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Criminalization of Tax Evasion

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Lawyers reject criminalizing tax evasion

dulcidio-de-la-guardia-620x264.jpg 
De La Guardia. mulling over tax evasion laws

THE POSSIBILITY that the government might yield to “external pressures and make tax evasion in Panama a criminal offence has  been denounced by the National Bar Association (CNA).

“I t does not cause such a disturbance” that obliges the State to make it a criminal offense, said the body’s president Juan Carlos Araúz, who   on Saturday rejected the “external pressures,” to  take that step.

“Internal tax evasion is not part of a problem that requires a regulation in terms of its criminalization,” which “leads us to categorically reject any external claim” in that regard, Araúz said in statements to the Efe  news agency

Panama’s  Finance Minister Dulcidio De la Guardia said last week that international agencies have recommended Panama consider tax evasion as a criminal offense and not an administrative default, as it is now, and said  the issue should at some point be evaluated and debated.

Presidency Minister, Alvaro Alemán, has not ruled out that the recommendation on the criminalization of tax evasion should be included in a report that will be presented in 45 days by the Latin American Financial Action Task Force (Gafilat), which ended Friday an evaluation round in the country on Friday May 26.

For Araúz, external pressures on the fiscal issue are not in line with Panamanian reality and only yield to the pretension that the country should become “the fiscal police or the police of the taxes of any individual in another jurisdiction.”

In terms of taxes, the Central American country “maintains the possibilities of control and monitoring that determine precisely the fulfillment of the obligations of both nationals and foreigners residing in our territory,” said Araúz.

He added that Panama also has “sufficient control mechanisms” to prevent its powerful international financial center “from being used for the commission of criminal acts in the light of precisely what conduct is a crime in our country.”

Revelations in the Panama Papers of the creation by law firm Mossack Fonseca, of hundreds of thousands of offshore companies to enable businessmen, politicians and sports and entertainment figures to avoid taxes, reverberated around the world.

 

http://www.newsroompanama.com/news/panama/lawyers-reject-criminalizing-tax-evasion

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Jail for tax fraud  considered in new bill

Dulcidio-Guardia--620x264.jpg 
Dulcidio De La Guardia

PANAMA’S MINISTRY  of Economy and Finance (MEF) is working on a bill that could earn jail terms for those convicted of tax fraud. But fiscal experts  warn it needs controls to avoid becoming a tool for political persecution

At the moment it is an administrative fault that does not lead to imprisonment.

Tax consultant Osvaldo Lau said that “it is necessary to strengthen the control and sanctions as far as the taxes, in general, are concerned. The problem that if the power is centralized in an official appointed by the Executive it can become a political weapon. ”

In an attempt to limit the arbitrariness of an official, in the scheme that is being considered for Panama, it could require the analysis of the Tax Administrative Court to decide if the case deserves to be sent to the Public Ministry.

Rubén Bustamante, a tax law expert, said that prosecutors, lawyers, judges and the population, have advocated the creation of a specific criminal court for cases of tax fraud.

Tax lawyer José Javier Rivera warned of the need to train professionals and recalled that “in a democracy as weak as this, without having  been  constituted as a crime, it has already been used to try to intimidate people.” Reports La Prensa.

Finance Minister, Dulcidio De La Guardia, told La Prensa that hat “there will be people who are not satisfied and will say this  is persecution. when there are obvious actions against the patrimony of the State. He said  it must be taken into account that “Panama is the only country in Latin America which does not consider tax fraud as a crime along with  money laundering.”

The minister pointed out that tax fraud would be considered an offense, if there is the intention of deliberate evasion of taxes. Debts  with the treasury cannot be punished with prison penalties of prison, according to the Constitution. The threshold has not yet been defined ,for  a minimum amount of money evaded, to  be considered an offense.

 

http://www.newsroompanama.com/news/panama/jail-tax-fraud-considered-new-bill

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The Criminalization of Tax Evasion

A proposal has been made to criminalize tax evasion in Panama, where, unlike other countries, it is only considered an administrative defect.

Friday, October 6, 2017

In order to avoid going back on the gray list and improving compliance with international standards against money laundering and fiscal transparency, the Panamanian government has presented a comparative study on tax offenses in Panama and other countries in order to start a debate on criminalizing tax evasion in the country.

Panama is one of the few countries in Latin America where tax evasion is not considered a crime, but an administrative defect.  The comparative study presented by the Ministry of Finance details that of 27 countries analyzed, Panama and the Bahamas are the only ones that do not criminalize tax evasion.

From a statement issued by the Ministry of Economy and Finance:  

The Minister of Economy and Finance, Dulcidio De La Guardia, pointed out that the definition of tax fraud as a crime and a offense which is a precedent to money laundering aims at complying with the international standard in this matter and, sooner or later, Panama must discuss the issue in order to achieve consensus."
 
His statements were given today within the framework of the presentation of "Comparative Analysis of Tax Crimes in Panama and in other countries", an event that brought together representatives from different sectors.

Read full study (in Spanish).

 

https://www.centralamericadata.com/en/article/main/The_Criminalization_of_Tax_Evasion

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Plans to Penalize Tax Evasion

In Panama, a bill put forward by the Varela administration proposes that tax fraud of $300 thousand or more be classified as a criminal offense, and punished with 1 to 3 years in prison.

Monday, November 20, 2017

The Ministry of Finance and Economy insists that the country is at risk of being included once again in the gray list of the Financial Action Group if tax evasion is not considered a crime. Panama is one of the few countries where tax evasion is not considered a criminal offense. 

Prensa.com reports that "...The government has distributed among business associations and specialists a proposal for a law that establishes that tax fraud of $300 thousand or more would be considered a criminal offense, punishable with imprisonment of 1 to 3 years."

See: "The Criminalization of Tax Evasion"

Héctor Cotes, president of the Panamanian Association of Business Executives (Apede) "... suggested raising from $300,000 to $500,000 the amount for which this type of fraud is considered a criminal offense and highlighted the need to have guarantees for taxpayers."We are worried that it will be used as a political tool," said the union representative, who asked that the process not allow the directer general of revenue to have all of the power in these cases."

 

https://www.centralamericadata.com/en/article/main/Plans_to_Penalize_Tax_Evasion

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Project to Penalize Tax Fraud Goes Ahead

The bill presented by the Varela administration in the National Assembly stipulates sanctions of 2 to 5 years and fines up to 10 times the amount defrauded. 

Friday, January 19, 2018

From a statement issued by the Ministry of Economy and Finance:  

January 18, 2018 The Ministry of Economy and Finance (MEF) today presented to the National Assembly a bill proposing the inclusion of the crime of tax fraud as a crime in the Penal Code.  

The bill will add Chapter XII "Crimes against the National Treasury" to Title VII of the Criminal Code and shield our financial center as well as logistic activities and legal services against its possible use to evade taxes in other jurisdictions or in Panama. 

"The Bill is designed for large evaders, who have multi million dollar incomes and do not pay their tax obligations," said the Minister of Economy and Finance, Dulcidio De La Guardia, during his presentation to the National Assembly." 

Read full release (in Spanish).

https://www.centralamericadata.com/en/article/main/Project_to_Penalize_Tax_Fraud_Goes_Ahead

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I don't really understand the significance of this. Yes, out of its own self-interest, Panama should have made evading Panamanian taxes a crime. But imagine you are a Dutch businessman who somehow uses the Panama financial system to evade Dutch taxes.

How is Panama supposed to know foreign tax law? It's obviously a crime in Holland. Panama is going to arrest you and prosecute you for tax evasion if and when you set foot in Panama?  You're going to be sent to La Joya for breaking a Dutch tax law? 

Panama should arrest you if there is an international warrant and return you to Holland. Going beyond that seems impractical if not impossible. 

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".........multi million dollar incomes and do not pay their tax obligations,"

Well...that rules us out !  Seriously,  seems to me Panama would certainly benefit in tightening the noose on evasion of taxes owed to their own country.

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1 hour ago, Uncle Doug said:

I don't really understand the significance of this. Yes, out of its own self-interest, Panama should have made evading Panamanian taxes a crime. But imagine you are a Dutch businessman who somehow uses the Panama financial system to evade Dutch taxes.

How is Panama supposed to know foreign tax law? It's obviously a crime in Holland. Panama is going to arrest you and prosecute you for tax evasion if and when you set foot in Panama?  You're going to be sent to La Joya for breaking a Dutch tax law? 

Panama should arrest you if there is an international warrant and return you to Holland. Going beyond that seems impractical if not impossible. 

Wouldn’t “crimes against the national treasury” restrict the proposed law to the avoidance of Panamanian taxes? Or am I misunderstanding something?

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3 hours ago, Moderator_02 said:

The bill will add Chapter XII "Crimes against the National Treasury" to Title VII of the Criminal Code and shield our financial center as well as logistic activities and legal services against its possible use to evade taxes in other jurisdictions or in Panama. 

It's the EU who wanted this law in order to take Panama off of the "black" and then "gray list" of foreign tax havens.  They want it to be a crime in Panama to do what they consider to be money laundering or tax fraud or tax evasion of taxes that are owed to the members of the European Union.  They don't really care if Panama collects its own taxes or not.

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3 hours ago, Uncle Doug said:

It's the EU who wanted this law in order to take Panama off of the "black" and then "gray list" of foreign tax havens.  They want it to be a crime in Panama to do what they consider to be money laundering or tax fraud or tax evasion of taxes that are owed to the members of the European Union.  They don't really care if Panama collects its own taxes or not.

Exactly. The Panamanian government is just complying with mandates issued by the EU gang.

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Controversial Request to Reduce Penalties for Tax Evasion

During the discussion of a tax evasion law project, the Panamanian business sector requests that the amount defrauded to be considered a legal crime be increased from $300,000 to $500,000.

Tuesday, October 23, 2018

Regarding the request made by the Chamber of Commerce, Industry and Agriculture of Panama, the Ministry of Economy and Finance (MEF) explained that "... There are points that the guilds would like to modify, which would undermine the law project so far that its objective would be lost. Panama needs a solid proposal. To request that the amount of fraud be raised to 500,000 balboas does not demonstrate seriousness in combating money laundering."

From the MEF statement:

October 22, 2018. The Ministry of Economy and Finance (MEF) proposes that, in the absence of agreements on Laws 591 and 692, the efforts made by the Government and the private sector to seek a solid document should be considered.

Eyda Varela de Chinchilla, head of the MEF, said that "There are a few differences of opinion between what the guilds expect, but we believe that the law that seeks to criminalize tax evasion, promotes transparency which is key to raising our institutional payment of taxes to the state. It also constitutes a commitment or debt of Panama to the international community."

The improperly named Panama Papers contained many cases considered fiscal crimes in other jurisdictions, which used our legal structures, where money laundering is not a crime, which impedes the judicial cooperation of the Public Ministry with the country requesting the collaboration.

Read full statement (In Spanish).

 

https://www.centralamericadata.com/en/article/main/Controversial_Request_to_Reduce_Penalties_for_Tax_Evasion

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Progress in Tax Evasion Law

The law project approved in the first debate in Panama establishes penalties of two to four years in prison for evasion of $300,000 or more and could be used as a precedent for money laundering.

Wednesday, October 31, 2018

The Commission of Government, Justice and Constitutional Affairs of the National Assembly, approved in the first debate the law project 591, which considers tax evasion as a crime.

Regarding the law under discussion, last week the business sector requested that the amount defrauded to be considered a criminal offense be increased from $300,000 to $500,000, however, the amount remained at $300,000 as originally proposed.

See "Controversial Request to Reduce Penalties for Tax Evasion"

Regarding what was approved, Prensa.com reports that "... To introduce tax evasion as a precedent offence of money laundering, a new article of the Criminal Code was approved (Article 254-A), which establishes a penalty of two to four years. In addition, this general type indicates that anyone who reasonably presumes that the money handled is of illicit origin will be punished. In the case of evasion, the new article states that whoever handles the money "knowing that it is the result of crimes against the National Treasury" will be punished."

In the case of money laundering, the article adds that "... To have money laundering, there must be a previous offence from which the illegally obtained money originates. The current Criminal Code establishes that if the illicit money originates from corruption, drug trafficking, terrorism, human trafficking and a long list of illegal activities, the penalty is 5 to 12 years in prison."

 

https://www.centralamericadata.com/en/article/main/Progress_in_Tax_Evasion_Law

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