Panama’s Shipping Tax Regime is declared “non pernicious”

The Panama Shipping Tax Regime was declared by the Organization for Economic Cooperation and Development (OECD) as “not pernicious”. That is, it does not present a risk, nor is it prejudicial to the tax or tax base of other countries in the region.

This took place in the framework of the development of the 52nd Session of the Forum on Pernicious Tax Practices (FHTP) that took place in Paris, France.

The Panama Maritime Authority (AMP) reported that, in addition to the Shipping Tax Regime, the OECD evaluated the fiscal regimes of the Panama Pacifico Special Zone and the Multinational Corporation Headquarters (SEM).

By satisfactorily maintaining the revision, this positively impacts all the companies that generate activities around the country’s maritime conglomerate, which offers all kinds of services to the thousands of vessels that transit the jurisdictional waters of Panama each year.

The Panama Shipping Tax Regime was evaluated positively.

During the Plenary, the OECD Secretariat acknowledged Panama’s commitment to maintain compliance with the standards of the Forum on Pernicious Tax Practices, and referring to the general review of the special regimes of other States.

In addition, it emphasized the importance of the corresponding jurisdictions monitoring the income generation activities of companies included in their regimes, with special emphasis on obtaining data on their operations, income, taxes, expenses, benefits, labor and the impact of operations on the national economy.

The Panamanian delegation chaired by Alberto Alemán Arias, former vice minister of Foreign Trade of the Ministry of Commerce and Industries, and made up of Fernando Solórzano, general director of Merchant Marine of the AMP; representatives of the Department of International Financial and Fiscal Strategy of the Ministry of Economy and Finance (MEF); and representatives of the governing institutions of the other tax regimes of Panama that were under review.

The OECD carries out an Action Plan against the Erosion of the Taxable Base and the Transfer of Benefits (BEPS), whose purpose is for multinational companies to provide all relevant governments with the necessary information on the allocation of global income, on economic activity and on taxes paid between different countries to prevent them from continuing to take advantage of tax planning to avoid paying taxes or doing so minimally in any of them.

Under these conditions, States must demonstrate the degree of compliance with key factors that are reviewed by the Members of this forum in terms of identifying preferential tax regimes.

The BEPS project includes 15 Actions that seek to combat the erosion of the tax base and the transfer of benefits. The BEPS consists of fiscal practice derived from gaps caused by the interaction of different tax systems or double taxation treaties, by which the benefits are obtained by carrying out cross-border activities that are not taxed or are insufficiently taxed.

The forum was celebrated in Paris.

On October 31, 2016, Panama joined, as an associate member of the OECD’s Inclusive Framework on BEPS and during the 47th session of the Forum on Pernicious Tax Practices, held in September of 2017, the shipping regime of the OECD declared for the first time the Republic of Panama, as “Not Pernicious”, maintaining its status during the review carried out now, which includes the operations of ships under Panamanian registry (18% of the world’s maritime fleet), maritime transport activities, management of ports and auxiliary maritime industries.

The isthmus has a network of seaports in which a variety of auxiliary services is offered to both passengers and containerized cargo, liquid cargo, bulk cargo and cargo in general.

The largest companies in the world have established regional operations in the country and in recent years there has been an increase in companies that provide ancillary services.

Panama, is one of the leaders of economic growth in the region, thanks to its logistics and mercantile development which represents a little more than 25% of the country’s Gross Domestic Product.

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