(WSJ) 27 October -The government of Panama has officially signed up to an international agreement to combat tax avoidance and evasion, seven months after the country became the focus of global attention with the publication of a trove of leaked documents showing that one of its law firms had created hundreds of thousands of shell companies and offshore accounts for rich and powerful people around the world.
The move signals a change of approach for the Central American financial center, and comes ahead of a July 2017 deadline set by the Group of 20 largest economies for compliance with international rules on sharing tax information.
In signing up to the Convention on Mutual Assistance in Tax Matters, the Panamanian government has committed to provide information to the other 104 signatories, which would allow them to identify individuals who are using shell companies or offshore accounts in the country to avoid paying tax.
“They are no longer the difficult kid in the class room,” said Pascal Saint- Amans, director of the Center for Tax Policy and Administration at the Organization for Economic Cooperation and Development, which monitors compliance with international tax agreements.
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Mr. Saint-Amans said that until recently, Panama had been among the tax jurisdictions most resistant to those agreements, seeing them as a threat to its financial services industry. But he said the international pressure that followed the April release of documents related to the activities of law firm Mossack Fonseca & Co. had “persuaded them to move.”
“It is a key element in adjusting our platform of services to the expectations of the international community,” said María Del Pilar Arosemena de Alemán, Panama’s ambassador to France, where the OECD is based.
The ambassador said the government expected the move to be positive for the country’s financial services industry, as well as the country’s broader appeal to international businesses.
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