Entente cordiale with France evaporating as tax agreement rejected

If there was ever an entente cordiale, between France and Panama as reflected in photos of the countries’ presidents shaking hands, it is fast disappearing.

Recently Panama cancelled a multi million dollar bank loan with a French institution because of tax haven comments made by French president Nicolas Sarkozy after the G20 meeting in Cannes last month.

There were some strong words from President Ricardo Martinelli, and further public  “tax haven” sniping from France.

On Wednesday,  The Finance Committee of the French Senate rejected a tax convention bill to tax between France and Panama, due to the "many gaps in the Panamanian law." 

The convention was intended to avoid double taxation (DTT) and prevent tax evasion and tax fraud. The head of the commission, Nicole Bricq socialist, said in a statement that there are doubts about "the actual ability of Panama to provide information on  anonymous operations,  so-called low-tax companies ( off-shore ).

According  to Bricq,  the convention, signed in Panama on June 30, would compromise the "credibility of French policy in the fight against tax havens. " Then Panamanian Foreign Minister Juan Carlos Varela, said  the agreement was the eleventh that would allow Panama  to get out of the "gray list" prepared by the Organization for Economic Cooperation and Development (OECD ).

Bricq said Wednesday that, if ratified the convention would  lead Panama  out of the French list of uncooperative states and territories and eliminate the tax penalties on financial flows to the nation.

On  November 17  coinciding with a visit to Paris by President Martinelli, Sarkozy, pledged to remove Panama from the French list of tax havens. Martinelli said then that the processing of the double taxation agreement between the two countries, both of whose presidents have been losing favor with the voting public,  would move Panama off the “tax haven restrictive list”.