U.S. Foreign Account Tax Compliance Act (FATCA): Uncovers bank secret and presupposes extraterritoriality in Panama.


Operating banks in Panama that have any representations or agents in the United States must report immediately to the U.S. Foreign Account Tax Compliance Act (FATCA) about any clients that are citizens, residents or nationals of the United States.
The U.S. Foreign Account Tax Compliance Act (FATCA) demands Central American banks to apply the central tax emitted by the United States by June 30th of 2013. If banks fail to comply, the U.S. government will levy a 30% on operations with financial assets held by U.S. account users. The rest will reach its destination to the bank that does the transaction.

Panamanian banks will not benefit from FATCA since they are the ones required to investigate their clients and not the U.S. government who are requesting the withholding of tax.

As for the contributors, the only noticeable social thing is the promotion of tax payment.

We also note that FATCA is extra-territorial. The Panamanian constitution grants embassies extra-territoriality on Panamanian grounds. This piece of land is considered part of the country of the embassy and it is governed by its law and not by the law of the country in which it is located. We could argue that FATCA is not a territorial law and if it involves confiscation of foreign banks´ assets then it violates the sovereignty and independence of the government, i.e. Panama.

This situation has led banks to prevent owners of public limited companies and corporations from using their stocks in order to find out who the owners of the accounts are and consequently know who the owners of the companies are.

What some governments do to other governments or even to its own citizens in this case is a form of oppression. This oppression created, for instance, the current situation related to the Eurogroup that intents to rescue Cyprus and causes the first U.S. corralito in the private funds of people who have bank accounts in this country. It is a tax that was created in order to rescue the country from the crisis that followed the cases of the banking crisis in Greece, Portugal, Ireland and Spain.

In other words, the established tax by the authorities of Cyprus will be applied to all bank accounts of residents and tourists. 10.000 euros will be confiscated immediately from those who have 101.000 euros.

To be continued…

About the author Lcdo. Abel Gómez García, licensed attorney in Panama and partner of GOMEZ TOMICZEK, a multicultural firm specializing in Relocation Services, Immigration and Corporation Law, Real Estate, Relocation Services. For further information contact: info@gomitom.com