Houston, Texas 77007
Tel. (713) 426-0554 / Fax. (713) 426-0375 / E-mail: Panamerica @msn.con http://uspanama.webs.com/pwsponsorlevels.htm

November 1, 2010

Dear Friends of Panama and the United States

The U.S.-Panama Business Council (USPA) was created in 1994 with the mission of strengthening relations between the United States and Panama, and promoting business opportunities between the two countries. During its sixteen years of existence the Council has organized hundreds of programs and events which have greatly contributed to enhancing relations between the two countries.

Every year the Council organizes a comprehensive program in Washington D.C. entitled Panama Week. This year Panama Week will be held on November 18-19 in the Nation's Capital, coordinated by both the U.S. and Panama USPA associations. We anticipate a strong attendance this year, and several high profiled speakers that will address the numerous business opportunities offered by Panama.

Panama's excellent economic climate has produced positive news over the past five years with annual growth close to double digits. Even in 2009, when the world was impacted by a financial crisis, Panama still registered economic growth. The Panama Canal is undertaking an ambitious expansion, unemployment has decreased dramatically, the country attained investment grade and recently a $13 Billion investment plan was announced for the next five years.

An updated program is enclosed and periodic updates will be published in USPA USA website http://uspanama.webs.com/pwprogram.htmSeveral Ministers from Panama will be attending the program including Minister of Commerce and Industry H.E. Roberto Henriquez, Minister of Tourism H.E. Salomón Shamah, Minister of Energy H.E. Juan Urriola and Deputy Administrator of the Panama Canal Authority Jose Barrios Ng. The traditional black tie Gala Friendship Awards Dinner will be held on the evening of Thursday, November 18th and H.E. Jaime Alemán, Ambassador of Panama to the United States, will be the Keynote Speaker.

We avail of the opportunity to thank sponsors for their generous support. Please review the website for additional information. Should you have any questions you may contact Amb. Juan B. Sosa at (713) 426-0554. We look forward to see you in Panama Week 2010.

Best regards,

Amb. Juan B. Sosa President, USPA (USA)
Amb. Roberto Alfaro President, USPA (Panama)

Wednesday, November 03, 2010

Nov 1 - 6: Panama Week in Hanoi

The first Panama cultural week is being held in Hanoi from November 1 to 6 to celebrate 35 years of diplomatic relations between the two countries.

The event includes a photo exhibition titled “Discovering Panama” and the Panamanian Film Week will be held at National Library of Vietnam and Hanoi Cinematheque respectively.
During the Panamanian Film Week, “The Fists of A Nation” (Los Punos de Una Nacion, 2005, 73 min) and “Blood is Blood” (Sangre es Sangre, 2008, 25 min) will be screened on November 5 &6, 2010.
The “Panama Week” organized by the Embassy of the Republic of Panama also marks the capital’s 1,000th anniversary.

From Panama Embassy:The “Panama Week” organized by the Embassy of the Republic of Panama will take place in the first week of November to celebrate 35 years of diplomatic relations. During the “Panama Week”, the exhibition of Photography and Craft titled “Discovering Panama” and the Panamanian Film Week will be held at National Library of Vietnam and Hanoi Cinematheque respectively.
Schedule:Exhibition of Photography and Craft: Discoverying PanamaTime: 01 – 06 Nov 2010, 8 am – 8 pmNational Library of Vietnam31 Trang Thi, Hoan Kiem, Hanoi
Panamanian Documentaries Time: 05 – 06 Nov 2010
Hanoi Cinematheque 22A Hai Ba Trung, Hoan Kiem, Hanoi
During the Panamanian Film Week, “The Fists of A Nation” and “Blood is Blood” will be screened.
Film: The Fists of a Nation Screening time: 05 – 06 Nov 2010, 7.30 pm

Film: Blood is Blood Screening time: 05 – 06 Nov 2010, 9 pm

Monday, November 01, 2010

Panama and Taiwan start talks for signing of Double Taxation Agreement

Photo: With this meeting the Panamanian delegation, lead by the president, Ricardo Martinelli concludes its Asian tour. Photo / Courtesy of the Presidency

During a meeting with Panamanian businessmen and Taiwan, the president, Ricardo Martinelli, announced that the two countries begin talks on signing an double taxation agreement.

"Panama respects foreign investment and we are open to receive new investments," said Martinelli to Taiwanese businessmen who mentioned that with the signing of the Free Trade Agreement, Taiwan companies have invested heavily in developing the service transportation, technology, among others.

On another topic, Martinelli presented to entrepreneurs in Taiwan's competitive advantages offered by the country to foreign investment.

"In Panama they have opportunities to invest in agriculture, real estate, among other areas, where already several companies that have entered this Asian country," he said.

For its part, Taiwan's deputy foreign minister, Thomas Hou Ping-fu noted that Panama is Taiwan's staunchest ally in Central America that have maintained diplomatic relations for more than a century and that these bilateral ties have increased after the entry into force the Free Trade Agreement between both countries, as Taiwanese investments in Panama have increased by over 215 million Dollars.

More on Taiwan-Panama business