Panama signs OECD’s multilateral tax convention to combat tax evasion

Panama has signed OECD’s multilateral convention on mutual administrative assistance in tax matters, to boost transparency and combat cross-border tax evasion.

Panama is the 105^th jurisdiction to sign the convention, which was developed by the OECD and the Council of Europe in 1988.

OECD secretary-general Angel Gurría said: “Panama’s decision to sign the multilateral Convention is a confirmation of its commitment to take the necessary steps to meet international expectations in the fight against tax evasion. It also sends a clear signal that the international community is united in its efforts to stamp out offshore tax evasion. We will continue our efforts until there is nowhere left to hide.”

The convention supports various forms of administrative assistance in tax matters such as information exchange on request, automatic exchange, tax examinations abroad, simultaneous tax examinations, assistance in tax collection, as well as safeguards protection of taxpayers’ rights.

Signatories to the convention implement the standard for automatic exchange of financial account information in tax matters.

The standard requires jurisdictions to get information from their financial institutions and automatically share that information with other jurisdictions every year.

The convention also requires the country to implement automatic exchange of country-by-country reports under the base erosion and profit shifting (BEPS) norms endorsed by OECD/G20.

The signing of the latest deal comes following the massive data leak, dubbed the Panama Papers, which exposed how the world's affluent conceal their wealth from the taxman.

The database contained the names of shareholders, beneficiaries, intermediaries and addresses pertaining to over 200,000 offshore entities found in Panama-based law firm Mossack Fonseca's internal database.

Following the leak, EU finance ministers approved multiple anti-tax evasion measures to combat the tax-evading methods.

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