PANAMA’S SHIP REGISTRY FISCAL REGIME IS EVALUATED SATISFACTORILY BY OECD

The Organization for Economic Co-operation and Development (OECD) has evaluated satisfactorily Panama’s Ship Registry fiscal regime during its 52nd session of the Forum on Pernicious Fiscal Practices, held in in June 2019, in Paris, France. A statement from the agency indicated that the tax arrangements of the Panama Pacifico’s Special Zone and the headquarters of multinational companies were also satisfactorily assessed. Panama remains the world’s largest ship registry with over 8,000 vessels from different countries registered under its flag. During the plenary session, the Secretariat of the OECD recognized the commitment of the Republic of Panama to preserve compliance with the standards of the Pernicious Fiscal Practices Forum and emphasized the importance of the corresponding jurisdiction of the states in monitoring the activities of generators of companies included in their regions’ fiscal regimes, with special emphasis on obtaining date on their operations, income, taxes, expenses, benefits, labor and the impact of their operations on the national economy. The OECD carries out an action plan against the erosion of the tax base and the transfer of benefits (BEPS), in order for the multinational companies to supply all relevant government with the necessary information on the assignment of their global income, on the economic activity and on the taxes paid between the various countries to prevent them from continuing taking advantage of fiscal planning to avoid paying taxes or paying minimum taxes in any of them. Under these conditions, the States must demonstrate compliance with respect to those key factors that are reviewed by members of this forum in order to identify preferential tax regimes. The BEPS project includes 15 actions that seek to combat the erosion of the imposing base and the transfer of benefits. As of October 31, 2016, Panama adhered as associated member to the OECD’s inclusive framework on BEPS, and during its 47th session on pernicious tax practices held in September 2017, for the first time the Ship Registry was declared ‘no pernicious’, maintaining its status during the review carried out in June this year, that includes the operations of the vessels under the Panamanian flag (16% of the world’s fleet), the activities of maritime transport, port management and auxiliary maritime industries.