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Update on the Panama USA Tax Treaty – Dec. 4, 2010

Update on the Panama USA Tax Treaty – Dec. 4, 2010

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We are going to give you some tidbits regarding the progress of the restored Republic occupying the vacated seats. This is coming from the latest phone in talk show mostly.

http://www.panamalaw.org
We are going to give you some tidbits regarding the progress of the restored Republic occupying the vacated seats. This is coming from the latest phone in talk show mostly.

http://www.panamalaw.org

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Published by: Aurelia Masterson of Panamalaw.org on Dec 08, 2010
Copyright:Attribution Non-commercial

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05/12/2014

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Update on the Panama USA Tax Treaty –Dec. 1, 2010
It appears that the new tax treaty requires Panama to have their legislature endorse it before it can go intoeffect. We do not know when this is going to be but they have a year to do so. The US Treasury Secretarysigned the treaty on Nov. 30th. If the legislature modifies it then it would need to go back to the USA forendorsement as well. They both seem to be aware of this. I will quote the following section of the treaty:ARTICLE 11ENTRY INTO FORCEThe Parties shall notify to reciprocate when they have completed their internal procedures necessary forentry into force of this Agreement. This Agreement shall enter into force on the later of the dates of suchnotifications. Once the Agreement enters into force, it will have effect for applications to be made on orafter the date of enactment, with respect to matters pertaining to fiscal years beginning on or after threeyears prior to signing this Agreement.The last few words of this treaty are troubling.“Once the Agreement enters into force, it will have effect for applications to be made on or after the date of enactment, with respect to matters pertaining to fiscal years beginning on or after three years prior tosigning this Agreement.”This is a retroactive contract which is normally against the constitution of a nation. It allows informationrequests to be made going back three years before the treaty signing date. Whoa. Can you believe they didthis?Here is a quote we came across on Panama Guide:http://www.panama-guide.com/article.php/20101129110623149“the lawyer Eduardo Morgan Jr. said Panama would have to limit the tax information to be sent to theUnited States to only those US nationals who "actually reside in the United States." Otherwise, he warned,it would violate Article 17 of the Constitution and with it, 'Panama lost much more than they could win”Here is a machine translation of Article 17 of the Panama Constitution:ARTICLE 17. The authorities of the Republic are instituted to protect in their life, honour and goods to thenationals anywhere are and the foreigners who are under their jurisdiction; to assure the individual andsocial effectiveness of the rights and duties, and to fulfill and to make fulfill the Constitution and the Law.The rights and guarantees that this Constitution consecrates, must be considered like nonexcludingminimums and of which they affect the rights fundamental and the dignity of the person.The key words are the constitution applies to foreigners under their jurisdiction. This would mean aresident of Panama banking in Panama with a Panama Corporation or Foundation could not be subject tothis “treaty” just because they are American as well. Now an American not being a Panama Resident wouldnot be construed to be under protection of Panama Constitution. The three year look back period would beunconstitutional in our opinion and thus would not be applicable to a resident of Panama. The USA may

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