Panama's national bar association (Colegio Nacional de Abogados de Panama) has notified the country's National Assembly that it opposes any agreement with the OECD that automatically exchanges tax information with Europe. The attorneys' position, which came in an open letter from the association's president, José Alberto Alvarez, alleges that such an exchange of tax information would "violate [Panama's] Constitution," and "legal norms," and "jeopardize the economy."Specific proof about these claims did not appear in the letter. Alvarez emphatically denied that Panama is a tax haven.
What the Panamanian lawyers want is a voluntary system, where the permission of the account holder is a condition precedent to the release of personal account information. They allege that anything automatic would be fatal to Panama's status as a financial center, as it would eliminate Panama's "competitiveness." Under Panamanian law, only attorneys and law firms can form corporations, which are used to own banks accounts, and they represent a major portion of attorney income, which would be sorely missed.
In truth and in fact, what the lawyers are complaining about is that information sharing with Europe would cause tax evaders to give Panama a wide berth; it is estimated that the vast majority of funds on deposit in the Republic of Panama consist of money from tax cheats, and narcotics trafficking organizations, both of which would most likely find another tax haven, one without information sharing, which could spark massive capital flight from Panama, and result in a major recession, or even depression, in the local economy. Panama is already suffering a steep drop on both hotel occupancy rates, and cruise ship visits; the loss of its "flight capital" would plunge the Republic deeper into an economic and budgetary crisis.