Panama Abandons Extra-Territorial Taxation

…but has this damaged Panama’s brand as an international financial centre?

That’s the question many in Panama will be contemplating as 2014 begins.

The ‘axed’ law,  proclaimed on December 30 last year, but revoked two days later, required companies and individuals to pay tax not only on income generated in Panama, but also on income generated abroad.

Panama’s retreat to territorial taxation means that it remains one of the several countries which use this system. In fact most countries have a territorial tax system .

Among G-7 countries, only the U.S. has a worldwide tax system. Among OECD nations, 26 have territorial systems including Australia, Canada, France, Germany, Japan, Spain, and the United Kingdom. Eight OECD nations have worldwide systems, including the U.S., Greece, Ireland, South Korea, and Mexico.

For a discussion on a proposal to adopt territorial taxation in the US click here

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