EpiphyCorp

Book Review: “Treasure Islands: Tax Havens and the Men who Stole the World”
by Nicholas Shaxson

When a book about tax havens makes its way into the international press, we can’t help but wonder what it has to say about Panama, being identified in many books and reports as a tax haven itself.

This book tells a story, that narrates a little bit of the history about the place that tax havens occupy in the international financial world, as seen through the eyes of Nicholas Shaxson, an English financial newspaper writer.

Just as expected, Panama is portrayed in a bad light, being called “a tax haven at the service of all kinds of morally dubious international financial transactions”, as seen in many other publications that try to undermine the country’s position as one of the oldest, best regulated, secure and efficient financial centers of the world.

The outstanding thing about this book, is that for the first time we see direct references to the financial tycoons and big hitters of international finances, such as the US, Great Britain, France and practically every single one the developed nations that receive special treatment as part of the string of movers and shakers of the offshore financial world, portraying it much worse than all tax havens put together.

The authors premise, is that these financial superpowers created and direct to this day not only other countries tax and financial service authorities, but also their laws and markets to their own advantage, which goes in direct opposition with each country’s political and legislative autonomy.

In the case of Panama, it’s corporation law has been the same since 1928, making it one of the oldest, stable and trustworthy in the world. Panamanian corporations have been preferred and used in every country and have been part of many of the world’s most important financial transactions.

Instead, Panama’s tax legislation has been modified every two to four years in response to world events, making Panama one of the few countries in the world to have an increase of income and investment ratings in spite of the mayor economical crisis that stormed developed nations all around the globe. This crisis has demonstrated which tax and public administrations need to be reviewed worldwide.

As a book, we praise the good effort made by the author to bring those who are truly responsible for the world’s economic problems to light, but saying that tax havens are the ones mostly responsible for all of the ill controls each nation has over their financial markets and institutions is an oversimplification of economic policies made by others.

We must remember that each tool, each financial instrument or otherwise, is not in itself evil or good as the author tries to sell us, but different kind of people will use them in different kinds of ways, being it morally responsible or not. As a nation with a long history of offering international financial services, it is Panama’s responsibility to take legal measures to ensure that the bad and dubious connotation stays out the picture and the transparent and responsible clients access it’s services.

With this in mind, we see Panama signing commercial and financial information interchange treaties with over a dozen countries, we see it’s tax law with revenues and income taxes around 25% and also remittances and share profits taxes even over offshore transactions, measures that had not been taken by developed countries even after the economic crisis they have been through.

It is the assurance of Panama’s financial system, it’s solid financial institutions and the reckoning of its legal frame over and over that brings the international financial market to its shores. If you also take into consideration the investment incentives the authorities have given because of its policy to attract international investment, you have the secret to Panama’s success, not a big secret after it is explained.

In the end no, Panama is not a tax haven, but a financial center, used worldwide, that has a thing or two to teach the world.