Panama’s Vice President has demanded that Panama be taken off Colombia’s tax haven black list in order to proceed with negotiations to end tax dodging unless Colombia wanted to face retaliatory measures.
The two countries have been working to exchange information regarding Colombian tax dodgers and establish a bilateral mechanism to facilitate the transfer of information. The lack of progress in this measure and Panama’s failure to sign the agreement on the exchange of tax information resulted in Colombia declaring Panama a tax haven.
MORE: Colombia and Panama look to settle tax haven agreements
Panamanian Vice-President Isabel De Saint Malo has stated that, “Panama is interested and available to work with Colombia to find a mechanism that is valid for both, but Panama cannot after the inclusion of Panama on Colombia’s tax haven list,” according to Colombia’s El Espectador newspaper.
Malo went on to say that Panama could not negotiate while on Colombia’s tax haven list, because “that would be negotiating under pressure, which goes against the spirit of international law.”
“If today the response is that Panama is taken off the list and the opening of a negotiation process, we are interested. If the response is that Panama is not taken off the list, then Panama will analyze what measures will be taken,” stated Malo.
Colombia’s declaration of Panama as a tax haven can prove to be one of the biggest diplomatic headaches of President Santos’s administration. The Panamanian vice president had already mentioned the possibility of using the “Ley de Retorsion” in which Panama essentially goes eye for eye, according to Semana news magazine.
The enactment of this law has the Colombian private sector nervous as it would mean a reciprocal tax on Colombians by Panama. Panama has many options to get the tax off of one of their biggest foreign direct investors. The Panamanian government could suspend the binational electric connection project, start requesting visas for Colombians, and put a price on military cooperation, according to El Espectador.
Sources
- El paraíso que se volvió pesadilla para Colombia (El Espectador)
- Panamá solo negociará con Colombia si retira al país de lista paraíso fiscal (El Espectador)
- Panamá, el paraíso de la discordia (Semana)
