Our economies are very similar. We support our activities on international services and the new challenges that we are facing, for instance, the fact that the exchange of information concept has been moved from a by-request process to a more widely automatic exchange of information process in tax matters is something that we need to see as a huge challenge for our countries.
The Base Erosion and Profit Shifting programme that is being advanced by the Organisation for Economic Cooperation and Development (OECD) is another important challenge, but as challenges they also represent opportunities.
In the case of the treaty between Panama and Barbados, we really see it as a key factor for improving the economic relationships between both countries.
We know that the treaty by itself does not generate additional business opportunities.
However, they present a gateway for new investments, to have the countries talking to each other, to have the private sectors of both countries talking to each other, finding ways to enhance businesses and to improve the quality of life of the treaty partners.
In our treaty, as you may expect, it is well defined who are the persons that may be qualified to benefit from these treaty, basically tax residents of both countries.
Barbados has a worldwide taxation system. That is not the case with Panama, so only those Panamanian corporations that are tax residents in Barbados may benefit from the tax treaty.
And there are several benefits. For instance, in the area of international transport the treaty establishes the taxation rights to tax that type of activity, meaning that since the treaty was signed I am aware that there have been discussions between one of the main Panamanian airlines and the Government of Barbados in trying to establish a route and make us use the hub in Panama in order to facilitate communication by air.
But that is something that has been clearly a result of the discussions on the tax treaty.
There have also been some very specific benefits. For instance, in the area of dividend taxes where there is a reduction in the tax rates applicable in Panama or in Barbados, as well as dividends, interest and royalties.
Of course, in order to qualify with the standards that were applicable at that time, 2010, it includes an exchange of information clause on tax matters, which is in line with the standard offered by the OECD and this principle may have changed in the sense of the OECD promoting the signing or the subscription of a multilateral exchange of information agreement.
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