Panama needs “a little more time” to comply with OECD standards on exchanging tax information, but remains committed to greater financial transparency, President Juan Carlos Varela has said. Meanwhile, the two Central and South American countries said late on Thursday that Colombia and Panama will sign a financial information-sharing deal aimed at helping Bogota combat tax evasion.
Varela did not specify how much time Panama was seeking to meet the Organisation for Economic Cooperation and Development’s (OECD’s) reporting standards for automatically exchanging tax information.
Revelations in the so-called Panama Papers, which showed how one Panama law firm set up 200,000 offshore entities for wealthy clients around the globe, have thrown Panama’s secretive financial sector under intense international scrutiny.
OECD officials say they have long tried to get Panama to agree to their common reporting standards on exchanging tax information, to no avail. Panama insisted on bilateral accords on the matter, rather than the OECD’s multilateral one.
But last week, during a visit to Japan, Varela told Kyodo News in an interview that his country had “decided to join” the OECD’s reporting standards. His officials were to meet with an OECD technical team “to find ways to come to an agreement,” he said.
No progress on the issue has been announced, and Varela’s comments on Thursday suggested more discussions were needed.
In the meantime, Panama has been put on France’s blacklist of “tax havens.” Paris is also pushing EU and OECD partners to follow suit.
Varela, though, told the reporters on Thursday that he had spoken with German Chancellor Angela Merkel and she had “offered her support to Panama” as it pursues reforms of its financial sector.
The Panamanian leader said he would make a state visit to Germany in October to sign a bilateral agreement on exchanging tax information “based on the OECD standards.”
BOGOTA TAX EVASION
Panamanian and Colombian presidents in June are set to sign a deal that would establish an initial phase of information sharing until 2018, after which the process would become automatic, the two countries said.
“It’s important that this information is only used for fiscal issues and that it remains confidential,” Panamania finance minister Dulcidio de la Guardia said after a meeting with his Colombian counterpart in Panama City.
The deal would help Colombia improve tax collection and Panama improve transparency in its financial system, de la Guardia said.
The accord was reached after lengthy negotiations that began at the end of 2014.
The deal would improve Colombian authorities’ oversight of funds kept in Panama by its citizens, Colombian finance minister Mauricio Cardenas said.
“For countrymen with income or assets in Panama, it’s very important that they take advantage of this opportunity to normalize their situation, paying a penalty of 11.5%,” he said.
The agreement comes amid revelations by the Panama Papers that have sparked global scrutiny of offshore banking. Many Colombians legally keep funds in dollar-denominated accounts in Panama, which has signed financial agreements with around 20 other countries, including an information-sharing accord with the United States.