Colombia and Panama: Warm no more
Colombia and Panama
Warm no more
Oct 13th 2014, 17:53 by S.B.| BOGOTA
IN ONE of the most remembered scenes of the film Casablanca, police chief Louis Renault orders the close of Rick's Cafe when he is "shocked, shocked" to learn that there was gambling going on in the establishment. Seconds later a waiter presents Renault with his winnings from roulette. Panama was similarly shocked when Colombia last week included the neighbouring country on its list of tax havens, after the Central American nation failed to meet a deadline to sign a bilateral tax information exchange agreement.
“Panama is not a tax haven, and we reject being classified this way," Panama's finance Minister Dulcidio de la Guardia said. Panama's outrage led the foreign ministry to insinuate the possibility of retaliation, saying in a statement that the Panamanian government would study unspecified measures against countries that "discriminate against Panama."
Panama and Colombia have had historically warm relations and the Central American country is home to about 500,000 Colombians. It has a flourishing financial centre and is also home to countless corporations whose principals are Colombian nationals. There are no hard figures on how much money Colombians could be keeping in Panama specifically but estimates range between $2 billion and $7 billion for all tax havens. Given the proximity of Panama to Colombia, most is believed to be held there.
Those were meant to be the target of Colombia's decision, according the President Juan Manuel Santos. “This is not against Panama," he said on Monday, adding that it was part of a policy to fight tax evasion. It's also part of the Colombian government's search for additional revenue. A recently presented tax reform bill seeks to raise $26.2 billion over the next four years. Bringing tax evaders in from the cold could raise another $10 billion.
More:
http://www.economist.com/blogs/americasview/2014/10/colombia-and-panama