MOSSFONREPORT - Mossack Fonseca & Co.

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BRITISH VIRGIN ISLANDS (continued) Funds Act, 1996 to add Australia, Canada, Germany, Italy, Japan, Sweden, the Bahamas and the Cayman Islands. The other recognized countries already on BVI’s list are: Bermuda, Gibraltar, Hong Kong, France, Luxembourg, the Isle of Man, Belgium, Spain, Ireland, Malta, Singapore, Guernsey, Jersey, Switzerland, the UK and the US. In evaluating countries and jurisdictions for recognition and registration, the FSC considers the prudence and reputation of each applying country’s regulatory environment and its supervision of mutual fund business, and whether recognition under the BVI Mutual Funds Act would enhance the development of BVI’s mutual fund industry. If approved by BVI’s Registrar of Mutual Funds, applicants must record a ‘functionary’ (i.e. manager) from the recognized jurisdiction. Over 3,000 mutual funds are registered in BVI with more than $100 billion under management. BVI to Seek Economic Diversity Notwithstanding continued growth in the country’s key financial services and tourism sectors, Chief Minister Dr. Orlando Smith announced during his third annual ‘State of the Territory Address’ that government are introducing an initiative called “Future of the BVI Economy’ to focus now on possibilities for developing new sources of investment to preserve the Territory’s future economy. Dr. Smith said “There are few things harder than preparing for famine at a time of plenty, but wise nations know good times rarely last, and common sense tells us the time to act is now.” He also said “If either the financial services or tourism industries were to suffer a serious setback the consequences for us MOSSFON REPORT THE jurisdictions recognized under the BVI Mutual would be severe” … “That is why I will be launching an initiative called the Future of the BVI Economy over the coming year.” The Chief Minister said the new initiative will invite productive proposals and creative solutions from local community leaders and international experts, and government will utilize results to determine how to create employment opportunities in profitable new professional services fields, independent from financial services, to stimulate new investment in BVI’s economy. “And in so doing, we can ensure that if the worst comes to pass we will be prepared, and our people will be protected” Dr. Smith said. “I want to explore strategies for creating a more stable flow of visitors by tapping into new markets such as medical tourism, sports tourism and eco-tourism in unique ecosystems such as Anegada,” he said, adding that “In particular, I want to explore the viability of attracting multinational corporations to establish customer service centres, high-tech research facilities, and other value-added functions.” BAHAMAS Bahamas Survey Confirms Leading Position According to Government officials, a survey conducted by PricewaterhouseCoopers for the Bahamas Government confirms the Bahamas position as a leader in the three core areas of private banking, trusts and corporate services; and also indicates that the market is not aware of the jurisdiction’s strength in many additional core areas that could lead to new and increased business opportunities. Over 220 organizations, mainly from the private banking sector, responded to the extensive survey. Survey participants indicated that great opportunities for growth also exist through a wide range of additional local amenities including business continuity, custody facilities and structured products, establishment of a commercial court, bespoke/comprehensive services for families, capital market facilities, e-business, intellectual property, back office and call centers, funds, insurance and establishment of an international arbitration center. Forty percent of the respondents would recommend asset management services, tax inheritance planning, residency, investment funds, foundations and family office services to clients even though these services are not as widely recognized as the country’s primary areas of strength. At a recent BFSB (Bahamas Financial Services Board) retreat, various Cabinet Ministers together with members of the official opposition party, senior public officers and heads of the regulatory agencies, met with over 100 representatives from the private sector for a two day conference to review the survey results. Input from these key industry leaders at the 2006 BFSB retreat will be used, together with the valuable data collected in the Survey, to construct the nation’s next five-year strategic plan for financial services (for years 2007 through 2012). Both Government and survey participants recognized that the Bahamas has many strengths, particularly its political stability and sovereignty, banking confidentiality, language, location and time zone, and Government noted that this unique combination of strengths, coupled with the jurisdiction’s competence and scope of wealth management services were major reasons why ‘The Banker’ magazine, an affiliate of the Financial Times Group, named the Bahamas as the “leading financial centre in the Hemisphere.” Strong Investment Propelling Bahamas Economy In his recent budget statement to Parliament, Bahamas’ Prime Minister and Finance Minister Perry Christie said the nation will maintain strong rates of economic growth during the next two years, noting that his government’s policies have produced this current economic success. The International Monetary Fund (IMF) predicts that economic growth this fiscal year in the Bahamas will hit 5.8%, up from 4.7% during 2004/5 and that the jurisdiction’s future looks bright with GDP growth expected to continue at rates of 6.5% and 6.7% respectively for fiscal years 2006/7 and 2007/8. The Prime Minister said the robust economy is due to “unprecedented” levels of inward investment, especially in the tourism sector with nearly every major island of the
Bahamas attracting prolific investment. He also noted that the international ratings agencies, including Standard & Poor’s and Moody’s, continue to give the Bahamas some of the highest investment ratings in the region. In his budget statement, Mr. Christie reported that recurrent expenditure is $1.386 billion, with capital expenditure at $175 million and recurrent revenue at $1.345 billion. He also reported that although the budget includes various changes in taxation measures, including significant reduction is certain areas, no new taxes are imminent. SEYCHELLES Qatar Signs DTA Agreement with Seychelles Qatar has signed a Double Taxation Avoidance (DTA) agreement with the Seychelles that allows investments made in either country to qualify for tax breaks on dividends and royalty payments. The agreement was signed on behalf of the Seychelles by Jacquelin Dugasse, Minister for Employment and Economic Planning, and the Qatar signatory was Yousef Hussain Kamal, Minister for Finance. Rupert Simeon of the Seychelles Department of Finance commented that dividends paid on Qatari investments in the Seychelles would qualify as tax credits and would reduce the investing company’s tax liability in Qatar, and vice versa. It is hoped that these reciprocal arrangements for improved conditions for investment between the two countries will attract foreign companies interested in investing in Qatar, to take advantage of setting up business operations in the Seychelles offshore sector. The national airline Qatar Airways is presently the only Qatari company trading in the Seychelles. Cypriot DTA Second Route For EU Following the very recent signing of a Double Taxation Avoidance (DTA) agreement between the Seychelles and Belgium which marked the Seychelles’ first step towards boosting EU investments, after months of negotiations Government representatives from the Seychelles and Cyprus have now completed signatures to a DTA agreement which is perceived as a second step towards encouraging further European investment in the Seychelles. The Seychelles-Cyprus DTA was signed on behalf of the Seychelles by Mr. Jacquelin Dugasse, Minister for Employment and Economic Planning, and the Cypriot signatory was Mr. Michalis Sarris, Minister for Finance. Seychelles Minister Dugasse said “The signing is for us in Seychelles very important as it provides the framework which will enable businesses in our two countries to exploit the business ties and cooperation which exist.” He added that the agreement would … “strengthen our cooperation between Seychelles and Cyprus in the economic and financial spheres.” While initially any increased investment resulting from the DTA is likely to flow from Cyprus to Seychelles, Mr. Dugasse noted that hopefully this position will change in the future, stating: “And why not Seychelles into Cyprus in the years to come.” Qatar’s Finance Minister Sarris welcomed the DTA agreement, noting that the Seychelles’ foreign exchange deficiency does not necessarily hinder Cypriot investment. He commented that “These are not insurmountable problems amongst these honourable people,” adding that although the DTA between their small economies may not make headlines … “but even small projects go a long way in these small economies.” Minister Sarris also said that “Cyprus has in its own way made progress, it has joined the EU and I think the DTA also opens the door to the citizens of Seychelles to the markets of the EU” and he thanked the Seychelles for their support of Cyprus, calling the DTA… “a strengthening and an expansion of our economic and friendship ties.” MOSSFON GROUP www.mossfon.com 2006 SPECIAL DONATIONS This year, on behalf of its valued clients, Mossack Fonseca & Co. has made a US$30,000.00 Special Donation, thus contributing to several charitable causes and projects in Panama. The beneficiaries of such donations are: • Social Pastoral Project “Vírgen del Camino Training and Education Centre” – Diocese of David, Province of Chiriqui • National Scout Association of Panama • National Symphony Orchestra of Panama • Science and Arts Centre Foundation (Explora) for underprivileged children. • Jesus en los pobres (Jesus through the poor) – Ecumenical Hostel – Saint Thomas Hospital • Foundation for the Support of Social Development – restoration of three colonial bridges in Portobelo, Province of Colon. In this photo we can see, in the usual order, Ramón Fonseca Mora Esq. of MF & Co., Rev. Father Adonaí Cortés Elisha of the Saint Felix Parish, Chiriqui, and Christoph Zollinger, Esq., of MF & Co. This photo shows, Mr. Christoph Zollinger Sq. receiving the “2006 Scout Recognition”. In the usual order: Christoph Zollinger of MF & Co., Mr. Víctor N. Wynter, Operations Manager of the Scout Association and Mr. Ariel Sucre Espino, Member of the National Court of the Scout Association. AUGUST 2006
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MOSSFONREPORT - Mossack Fonseca & Co.

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