US-Panama Fatca implementation postponed for a year

Panamanian banks and other financial institutions have been granted another year before they will begin adhering to the US government's Foreign Account Tax Compliance Act (Fatca).

The economy and finance ministry (MEF) said it had informed the local banking association that the US had agreed to postpone Fatca to September 30 next year from this month, as was the initial plan.

Panama is one of several countries that have agreed in principal to Fatca, but which have not yet signed an intergovernmental agreement with the US, which is the reason behind the delay in implementation.

Under Fatca Panamanian financial institutions will have to automatically share tax information if they have US taxpayers as clients.

Fatca is a federal law used by the US to reduce tax evasion by forcing foreign financial institutions to share the tax information of their US clients (both those living at home and abroad).