Kenneth Rijock

Kenneth Rijock

Friday, January 10, 2014

NEW LAW TAXING OFFSHORE INCOME IS QUIETLY REPEALED IN PANAMA

Opposition to Law 120 was universal when it was passed
At the end of 2013, while most Panamanians were enjoying their Christmas holiday, the Government of Panama passed Law 120/2013, which imposes tax on the global income of all individuals, and corporate entities. After a universal outcry, due the fact that imposing tax upon income earned outside Panama would in essence end its existence as a tax haven, the law was then amended,which appears to be the functional equivalent of repeal, but the fact that the President of Panama was able to pass such legislation indicates the extent of his power.

Compliance officers charged with the assessment of Country Risk will now be looking at Panama a bit more closely than they did in 2013, for the country is sorely in need of funds, to cover its bloated budget, and will most likely seek other revenue-sharing measures, which could seriously impact foreign investors, international financial transactions, or the repatriation of assets. Some foreign businesses that sought to wire transfer the funds in their bank accounts, during the few days that Law 120 was in  effect saw their efforts blocked by their banks, who stated that they required governmental approval.

One final note; visitors to the Republic of Panama are now having their photographs taken at Immigration & Customs. While this is generally of no consequence to legitimate businessmen, individuals for whom privacy is paramount, due to political conditions, or domestic crime in their own countries, or who fear that the information may increase the risk that they will become victims of crime while in Panama, should govern themselves accordingly.


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