Thursday, December 30, 2010

Panama as Regional Business Hub

Because of the geographical position of Panama, located in the center of the American Continent, with access through land, sea and air, with a tropical year round climate, free of natural disasters. With an open service economy, capable human resources, dollarized economy, the international finance center, world class logistics platform and economic political and social stability, make Panama the ideal site for making businesses in the region.


Panama is a country with a service vocation, that possesses a privileged geographical location, that has allowed us to become one of the most important logistic centers of the Western Hemisphere for the storing and distribution of world cargo, a bridge for the mobilization of passengers to the entire American Continent and facilitator of efficient and modern communication services. As a commerce promoter, both nationally and internationally, Panama enjoys political, social and economic stability.

Panama has gone from being a bridge to becoming a logistic platform by air, sea and land, with the Panama Canal as main axis, transporting over 300 million of CPSUAB (Container, Bulk, etc.) presently serving more than 14,000 ships through 144 maritime routes and complementing with a system of container terminals in the Pacific and the Caribbean, that serve as cargo transship and redistribution, that recorded an annual movement of containerized cargo of 4.25 million TEU's, added to the inter-oceanic railroad that has a capacity 330,000 containers per year from one coast to anther. Panama also has the Colón Free Zone, the most important one in the Western hemisphere, with an annual trade exchange of over 19 thousand million dollars through its approximately 3,000 companies established in the Colón Free Zone. The development of the Panamá Pacífico Special Economic Area, in the former Howard Air Station, will serve as a space destined to the production of goods and high technology services.

We offer an efficient air service through the Tocumen International Airport, presently undergoing a remodeling process for offering a comfortable and safe atmosphere to all the travelers that visit our country and an expeditious and efficient attention to the transiting passengers, who do not go through customs or migration checks. From the airport the Copa Airline operates its Hub that offers more than 46 destinations to 25 countries in America and excellent connections, some of them with three daily flights to the most important cities of Latin America. In addition we account for with an excellent internal offer of direct flights to the principal cities of the interior of the country.

Panama has become the preferred center for the installation of five submarine optical fiber cables, turning into the ideal place for telecommunication companies and data centers since we have the advantage of offering great connectivity with North and South America, Europe, Asia and the Caribbean, advantages that companies have learned to use effectively, such as MCI, Cable & Wireless and Movistar that offer cellular telephony services and first quality internet to the international market.

Our prestigious International banking Center, with over 93 internationally renowned banks, reflected for the first Quarter of 2010, assets in the order of US$ 65,000 millions.

Our medical and health services are well known internationally and they have the two best private hospitals of the Central American region; equipped with the most recent medical technology, and they are affiliated to world famous hospitals such as the Baptist Hospital in Miami, Florida and the Johns Hopkins Medical Center in Baltimore, Maryland.

Our tropical climate and varied tourist offer sets us among those preferred for the travelers that can find in our country picturesque indigenous and colonial communities, white sand beaches and coral reefs with indescribable beauty, mountains with fresh climates and tropical jungles with an exuberant vegetation, habitat of innumerable flora and fauna species. And with our excellent highway network and short distances the country can be toured in only six hours.

For these reasons, Panama has been chosen by important multinational companies such as Samsung Electronics, Inc., DHL, DELL, Hutchinson Port Holding Group, HSBC, BICSA, SCOTIABANK, Assicurazioni Generali, American Life Insurance Company and many more, as main offices for their regional operations. In addition, some of the most recognized International Organisms such as UNICEF, UNDP, OAS, the Spanish Agency for International Cooperation (AECI, initials in Spanish), and the BLADEX [Latin American Export Bank] among others, have chosen Panama for establishing their operations.

Panama offers goods and services at reasonable prices as compared to its nearest neighbors, with Free Trade Treaties (TLC, for initials in Spanish) with Taiwan, El Salvador, Singapore and Chile. Furthermore, we are going through the final negotiations of a TLC with the United States and Central America and we are preparing our entrance in the G-3.

$2.6 billion in loan guarantees vs. 13,000 jobs

Right after the U.S.-Panama Tax Information Exchange Agreement was signed by Vice-President Juan Carlos Varela, he attended the signing of an agreement for the US $2.6 billion purchase by COPA airline (NYSE: CPA) of 32 Boeing (NYSE: BA) airplanes, with financing guaranteed by the U.S. Export-Import Bank .

The same day that 13,000 jobs of the Panama financial center are put in jeopardy, a Panamanian multinational secures financing guaranteed by the U.S. taxpayer. Quid pro quo?

Copa and Boeing sign largest ever Panama-US business deal

Wednesday, 01 December 2010 17:35

Panama's principle airline Copa, and the Boeing aircraft company signed a $2.6 billion dollars agreement for the purchase of 32 aircraft onTuesday (November 30).

It was the largest ever business transaction between the U.S. and Panama

The ceremony took place at the U.S. Department of Commerce, soon after the signing of a tax disclosure agreement between the two countries.
Panamanian vice president and foreign minister, Juan Carlos Varela represented the government at the ceremony along with the chief executives of both companies: Pedro Heilbron of Copa Airlines, and Jim Albaugh of Boeing.

The 32 aircraft will be delivered between 2015 and 2018, and are part of the planned growth of the company, said Heilbron.

Copa Holding's president, Stanley Motta, and Vice President of Finance, Victor Vial, shared details of the funding for the deal, which was supported by a group of international banks such as Citibank, JP Morgan Chase, BNP Paribas, and Bank Exim.

Motta said the loan was agreed at very low rates for the guarantees provided by the Exim Bank.

Largest Ever Ex-Im Bank Transaction To This Country

The Export-Import Bank of the United States is providing a $113 million long-term guarantee to support the $132 million export by The Boeing Co., Seattle, WA, of four B737-700 aircraft plus two spare engines made by CFM International, Inc., Cincinnati, OH, to Compania Panamena de Aviacion, S.A. (COPA), Panama City. Each Boeing aircraft is also equipped with two CFM engines.

"This is the largest transaction ever authorized by Ex-Im Bank for a company in Panama," said Ex-Im Bank Chairman James A. Harmon. "We are delighted to finance US exports that support economic growth in this important Central American market while sustaining US jobs at thousands of Boeing subsuppliers at home."

Ex-Im Bank has supported Panamanian customers for over 50 years. This latest transaction is more than double the previous record-setter, a $60 million financing of a gas turbine export in fiscal 1994.
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Tuesday, December 28, 2010

History of Real Estate Agents

December 28 in Panama is Innocents' Day which is similar to April's Fools Day and remembered with hoaxes. For the next time you are looking at properties in Panama with a real estate agent, here is a joke to share from Kelly'

6 MILLION BC: God searches for a planet to establish life. Encounters real estate agent from "Lucifer's Planets & Gardens" who says "I've got a great deal on a fixer-upper just 90 million miles from the Sun."
5.9 MILLION BC: God buys the Earth and, after the closing, discovers it is a mass of molten goo. Angry, God confronts the agent and banishes him to spend eternity wearing polyester suits.
4 MILLION BC: God creates the ocean and the seas. By accident, a pool of pond scum transforms itself into the National Association of Realtors.
3.5 MILLION BC: God creates Florida.
3.49 MILLION BC: Thousands of real estate agents crawl out of the ocean to scout good condo locations. Market immediately crashes when agents realize that "snow birds" won't be invented for another 2 million years.
3 MILLION BC: A meteor crashes into Earth. The resulting crater creates a giant black hole filled with green ooze. The Multiple Listing Service is born.
2.45 MILLION BC: God makes Adam and Eve. However, delays in constructing Garden of Eden force Adam and Eve to live in an apartment eight months.
244 MILLION BC: Shopping for a move-up garden, Eve visits an Open Garden and encounters a fork-tongued real estate agent who tells her, "Garden, why would you want another one of those? I've got an entire apple orchard you can have real cheap."
243 MILLION BC: Adam and Eve become the first humans to truly understand what it means to buy from a real estate agent.
550 BC: Jealous of rising property values, real estate brokers in Greece devise a way to attack Troy by using a Trojan Horse.
42 BC: Cleopatra decides to build the Pyramids. Real estate agent and builder try to convince her that Squares would be much cheaper.
30 BC: Rome touted as "the hottest housing market in Europe" Thousands of buyers flock in to make deals with real estate agents.
29 BC: Rome real estate crashes. Julius Caesar calls a meeting of his advisors to see what can be done. Chief real estate broker Brutus suggests Caesar tours Rome to inspire consumer confidence. "Just lead the way," Brutus says, "I'll be right behind you."
500 AD: Middle ages bring major real estate slowdown. Agents are forced to take second jobs as undertakers. Scandal breaks out when agents are discovered to be removing gold fillings from dead people.
1308 AD: Real estate agent list a tower in Pisa, Italy as a "one of a kind property. Solid building guaranteed not to lean."
1492 AD: Christopher Columbus lands in America. However, he mistakenly believes he's in India, thanks to a bogus land survey provided by a Spanish real estate broker.
1620 AD: Pilgrims land on Plymouth Rock. First colonial real estate agent promises Pilgrims that Massachusetts is "always sunny and warm. Never drops below 70 I swear."
1621 AD: Giant blizzard nearly wipes out Pilgrims. Real estate agent is banished to New Jersey.
1626 AD: Manhattan bought for 100 beads and trinkets from the Indians. The Indians' real estate agent takes 6 beads as a commission.

l803 AD: Napoleon shocks and angers French real estate agents when he sells Louisiana to United States without an agent. At 515 million, sets record for largest "FSBO" (for sale by owner) sale in history.
1867 AD: United States purchases Alaska from Russia for 2 an acre, after Russian Czar is given advice by real estate agent that Alaska is "utterly useless" land with no value at all.

Saturday, December 04, 2010

Why Tax Information Exchange Agreements Are 'Toothless'

Despite the ominous messages being communicated to the public, taxpayers have little to fear from the tax information exchange agreements (TIEAs) to which most tax havens have rushed to commit.

July 16, 2009
by Kristofer Neslund, CPA/DBA

.... the flaws in the Model TIEA overwhelm its positives.


The OECD has frequently noted that havens that had agreed to adopt the TIEA failed to implement it. There is a real concern that some or many of the haven jurisdictions that rushed to announce their commitments to the TIEA were simply playing for time, hoping the furor will die down before they actually have to implement the agreements.

Domestic bank secrecy laws trump these agreements. Indeed, UBS has raised Swiss bank secrecy laws as its primary defense in the current John Doe summons enforcement proceeding.

Havens are exempt from supplying information they do not collect and they often collect little. The British Virgin Islands, for example, has more than 400,000 registered corporations but requires neither the identification of shareholders or directors nor the maintenance of financial records.

Severe procedural restrictions are imposed to preclude "fishing expeditions" — i.e., broad, general inquiries. Automatic information sharing is expressly excluded.

The requesting jurisdiction must:

- Identify a specific person,
- Identify the specific information sought and the tax purpose for seeking it,
- Identify why it believes the information is within the requested jurisdiction and
- Demonstrate that it has exhausted all other means for obtaining the information.

The result is a slow and unwieldy process that precludes serious real-time help to tax authorities. Offshore tax cases are complex and labor-intensive, taking 500 days longer than normal to develop. The cumbersome, low-yield information exchange process contributes to these delays and deters the IRS from aggressive enforcement. Even when the government has proven criminal activity, the process is ineffectual. The U.S. sent tax information requests to Switzerland after UBS admitted to criminal activity; it received back only 12 names (out of an estimated 52,000 U.S. accounts holding $15 billion). It is not surprising that there are only a few dozen TIEA requests each year. To be of genuine value, information sharing needs to be comprehensive, real-time and automatic.

Critics argue that the havens' rapid adoption of Model TIEA is little more than public relations, allowing them to make a show of cooperation while going about business as usual, supported by governments that are more than happy to have their taxpayers believe that offshore tax evasion has become much more dangerous.

The OECD's Model TIEA seems to have adopted a lowest-common-denominator approach — offering minimal effectiveness to gain widespread acceptance by havens, in turn allowing world leaders to proclaim a global assault on offshore tax evasion. Given the sharply opposed interests of some of their members, the TIEA's endorsement by the G-7, G-8, G-20, United Nations and EU is supportive of this view.

The establishment of a low information exchange standard for the international community could backfire. Tax havens — little deterred by their TIEAs — are likely to assert that, by having implemented the benchmark standard, they have ceased to be "tax havens." The Bahamas' ambassador to the U.S. has suggested as much on behalf of the Caribbean TIEA adopters. This assertion may be hard to counter without embarrassment; and it may become very difficult to sanction adopting havens when it becomes obvious that their behavior has not changed.


There are many reasons not to engage in offshore tax evasion, but the Model TIEA is not one of them.

The public has been led to believe that all it takes now to open the international information floodgate is a simple request by a tax authority. Not so. The Model TIEA is a slow, largely ineffectual, resource-intensive process that seems unlikely to be used much more in the future than it has been in the past, despite the increased number of haven jurisdictions adopting it.
Tax practitioners should be rendering advice based on the reality, not the perception, of these agreements.

Kristofer Neslund, CPA/DBA, LLM, JD, is an associate professor of taxation at the Golden Gate University.
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