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Panama Financial Sectors Uncertain How to Comply with U.S. Foreign Account Tax Compliance Act

Article Summary:

The start of registration stipulated by FATCA law (Foreign Account Tax Compliance Act) of the United States is January 1, 2013, with enforcement beginning on July 1 of that year. However, many questions remain in several sectors such as insurance, securities and pensions, and even the regulators don’t have a clear idea of how to comply with the law.

Photo Credit: Capital

Original Article Text From Capital via Google Translate :

Ignore Regulatory Scope of the FATCA

Doubts persist among some U.S. citizens living in Panama and financial institutions regarding the implementation of FATCA (Foreign Account Tax Compliance Act), extraterritorial law that raises many uncertainties.

The start of registration of the agreements for compliance by entities FATCA is January 1, 2013, only eight months, and compliance as of July of that year. However there are still unaware of their impact sectors such as Insurance, Securities and Pensions. And regulators do not know the impact.

The Superintendent of Insurance and Reinsurance of Panama, Luis Della Togna said that has not yet been consulted on the subject by any of its regulated. He also noted that little is known about the topic and do not know the impact it will have on companies in this sector. Togna Della said he has scheduled a meeting convened by the Ministry of Economy and Finance (MEF) to address the issue.

Other financial regulators are the Securities. Recently in the forum for business and investment opportunities organized by Capital, Juan Manuel Martans Commissioner was asked about the impact of FATCA in this sector and this indicated that it recognized that this issue should be handled by the Financial Coordination Council, however the priority for securities firms and other regulated is to comply with the laws of Panama before the alien.

The bank in turn has been more active on the issue, but it is also full analysis of the regulation.
The secretary general of the Superintendency of Banks of Panama (SBP), Amauri Castillo said that this is a concept that goes over the issue of compliance and the issue of know your customer. The SBP does not intend to make changes in regulations by Panamanian FATCA issue, but he has followed the norm and have even held seminars to better understand their scope.

Castillo said that has not yet discussed the issue in the Financial Coordination Council, but understand that this must be analyzed and discussed there.

Mario de Diego, executive vice president of the Bankers Association said still studying and analyzing the draft regulations issued by the Department of U.S. Tax (IRS) in February, which is not yet final, because they are accepting comments until the end of months and could give changes.

The union has been conducting seminars and workshops with experts in the field and in the June convention will have a session that will last a whole morning with experts who will come to U.S. legal and practical issues.

Diego said has spoken with the national government and SBP-MEF-about the need and importance of them involved in this because what eventually stood as final regulations will affect banks established in Panama, and as authorities in other countries are intervening directly with the IRS even consider that the Panamanian must also do so, especially since Panama has signed an agreement to exchange tax information with the U.S.

In fact the Minister of Economy and Finance, Frank de Lima said he sent a letter to the IRS to request the same agreement reached with some countries like Italy, Spain, France and the United Kingdom, for institutions to make reports U.S. accounts by governments and not directly to the IRS, this much on issues of provision of information and retention. We consulted the Minister of Lima to learn whether he had any response on this request, but until press time there was no answer.

It is known that some banks have hired consultants to law firms to meet the proposed regulations and what to expect.

Also the Association of Compliance Officers of Panama held an activity recently with two experts in the field Carl Fornaris, co-director of the national practice of Greenberg Traurig related financial institutions, and Erika G. Litvak, member of the same law firm.

In his presentation indicated that the scope of FATCA is extremely broad and almost all foreign financial institutions are affected by these new rules. He clarified that non-financial foreign entities direct or indirect investments in the U.S. or beneficiaries of this country will be affected.

“It is therefore important to know these new rules and act in advance of the entry into force,” said Litvak.

The statute seeks to place the citizens and residents to comply with the obligation to declare to the IRS all accounts, even those outside the U.S., on whose sources of funds to pay taxes. Therefore, when opening accounts in Panama, the banks will require that they confirm that they declare their accounts to the IRS and authorize them to take effect when the FATCA operations report to the IRS. One of the main impacts of the rule is to be withheld in the U.S. 30% of the assets of the institution or customer when they are declared income but the taxes are reported .

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From Capital

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