Bill 439.

Summary.

The bill approves in full the Agreement between the Government of the Republic of Panama (Gobierno de la República de Panamá) and the Government of the Republic of Ecuador (Gobierno de la República del Ecuador) on the Exchange of Information in Tax Matters, concluded in Panama City (Ciudad de Panamá) on August 14, 2025. The agreement provides for the competent authorities to exchange information foreseeably relevant to assessing, collecting and enforcing taxes and to investigating or prosecuting tax matters. Rights and safeguards applicable in the requested Party remain in place, provided they do not unduly delay exchange. The duty to provide information covers material held by its authorities or by persons within its territorial jurisdiction, regardless of the nationality or residence of the persons concerned.

For the Republic of Panama (República de Panamá), the agreement covers all national taxes but excludes taxes imposed by municipalities or other political subdivisions. For the Republic of Ecuador (República del Ecuador), it covers income tax and other taxes collected by the Central Government (Gobierno Central). It also addresses later identical or similar taxes, analogous taxes included by agreement, and changes to the taxes covered through an Exchange of Notes. It defines the Parties, persons, companies, investment funds, information gathering measures and criminal tax matters. It names Panama’s Ministry of Economy and Finance (Ministerio de Economía y Finanzas), or its authorized representative, and Ecuador’s Director General of the Internal Revenue Service (Servicio de Rentas Internas), or the Director General’s delegate, as competent authorities. Its definition of criminal law includes provisions of the criminal code (código penal).

For exchange on request, the requested Party must use relevant information gathering measures even when it does not need the information for its own tax purposes. Subject to domestic law, it may take testimony, examine and certify documents, and allow representatives of the requesting Party to be present. It must be able to obtain information held by banks, other financial institutions, agents and fiduciaries, as well as ownership information concerning companies, trusts and foundations, subject to the stated exceptions for listed companies and public collective investment funds. A request must identify the person under investigation, the information sought, the tax purpose and tax period; explain its foreseeable relevance and expected location; and state that it complies with applicable law and that available domestic means have been used. The requested Party acknowledges receipt and reports defects within sixty (60) days. If it cannot provide the information within ninety (90) days, it communicates the reasons.

The agreement also provides for automatic exchange, with its content and procedures to be set by the competent authorities, and spontaneous exchange of information learned in the course of their activities. It governs interviews and tax examinations in the other Party’s territory, subject to domestic law and the required authorizations. Assistance may be refused for noncompliance with the agreement, failure to exhaust available means, protected secrets, confidential communications with legal representatives, public policy, or a discriminatory tax provision. A dispute over the underlying tax claim and expiry of the limitation period in the requested Party do not, by themselves, justify refusal.

Information received is confidential and restricted to specified tax uses; the stated further disclosures require the requested Party’s prior written consent. The agreement allocates ordinary and extraordinary assistance costs, establishes a mutual agreement procedure and permits technical cooperation on auditing and noncompliance. It would enter into force upon receipt of the last diplomatic notification confirming completion of domestic procedures, with effect for tax periods beginning on or after January 1 of the following calendar year; information from the previous six tax years may be requested. It provides for termination by diplomatic notice and continued confidentiality afterward. The bill provides that the approving law takes effect upon promulgation. The agreement concerns both countries’ tax authorities and could affect taxpayers, banks, other financial institutions, fiduciaries, companies, foundations and investment funds.