THE PANAMA TAX FIASCO
It was bizarre and caused a massive uproar the next day in Panama. In fact, it's repercussions are still being felt and it likely will cause major damage to the country of Panama.
What occurred?
Late on December 30th, Law No. 120 of 2013 was passed, and two articles were included to amend the tax code. One states:
"Every natural or juridical, domestic or foreign, who receives any taxable income within or outside Panamanian territory, must pay taxes."
The law made it clear that those who are residents, citizens or companies in Panama will have to pay tax-based on their worldwide income instead of only Panamanian-sourced income.
This was massive news with massive repercussions for any Panamanian resident who had foreign income and, more importantly, the thousands of businesses who had moved to Panama mostly because of their non-taxation of foreign income.
The Panamanian business community went into a near panic and noted
how the law had been passed while shrouded in secrecy. There was no
discussion of the law whatsoever in public.
Realizing the disastrous potential results, the President tweeted amidst the outrage: "On territoriality and taxes if we need to repeal we'll repeal or what needs to be defined will be defined, but ample debate must take place."
The law was not even discussed in the National Assembly. There was no debate, no warning. Quite a double standard: laws don't need to be debated in order to be implemented, but "ample debate must take place" to repeal the law. Ah, the logic of government.
At 12:06 he tweeted this: "There is too much gossip and disinformation regarding tax territoriality. On the first week of January everything concerning that will be clarified."
On the same day, Mr. Luis Cucalón, Director of Autoridad Nacional de Ingresos de Panamá (Panama's version of the "IRS"), tweeted this:
"I was the one who proposed Arts. 2 and 3 of Law 120 and I made a mistake. We are not prepared for taxation of worldwide income." Then he quickly followed at 13:58 with: "I have requested Mr. President to repeal said articles, which he accepted."
That Panama's version of the IRS is "not prepared for taxation of worldwide income," should not make anybody with wealth in Panama feel comfortable. This only implies they plan to do so in the future. And, as they've displayed once before, it will come without warning nor debate.
The government ultimately announced on December 31 that the law will be repealed right away in the New Year.
The attempt by the Panamanian government to institute worldwide taxation, without debate, shows us how governments work. When they are in trouble, as governments all around the world are with their historical sovereign debts, they will do whatever it takes to fleece you of more of your hard-earned income. And, it would not surprise us in the least if the US government was pushing for the change. The US government, after all, actually has 150 IRS agents in Panama spying on US citizens already.
Either way, Panama just shot itself in the economic foot.
Until now, Panama has been seen by international businesses and North Americans as a place of strategic financial importance. Panama allowed people from retirees to international companies a tax-enhanced place to live, do business and enjoy the benefits of the Panamanian tax code.
This tax code was the only reason Panama has enjoyed economic success in recent years. Its tax laws and business environment are directly responsible for this.
Now that PANAMA has tipped its cards - That it intends to one day tax everyone and everything to the hilt - the Panamanian authorities can be assured people will begin looking to get their money OUT of Panama.
A re-post from http://dollarvigilante.com/blog/2014/1/8/yet-another-government-just-decared-they-want-to-steal-all-o.html#6181
It was bizarre and caused a massive uproar the next day in Panama. In fact, it's repercussions are still being felt and it likely will cause major damage to the country of Panama.
What occurred?
Late on December 30th, Law No. 120 of 2013 was passed, and two articles were included to amend the tax code. One states:
"Every natural or juridical, domestic or foreign, who receives any taxable income within or outside Panamanian territory, must pay taxes."
The law made it clear that those who are residents, citizens or companies in Panama will have to pay tax-based on their worldwide income instead of only Panamanian-sourced income.
This was massive news with massive repercussions for any Panamanian resident who had foreign income and, more importantly, the thousands of businesses who had moved to Panama mostly because of their non-taxation of foreign income.
Realizing the disastrous potential results, the President tweeted amidst the outrage: "On territoriality and taxes if we need to repeal we'll repeal or what needs to be defined will be defined, but ample debate must take place."
The law was not even discussed in the National Assembly. There was no debate, no warning. Quite a double standard: laws don't need to be debated in order to be implemented, but "ample debate must take place" to repeal the law. Ah, the logic of government.
At 12:06 he tweeted this: "There is too much gossip and disinformation regarding tax territoriality. On the first week of January everything concerning that will be clarified."
On the same day, Mr. Luis Cucalón, Director of Autoridad Nacional de Ingresos de Panamá (Panama's version of the "IRS"), tweeted this:
"I was the one who proposed Arts. 2 and 3 of Law 120 and I made a mistake. We are not prepared for taxation of worldwide income." Then he quickly followed at 13:58 with: "I have requested Mr. President to repeal said articles, which he accepted."
That Panama's version of the IRS is "not prepared for taxation of worldwide income," should not make anybody with wealth in Panama feel comfortable. This only implies they plan to do so in the future. And, as they've displayed once before, it will come without warning nor debate.
The government ultimately announced on December 31 that the law will be repealed right away in the New Year.
The attempt by the Panamanian government to institute worldwide taxation, without debate, shows us how governments work. When they are in trouble, as governments all around the world are with their historical sovereign debts, they will do whatever it takes to fleece you of more of your hard-earned income. And, it would not surprise us in the least if the US government was pushing for the change. The US government, after all, actually has 150 IRS agents in Panama spying on US citizens already.
Either way, Panama just shot itself in the economic foot.
Until now, Panama has been seen by international businesses and North Americans as a place of strategic financial importance. Panama allowed people from retirees to international companies a tax-enhanced place to live, do business and enjoy the benefits of the Panamanian tax code.
This tax code was the only reason Panama has enjoyed economic success in recent years. Its tax laws and business environment are directly responsible for this.
Now that PANAMA has tipped its cards - That it intends to one day tax everyone and everything to the hilt - the Panamanian authorities can be assured people will begin looking to get their money OUT of Panama.
A re-post from http://dollarvigilante.com/blog/2014/1/8/yet-another-government-just-decared-they-want-to-steal-all-o.html#6181
