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Panama Approves Israeli, UAE Double Tax Pacts

Monday, February 11, 2013

Panama's National Assembly has approved two new double tax conventions signed with Israel, and with the United Arab Emirates.

The agreement signed with Israel on November 8, 2012, includes a protocol that seeks to enhance provisions included in the main agreement for the exchange of tax information in line with the Organization for Economic Cooperation and Development's internationally-agreed standard.

In general, the agreement caps the maximum withholding tax rates applicable to cross-border income received in the form of dividends, interest and royalties at 15%. A specific regime is provided for income received from a real estate investment trust, and dividends that are received by a pension scheme may be entitled to a reduced 5% rate. The agreement contains anti-abuse provisions limiting these reduced rates to the beneficial owner of that income, to prevent tax treaty shopping.

The second agreement, signed with the United Arab Emirates on October 13, 2012, also includes provisions to facilitate tax information sharing.