Offshore Banking and Panama TIEA

03 Aug

Panama City, Panama - Panama TIEA

Offshore banking and Panama

The recent Tax Information Exchange Agreement (TIEA) between Panama and the U.S. will only have an effect on bank accounts held by U.S. citizens in Panama. Panama companies and foundations are simple to set up as 100% anonymous vehicles just as before as there have been no changes to the law that governs these vehicles.  Also you have full protection under attorney-client confidentiality since we are a law firm.  The strategy is then simply to open accounts in other jurisdictions which do not have any TIEA’s in place, such as Belize, Andorra or Hong Kong.  Of course one can also form companies and trusts in Belize and other similar jurisdictions as an alternative option although it is a good idea, in any case, to consider a jurisdictional strategy with perhaps a foundation in Panama owning a Nevis or Hong Kong corporation with bank accounts in Belize, St. Vincent, Andorra and/or Hong Kong – for example. If you have further questions I am more then happy to answer them. ”

An Adviser’s response to the legal advice (above):

I can’t say I agree with him on the fact that the TEIA only affects US persons, certainly the intent is to capture US persons but keep in mind the contra flow of data?.I see a flow of data going to the US and finding its way back to any other LATAM country that has a TIEA with the USA which consequently will affect many other Latin American individuals.

Keep in mind also if you are an Ecuadorian for example that owns a bunch of real estate through a Panama foundation, is he telling me that the IRS will disregard that data? I doubt it very much, in the same way I doubt the Ecuadorian tax authorities will disregard same data. Also the anonymity of the foundation is incorrect as in some LATAM countries, again using the example of Ecuador if you settle a foundation you must disclose it and report it 2-3 steps up the structure?the window is very narrow for them and I see his approach as short term.

What about distributions from the foundation, where do they go, how are they classified and how are they received? We see this issue all the time currently with some clients and prospects we have. Again he is not incorrect about setting up his bank accounts but these to me are reactive positions without any long term strategic approach, where will he go once these jurisdictions are all being looked at?

Related to Offshore banking and Panama; He has not really addressed the issue of compliant money or non compliant money.

Contact us today, if you need assistance, or just a second opinion on your foreign financial accounts compliance.

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