FAQs on Panama Papers

1
Customer Care No. 91-11-45562222
FAQs on Panama Papers
www.taxmann.com
2

• 1. What are the 'Panama Papers'?
• The 'Panama Papers' are a set of confidential
  documents leaked from one of the biggest law
  firms of Panama - 'Mossack Fonseca'. The Panama
  Papers provide information about thousands of
  offshore entities, identities of their
  shareholders and directors. It listed various
  world leaders, public officials, billionaires,
  celebrities, sports stars and politicians.
• 2. How much data has been leaked and by whom?
• a)  The leaked data consists of 11.5 Million
  Documents in around 2,600 GB taken from the
  Mossack Fonseca's internal database by one of its
  employees.
• b)  These documents were obtained by Sueddeutsche
  Zeitung, a daily newspaper headquartered in
  Munich, Germany. Sueddeutsche shared the Panama
  Papers with the Washington-based International
  Consortium of Investigative Journalists (ICIJ)
  and other news outlets, including the BBC, the
  Guardian and the Indian Express.
• c)  Sueddeutsche mentioned that an employee at
  the law firm had leaked the data, telling the
  newspaper that he had risked his life in doing
  so.

Customer Care No. 91-11-45562222
www.taxmann.com
3

• 3. What does the Panama Papers reveal?
• a)  The Panama Papers contain information on 2.15
  lakhs offshore entities connected to people from
  more than 200 countries.
• b)  The leaked data covers nearly 40 years period
  from 1977 through the end of 2015.
• c)  It reveals the database of individuals who
  have set-up offshore entities through the Panama
  law firm.
• d)  These individuals are either holding direct
  ownership or indirect ownership (beneficial
  ownership) in the offshore entities.
• e)  Some of the Indians have also floated
  offshore entities at a time when foreign
  exchanges laws of India did not allow them to do
  so.
• 4. What is the authenticity of documents leaked?
• Ramon Fonseca, one of the co-founder of the
  Mossack Fonseca, confirmed the authenticity of
  the papers being used in articles published by
  more than 100 news organizations around the
  world. He told to one of the Panama's news
  channel that the documents are real and were
  obtained illegally through a hacking method.
• 5. Who is 'Mossack Fonseca' and what is its role
  in this entire controversy?
• a)  Mossack Fonseca Co. is a law firm and
  corporate service provider based in Panama with
  more than 40 offices worldwide.
• b)  It specializes in commercial law, trust
  services, investor advisory and international
  structures.
• c)  It provides services like incorporating
  companies in offshore jurisdictions, wealth
  management, private banking, accounting services,
  etc.

Customer Care No. 91-11-45562222
www.taxmann.com
4

• d)  This law firm is one of the seven firms that
  collectively represent more than half of the
  companies incorporated in Panama.
• e)  It also provides assistance in transferring
  funds, buying property, setting-up trusts or
  signing agreements with entities.
• f)  Mossack Fonseca plays a crucial role in
  incorporating entities in tax havens. It had
  incorporated 14,658 active companies in Panama
  till August, 2013 out of which 4,646 companies
  were incorporated without providing any
  information about their shareholders.
• 6. How entities incorporated in Panama provide
  secrecy about the beneficial owners?
• a)  Panama offers the most favorable and most
  flexible company incorporation laws available in
  the world. Private Interest Foundations are also
  available, and are one of the most widely used
  estate planning structures in the world today.
• b)  Panama is the registered domicile for over
  400,000 corporations foundations, making it one
  of the most popular jurisdictions in the world to
  incorporate.
• c)  Panama does not impose any reporting
  requirements for non-resident Panamanian
  corporations.
• d)  Panama does not allow "piercing the corporate
  veil".
• e)  Panamanian corporations share certificates
  can be issued in Nominative or Bearer form
  (anonymous form of ownership), with or without
  par value.
• f)  Panamanian Companies can have directors,
  officers and shareholders of any nationality and
  resident of any country.

www.taxmann.com
Customer Care No. 91-11-45562222
5

• g)  The offshore entity in Panama need not
  appoint natural persons as directors or have
  individuals as shareholders.
• h)  Neither the directors nor the officers of
  Panamanian corporations need to be shareholders.
  Meetings of directors, officers, and shareholders
  may be held in any country and accounting books
  may be kept in any country.
• i)  It is not necessary for the interested
  parties to be present in Panama for the purpose
  of establishing a corporation. Corporations
  conducting business outside of Panama do not
  require a commercial license for offshore
  business activities.
• j)  Registered Panamanian Agents offers its own
  executives to serve as shareholders or directors.
  Sometimes an intermediary law firm or a bank acts
  as a director or a nominee shareholder. So the
  real beneficiary remains hidden.
• k)  The registered agent provides an official
  overseas address, a mail box, etc., none of which
  traces back the entity to the beneficial owner.
• 7. What are the key advantages of incorporating a
  Panamanian Company?
• a)  The incorporation process is fast and can be
  achieved in 3 days.
• b)  The identity of the shareholders is not
  publicly available.
• c)  Nominee and bearer shares are allowed.
• d)  There are no currency restrictions although
  the US dollar is regularly used.
• e)  The transfer of shares can be done freely,
  which facilitates the transmission of assets in a
  confidential manner.
• f)  The shareholders, directors and officers can
  be of any nationality and residents of any
  country.

Customer Care No. 91-11-45562222
www.taxmann.com
6

• g)  Meetings can be held in Panama or in any
  jurisdiction, subject to tax advice.
• h)  Accounts do not need to be held in Panama.
• 8. What are Panama foreign exchange rules?
• a)  Panama's circulating currency is the US
  Dollar, and Panama has no currency exchange
  controls or currency restrictions, so funds can
  flow in and out of the country freely.
• b)  Panama uses the U.S. dollar as its legal
  currency, instilling tremendous fiscal and
  monetary discipline while keeping inflation very
  low - under 2 percent for the last 40 years.
• c)  Panama has no restrictions on monetary
  remittances abroad, including dividends,
  interests, branch profits and royalties. No
  restrictions on funds flowing in or out of the
  country.
• d)  A dollar economy insulates Panama from global
  economic shocks. During the Asian monetary crisis
  of 1998, Panama became one of the healthiest
  economies in Latin America.
• 9. How secure is banking infrastructure of
  Panama?
• a)  Panama is one of the most secure offshore
  financial center - where privacy and
  confidentiality is vigorously protected by
  constitutional law.
• b)  Panama offers the best bank secrecy and
  corporate book secrecy laws in the world.
• c)  Panama has no provision for "piercing the
  corporate veil".

Customer Care No. 91-11-45562222
www.taxmann.com
7

• d)  Revealing banking information to third
  parties is a crime, punishable by prison.
• e)  Panama has no mutual legal assistance
  treaties (MLAT's) for sharing of banking
  information with any other nation and does not
  recognize court rulings from other countries.
• f)  Panama City is home to the second largest
  international banking center in the world next to
  Switzerland. Panama has the most modern and
  successful international banking center in Latin
  America, with more than 150 banks from 35
  different countries.
• g)  Approximately 150 international banks are
  located in Panama. Total assets in Panamanian
  banks are over US150 billion.
• h)  Some of the banks present in Panama's banking
  center are Citibank, HSBC, Dresdner Bank, Bank
  of Tokyo, Bank of Boston, Banco Nacional de
  Paris, International Commercial Bank of China,
  Societe Generale, Banque Sudameris, BBVA, Banco
  Uno, Banco General, PriBanco, Banco del Istmo,
  Global Bank, MultiCredit Bank, PanaBank, ABN
  Amro, Banco Aliado, Banco Continental, BancoLat,
  BIPAN, Lloyds TLB Bank, Bank of Nova Scotia
  BIPAN, Bank of Nova Scotia, and much more.

Customer Care No. 91-11-45562222
www.taxmann.com
8
To read more, please click here
Customer Care No. 91-11-45562222
www.taxmann.com