Panama signs agreement with US to combat tax evasion

Panama on Wednesday formally signed an agreement with the United States to help combat tax evasion, the Treasury Department said.

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The agreement has been treated as being in effect since June 2014, but the signing comes as Panama faces increased attention following reports on the “Panama Papers” — documents from a law firm based in the country that sets up offshore shell companies for clients.

Panama is one of 112 jurisdictions with intergovernmental agreements in effect with the U.S. under the Foreign Account Tax Compliance Act.

Under these agreements, foreign governments require foreign financial institutions in their jurisdictions to report information about the accounts of U.S. citizens.

A Treasury spokeswoman said the signing of the agreement is an important step in U.S. efforts to fight tax evasion.