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French Lawmakers' Green Light To Panama DTA

by Ulrika Lomas,, Brussels

26 December 2011

Safeguarding the interests of businesses in France, the French National Assembly has definitively adopted a highly controversial bilateral tax agreement between France and Panama after it had been rejected by the Senate on December 13.

As a result of the decision, the Central American state will now be removed from the country’s ‘black’ list of so-called tax havens, jurisdictions deemed to be uncooperative in tax matters.

Designed to avoid double taxation and to strengthen the clamp down on tax evasion and fraud in the area of taxes on income, the bilateral tax deal was signed by both countries back in June, and subsequently adopted by the Congress in Panama in October.

Defending its decision to support the deal, the French National Assembly explains in its release that the agreement pursues two objectives, namely increasing potential mutual investments and establishing a legal framework to eliminate legal uncertainties for individuals and businesses operating in both territories, and creating a legal framework to allow an effective exchange of information, notably by removing any banking secrecy.

According to the French National Assembly, the conclusion of the agreement highlights the willingness of Panama to conform to new international standards on transparency and exchange of tax information.

Contradicting fears expressed in the Senate over legal 'deficiencies' in Panama, the government was determined that the text be ratified by parliament as a matter of urgency, and underlined the real progress that had been made in Panama. Indeed, following a meeting with his Panamanian counterpart, Ricardo Martinelli, French President Nicolas Sarkozy welcomed the “efforts” made by the state.

The agreement is of great importance for French multinationals currently in the process of negotiating major contracts.

TAGS: individuals | tax | investment | business | double tax agreement (DTA) | interest | banking | agreements | multinationals | banking secrecy | France | standards | individual income tax | Panama

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