Thread: secret bankaccount

Hello, how long will the banking secrecy last in Panama?

Originally Posted by swedph

Hello, how long will the banking secrecy last in Panama?

Bank secrecy is a relative concept and I'm not sure it's completely secret now. KYC requirements include providing substantial information to the bank to open an account (at least that's what I believe to be true). So, with your information in hand your bank could divulge information to any number of other countries with whom it has a tax treaty, although typically only in the instances of actual suspicion of tax evasion by a specific taxpayer and not as part of a general disclosure to the world of the identity of persons having a bank account. I'm sure that through the right political channels with the appropriate party asking, your information would be released in a heartbeat. In other words, I don't believe it's the law in Panama that a bank cannot "voluntarily" disclose account information. Additionally, unless the money comes from a non-US source or is smuggled in, the US already is well aware of your transfer(s) of funds out of the country. So, it's just a matter of following the money and requiring you to explain where it went before your account is located.

For US citizens, whatever privacy exists will certainly be lessened when applicable portions of the HIRE Act are effective January 1, 2013. If your non-US bank so elects, it will be required to remit annual account reporting on accounts of US citizens to the US government. If your non-US bank does not elect to do so, then transfers to such bank from the US are subject to a 30% withholding tax at the source (i.e., by the US bank from which the funds are wired.) I'm concerned with the impact this law will have on persons legitimately seeking to make investment outside the US or even buy real estate in Panama and elsewhere, not simply "hide" bank accounts. (Note to IRS listening in: I'm compliant, don't waste your time trying to figure out who I am.) Then, again this may be one of the reasons for the law.

A person works, earns income, pays appropriate taxes and then has his after tax saving stalked like a common criminal. The banking system is the vehicle by which personal wealth is tracked. Private safety deposit boxes in multiple jurisdictions affords more privacy. It's not like you will earn any interest on your money in the bank anyway. As Balabeacher pointed out above PAY ANY TAXES THAT ARE OWED.

Originally Posted by swedph

Hello, how long will the banking secrecy last in Panama?

Good post from BalaBeacher! Your question is specific, but answers "may" depend on other factors - will try to expand the possibilities - mainly relating to domicile and personal background tho also depends on why there is a concern over banking privacy.

Privacy, as BalaBeacher said, is relative. This has everything to do with your own personal status than banking in Panama or any other offshore jurisdiction. It also depends on further personal detail which is better not discussed here. If your personal status is 'legitimate' at the core level, this can open up other legal possibilities.

As a general rule, if you do not live in, or earn funds from your domicile country (and assuming there are no outstanding taxes due), there is no obligation to file any taxation forms in your domicile country. However, there are a small number of countries where this does not apply - Libya, US, UAE or Uzbekistan (plus a further 'stan' country I can't remember at the moment).

Taking that a step further, if you are not domiciled in any of the countries listed above and you do not live in your 'home country', there are no other considerations why there should be banking secrecy if this is for taxation reasons - you have no obligation to report to your 'home country' tax agency and they are not interested in examining your circumstances (unless there is criminal activity involved, in which case everyone and their dogs are interested). In effect, you are 'tax compliant' and only obliged to pay taxation within the jurisdiction where you reside.

That said, Panama, and most LA countries operate on a geo-based tax system - e.g. taxes only apply if profits/income is generated within Panama. Otherwise no taxation is applicable. But, if these profits/income were generated in country outside Panama, there would be an obligation to pay taxation in that country and remit the net balance to a Panama bank.

Operating an offshore structure with banking facilities while remaining resident in e.g. your domicile country is generally more problematic and requires specific advice from a professional. Generally, (for most countries), there is a requirement to pay taxation on all funds from foreign sources pulled into your "home country" while you remain resident there - this means all funds, including magical plastic cards.

Overall, it is probably not wise to simply rely on banking privacy in Pamama (or elsewhere), if there are 'issues' over the funds. Banking regulators are monitoring accounts in all offshore jurisdictions and they all have a 'know your customer' policy. It is much smarter to, firstly have personal status legitimized and operate above board where financial information exchange is not a concern. The simplest way to effect that is simply declare you are 'resigning' from your home country tax regime, pay all taxes due, and walk with your feet to a desirable low or no tax location.

PS Better repeat - all of the above does not apply to citizens of Libya, US, UAE or Uzbekistan :-)

I have a question on this paragragh

That said, Panama, and most LA countries operate on a geo-based tax system - e.g. taxes only apply if profits/income is generated within Panama. Otherwise no taxation is applicable. But, if these profits/income were generated in country outside Panama, there would be an obligation to pay taxation in that country and remit the net balance to a Panama bank.

Do panama banks ask for any proof that you have payed taxes on any funds that you bring into the country if you are a resident

Originally Posted by tompoker

I have a question on this paragragh

Do panama banks ask for any proof that you have payed taxes on any funds that you bring into the country if you are a resident

No. Nor can I imagine what kind of written proof could be furnished to prove such a thing. Tax returns (which aren't required) would only prove you filed a return. If you open the account with $500 and then wire money from the U.S. they don't refuse the wire. Now, if you show up with a sack of $100 bills you might draw attention regarding money laundering.

Originally Posted by BalaBeacher

No. Nor can I imagine what kind of written proof could be furnished to prove such a thing. Tax returns (which aren't required) would only prove you filed a return. If you open the account with $500 and then wire money from the U.S. they don't refuse the wire. Now, if you show up with a sack of $100 bills you might draw attention regarding money laundering.

I may have misunderstood your question. If you're asking whether a Panama bank would require proof of payment of Panama taxes on funds deposited by a Panamanian "resident" (don't know what type of resident you're referring to), then I have no idea. I was thinking of a US citizen and whether proof of payment of US taxes was required.

Sorry I will make the question more specific

I am applying for my residency in panama, I am european not from the US, I will set up an account in panama and bring money in that I have earned outside of panama but will not be paying taxes on that money(for reasons I do not want to divulge) my question is will at any point the panama bank ask me about the origin of these funds and will they ask if it was an income for proof that I payed taxes on said funds

Thanks for your replys

It depends on the institution and amount, and generally only initial deposit. For sums over 50k initial deposit they will likely ask. Multibank and Banco General do. If you're already a client, it's unlikely you will need to speak with anyone about such things, transfer away. As far as proof, submit whatever you like. They are required to hold the paperwork but unlikely to disclose it. If you are concerned about future disclosure feel free to move the funds after initial transfer in smaller amounts to various investments. If you are applying for residency you wil have more cash investment options than your average gringo. I suggest you search this forum for posts by EdBowers, excellent financial advice for panama.

Originally Posted by tompoker

Sorry I will make the question more specific

I am applying for my residency in panama, I am european not from the US, I will set up an account in panama and bring money in that I have earned outside of panama but will not be paying taxes on that money(for reasons I do not want to divulge) my question is will at any point the panama bank ask me about the origin of these funds and will they ask if it was an income for proof that I payed taxes on said funds

It would be normal/routine for a bank to ask, as part of KYC policy, about the source of funds being deposited into an account - particularly if this is in the region of $10000 upwards. However, it is not the business of another jurisdiction what the tax status is on those funds - that is normally a matter between the taxpayer and the tax agency in the 'home country'. From personal/commercial experience over several decades, we have never had a bank (in Panama or elsewhere) question the tax status of funds tho this has never been an issue. It is entirely possible that taxation has not been accounted for on funds being deposited elsewhere - that in itself is not illegal and fairly routine in most businesses. The main obligation of banks and KYC is that funds deposited in accounts were not generated thru criminal activity which would place them in a position where their regulator can close the bank down.

Also bear in mind that settlement of any balances owing to tax agencies can drag on over a number of years and it would not be practical/appropriate for a bank to enter into a discussion over the tax status of specific amounts being deposited.

Thank you for the reply

Based on current low interest rates, I'd say a safe deposit box is a great alternative!

Originally Posted by BalaBeacher

Based on current low interest rates, I'd say a safe deposit box is a great alternative!

It would offer a person allot more privacy and security.