.S.-Panama tax evasion deal near

AN AGREEMENT against tax evasion is being negotiated between the United States and Panama says the U.S. Treasury Department.

It is seen as a sign of progress in the implementation of strong measures against U.S. tax loopholes says a Reuters report

The Law on Foreign Account Tax Compliance ( FATCA , enacted in 2010 , comes into force in July 2014. The law requires foreign financial institutions to report to the U.S. Internal Revenue Service on the accounts of U.S. citizens abroad who have more than $50,000 .
United States has no comprehensive agreement with Panama, which in recent years was listed by global authorities as a tax haven . However, the two countries signed an agreement to exchange tax information in 2010.
Negotiations with Panama mark an important step in the implementation of FATCA. They show that Treasury officials attack the heart of the problem of tax evasion abroad, said Alan Granwell , a former Treasury official now at the law firm DLA Piper, that advises governments on agreements signed under the law.
FATCA was enacted after a Swiss banking scandal which showed U.S. taxpayers hiding fortunes abroad to avoid paying taxes .
The Treasury has said previously that they are in various stages of negotiation of the law in more than 50 countries. The United States is the largest trading partner of Panama .
The Panamanian government said on September 18 on their website that they working on a proposal for a FATCA agreement , and planning to finalize it asap.
Banks , funds and other financial institutions that do not comply with FATCA face a 30 percent tax withholding other U.S. revenue, a punishment that could push them out of the financial markets of the world's largest economy .
Panama , Belize and Costa Rica are three Central American countries that the Organization for Economic Cooperation and Development has classified as tax havens in the past. Panama and other countries with very low tax “ have historically had bank secrecy," said Granwell .