The Boquete (not for tourists!) Handbook

Panama/USA to Sign Tax Treaty for Exchange of Tax Information

 (Though this is not strictly ‘BOQUETE’ information, I think its important for US citizens/residents to know when considering this area. Banking is one of the areas I get asked about A LOT!) 

  Summary – Panama and the USA will (in November 2010) sign a treaty allowing for the exchange of tax information. In return it seems Panama will get a free trade agreement with the USA. This treaty has been negotiated and concluded. US Treasury Secretary Timothy F. Geithner will be signing the treaty on Nov. 30, 2010. This means that any American signing on any bank account in Panama can have their bank records turned over to the USA. This will include Foundation and Corporation Bank Accounts where a US resident or citizen is the signer on the account. If the account is closed before the enactment date of the treaty then the treaty would not apply since it would be a retroactive law.

Panama Corporation Law – Panama has announced that it intends to diminish the secrecy of the bearer share corporations in January, 2011. Panama looks like it is going to be relying on the Panama Canal for their revenue and not the banks. A substantial amount of international clients in Panama Banks are American. We have no firm statistics but if we were to take a guess we would say between 25% and 40%. The percentage of deposits that these Americans hold is too difficult for us to even guess at. Panama has signed tax treaties with 13 other countries. Panama seems to be leaving the arena of tax havens. How the Panama banks will fare is a good question. In our opinion there is a distinct possibility that the Panama banks may experience capital flight as Americans leave and close their bank accounts. Only time will tell what impact this treaty will have on the banks in Panama.

Suggestions – There are several jurisdictions with no tax treaties with the USA. The first choice is Hong Kong. They have fully anonymous corporations without your name appearing in any public registry or database, well at least the way we set them up. They have bank secrecy. You can hold 10 currencies plus gold in your bank account. The bank we use is a trillion dollar bank that issues the bonds for Hong Kong. There is full online banking. You can have debit cards and Visa cards in USD or Euros. The best news is that the government of Hong Kong insures your bank balances fully to any limit. In our opinion this is better than the FDIC insurance. You do not have to go to Hong Kong to open the account.

Another Choice is Belize. Belize has no tax treaty with the USA. They offer online banking and you can hold four currencies in your account. There is bank secrecy. 

Another option is Ecuador. Ecuador has no Tax Information Exchange Agreements with any nation. Ecuador has no Mutual Legal Assistance Treaty with the USA. Ecuador uses the USD as their currency, same as Panama. Ecuador has anonymous bearer share corporations. Ecuador has bank secrecy. The bank has online banking. The bank will issue credit cards or debit cards. The downside to Ecuador is there is a 2% tax imposed by the government on all funds departing from Ecuador. The offset to this is that it is possible to obtain 6.5% to 9.5% on CD time deposits in USD. For more information on Ecuador Banking go here:

There are many nations that are not signing any Tax Information Exchange Agreements. Many of these nations do not offer viable banking options to foreigners not living in the country. Some of these countries are Peru, Guatemala, Paraguay, Bolivia, Nicaragua, Venezuela, Cuba, Saudi Arabia, Kuwait, Iran, Cambodia, Russian Federation, mostly all of Africa and many other countries. We estimate about 40 countries have opted out of signing any Tax Information Exchange Agreements. Blacklisting all these nations would be out of the question.

For more information in general go here: http://www.panamalaw.org/