Trends in International Taxation

ISSN 1726-0485 Edición Feb. ´16 Trends in - Politics and families that International taxation dominated Panamanian Political Scene - Transfer pricing - Bill Of Amendments to the Law of - Tax Secret procurement - Retention Agents ITBMS > - Adapting to climate change new obligations and conservation actions rbc.com.pa Water Resources Colaboradores en esta edición Consejo José Javier Rivera J. Rafael Fernández Lara Editorial Zumara Garrido Giovana del C. Miranda G. Yhestryll Mc Cree Maybé Mendieta Augusto García Albin Rodríguez Mariela de Sanjur Lisbeth Martéz José Javier Rivera J. Giovana del C. Miranda G. Portada y Diagramación: Virginia Medina Fotografía: Mariela De Sedas de Sanjur ÁREAS DE PRÁCTICA IMPUESTOS - CONTRATACIÓN PÚBLICA - PROPIEDAD INTELECTUAL - REGISTRO SANITARIO - LITIGIOS, ARBITRAJE Y MEDIACIÓN - DERECHO MARÍTIMO - ABANDERAMIENTO DE NAVES - DERECHO LABORAL - ASUNTOS MIGRATORIOS - SOCIEDADES - APERTURA DE NEGOCIOS - FUNDACIONES DE INTERÉS PRIVADO - CONTRATOS, FIDEICOMISOS - ASESORÍA BURSÁTIL - SERVICIOS NOTARIALES Y REGISTRO - AMBIENTAL - LEYES ANTIMONOPOLIOS - TELECOMUNICACIONES Legislación y Economía es una publicación de Rivera,Bolívar y Castañedas , que tiene como propósito principal mantener informados a nuestros clientes, empresarios, industriales, ejecutivos, banqueros, inversionistas, y a todo aquél que tenga INTERÉS en la actividad de PANAMÁ. Rivera, Bolívar y Castañedas @rbc_abogados RBC Abogados CONTENT 6. 20. EDITORIAL CONSULT DOCTRINE & WE LEFT THE GRAY LIST OF FATF JURISPRUDENCE 7. WORKERS WITH DISABILITIES ADDITIONAL TRAVEL ALLOWANCES FOR INVITED WRITER AIRPORT WORKERS ARE GOVERNED BY COLLECTIVE WORK AGREEMENT PRINCIPLES AND REALITIES OF INTERNATIONAL DOUBLE TAXATION FULL COURT DECLARED UNCONSTITUTIONAL OUTSOURCING OF TAX COLLECTION OF TAX 11. UNDER SECRET NORMS OF INTEREST NEW OBLIGATIONS FOR ITBMS 25. RETENTION AGENTS POLITICS BILL OF AMENDMENTS TO THE LAW OF PROCUREMENT POLITICS AND FAMILIES THAT DOMINA- TED PANAMANIAN POLITICAL SCENE TRANSFER PRICING A GLOBAL CHALLENGE FOR THE GLOBAL ECONOMY PARAMETERS FOR FUNDS 29. COMPENSATION BY ACH PANAMANIAN ECONOMY REGULATION OF SECURITIES BROKERS, CONSUMER’S PRICE INDEX ANALYSTS AND EXECUTIVE OFFICERS MAIN ECONOMIC INDICATORS “YO SI CUMPLO” PROJECT HAS PROCEDURE MANUAL INFLATION STARTS YEAR WITH POSITIVE NUMBERS CONTENT 35. 43. SPORTS CAPSULE WORLD ECONOMY THE WORLD BANK REDUCES FORECASTS 2016 TO 37 OF 46 COMMODITY PRICES INCLUDING OIL WHO PARTICIPATION IN RESEARCH AND DEVE- LOPMENT IN CONNECTION WITH VIRUS ZIKA ECLAC INTRODUCES TWO NEW STUDIES ON EFFECTS AND MEASURES TO CLIMATE CHANGE IN LATIN AMERICA FEED THE CITIES: A KEY CHALLENGE FOR SUSTAINABLE DEVELOPMENT ILO ANNOUNCES INITIATIVE ON YOUTH EMPLOYMENT 46. 41. ENVIRONMENTAL CAPSULE PANAMANIAN CHAMBER OF CONSTRUCTION (CAPAC): WATER RESOURCE MANAGEMENT FOR SUSTAINABLE CULTURAL CAPSULE CONSTRUCTION SECTOR ACTIVITIES FOR THE MONTH OF MARCH EDITORIAL WE LEFT THE GRAY LIST OF FATF José Javier Rivera - Attorney [email protected] fter two years, Panama has achieved a re- The result of concern within banking and financial acti- sult so far Avity since plenary session held in Paris, the FATF has been has removed country from the so-called gray list. favorable, but it is a milestone that should be main- tained as it will be reviewed next year to determi- As we have explained on several occasions in this Journal, his- ne whether the country remains attentive to FATF re- tory of this case relate to one practiced by World Bank that re- commendations on measures to prevent these crimes. flected forty weaknesses in the country to detect transactions of money laundering and operations that could use people dedi- It´s a new culture that should add value to the country if trea- cated evaluation to financing of terrorism and related figures. ted seriously, as international multinational corporations, financial institutions and banks could return to Panama as From that moment, economic agents such as banks and banking long as there is a perception that the country is transparent correspondents considered risky to conduct business with fi- as to final beneficiaries financial and banking transactions nancial institutions and, therefore, in some cases canceled their and adopting best practices in transparency, not only as re- presence in the country or failed to act as banking correspondents. gards private sector but in public procurement, for example. This had immediate involvement in business since certain ca- In this regard, much it remains to be done but it is encoura- pital flows and also perception of the country as a safe place ging that Assembly of Deputies to prepare to discuss a draft were restricted to carry out investments, negatively also varied. law on public procurement and elimination of direct con- tracting procedures that characterized last period of govern- From April last year, government created a legal framework ment through the PAN is raised and now still remain in DAS. obliging financial and non-financial subjects, including a wide range of economic agents such as sellers of real estate, vehicles, We hope that the issue of the gray list is a lesson lear- insurance brokers, accountants, pawn shops, houses exchan- ned, and that we maintain high levels of transparency ge, financial, lawyers and others to establish clear rules on the and law enforcement, to keep as a competitive place. L&E knowledge of their customers and clients of its customers. Among other subjects quartermaster unregulated level MEF was created, and entities such as Superintendency of Banks, Insurance Superintendence, Securities, Financial It will dawn and see… Analysis Unit and Public Ministry itself were strengthened. 6. february 16 INVITED WRITER PRINCIPLES AND REALITIES OF INTERNATIONAL DOUBLE TAXATION Zumara Garrido - Attorney [email protected] orld economy has undergone remarkable changes over time and twenty-first century brought a Wglobal economy full of changes. Constant migra- tion, consequently bring extraterritoriality of income and therefore income that don’t originate from operations that occur in one country, this crea- tes an extensive tax competition, which consequently brings the phenomenon of double taxation. The term double taxation is used in a number of contexts for which a precise definition wouldn’t apply in each of these contexts. Double taxation is not defined The agreements to avoid double taxation aim to avoid in the model of OECD and there is no reference in com- risk of double taxation for taxpayers engaged in in- ments of the same, however OECD model identifies ternational transactions as well as mitigate risks of primary objective of these treaties as “avoidance of dou- sub imposition of taxpayers by promoting coope- ble taxation with respect to tax income and on capital.” ration and exchange of international information. Issue of international taxation is important for the in- Because countries in the world are in a period of ternational economic community, as countries tran- economic integration, biggest challenge there is sacting with each other, should be interested in this to design a program of standards of international issue, both to present a favorable environment for taxation and coordinate this program with the sys- foreign investment and to protect its revenue base. tems of international taxation in other countries when signing agreements to avoid double taxation. It’s essential to assess individual situation and tax system of each country and this depends on the result of im- By creating international tax rules, there are four pri- plementation of agreements to avoid double taxation. mary goals, to fulfill, first, each country must receive fair share of international operations, for which will require 7. february 16 INVITED WRITER efficient domestic taxation rules are developed and at havens, which are no more than those countries that the same time avoid making agreements that limit the have a low rate of tax or not tax these transactions. rights to tax transactions on domestic-source income. Second, it must promote equality, ie regulate imposition of tax burdens on taxpayers with incomes without Jurisdiction of Taxes: reference to the source of income, and to distribute those burdens that these are proportional to the ability The income from an activity may be taxed according to pay taxpayers. On the other hand, third goal is to to tax rules of each country because there is a link bet- maintain competitiveness of the domestic economy of ween the country that carried out operation and the each country. While all countries should be concerned activity that generated income. According to interna- about welfare of non-residents, they also have an obli- tional tax rules, this link is known as jurisdiction of gation to promote national economic interests of its ci- source, however, it is also possible income tax based tizens and residents. Ultimate goal lies in the regulation on the relationship between country and person who of capital exports and capital neutrality and imports, is generating this income. The court claim of a country, indicating that should create international tax rules in based on link between this country and the subject of order not to encourage or discourage capital outflows. income generator is known as jurisdiction of residence. Agreements to avoid double Persons subject to jurisdiction of residence by their coun- taxation: try of residence, generally are taxed on their worldwide income, regardless of source of income into account. Over

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