Although the OECD initiatives in tax matters have been clearly defined since 1998, it was not until 10 years later, as a result of the global financial crisis, that the international community finally reached the consensus that it was in the best interest of most of the countries to move away from tax competition to embrace the concept of cross-border cooperation in tax matters.
It is this conceptual shift in thinking that served as the cornerstone for the development of the principles of transparency and information exchange that have prevailed in the last decade. Panama has not escaped to implementing legislation in compliance therewith.
By way of Executive Decree 122 of 11th June 2018, published in the Official Gazette of June 13, 2018, the Republic of Panama made public the list of reportable jurisdictions for the purpose of the automatic financial information exchange between tax authorities that shall take place for the first time in July / September 2018, with regards to financial information as of 31 December 2017.
While complying with the expectations of the international community Panama has tried to achieve an adequate balance between adopting new legislation and ensuring that the countries for which it opens a channel for the exchange of automatic financial information, provide certain safeguards to protect the fundamental rights of the owners of the information, such as: (i) an adequate legal framework to guarantee the protection of the data; (ii) a technological platform that minimizes the risks of undue access to information; and (iii) low levels of corruption and crime and high levels of political stability
Contrary to the negative publicity that had been generated in recent years, the reality is that there are legitimate reasons to protect the privacy of financial information. Owners of the information could be exposed to substantial risk if their personal information falls into the hands of criminal organizations. Hopefully, time will correct the distortions and abuses of the system that can occur at both ends of the pendulum that oscillates between total transparency and certain guarantees of privacy of financial information.