Trump Organization accused of tax evasion in Panama: what we know

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President-elect Donald Trump has sparked a feud with Panama over fees it charges U.S. ships to use the Panama Canal, while the Trump Organization leads a lawsuit over taxes in the Central American country .

What you need to know

In June 2019, the owners of a Panama City hotel that was managed by Trump Companies and branded Trump, accused two companies, Trump Panama Hotel Management LLC and Trump International Hotels Management LLC, of ​​failing to pay taxes. taxes on their Panamanian income.

In a complaint filed in U.S. District Court in New York, private equity manager Orestes Fintiklis and his firm, Ithaca Capital Partners, alleged that Trump's companies failed to pay 12.5% ​​taxes. on the millions of dollars they had earned from running the Panama City hotel. They also alleged that Trump's units failed to properly report the number of people employed by the hotel so he could avoid Panamanian social security payments.

The filing documents how the Panamanian government later conducted a tax audit on the hotel and discovered major irregularities. Fintiklis and his company were forced to pay the money owed to Trump, according to the court filing.

Donald Trump on December 22, 2024, in Phoenix, Arizona. On Sunday, Trump threatened to take back the Panama Canal in a series of social media posts. Donald Trump on December 22, 2024, in Phoenix, Arizona. On Sunday, Trump threatened to take back the Panama Canal in a series of social media posts. Rebecca Noble/Getty Images

In an updated complaint filed in the same court on March 30, 2020, Fintiklis' lawyers complained that “Trump had been honest with Ithaca about his inability to pay taxes on the management fees he was earning and its inability to properly report employees' salaries to Panama's social system. security agency, Ithaca would never have entered the [licensing deal] because, among other things, (i) Ithaca would have recognized the significant multimillion-dollar tax penalty that could be imposed by the Panamanian government once it began auditing the hotel; and (ii) Ithaca would have known that the statements made by Trump described above were false to the extent that the hotel suffered from significant financial irregularities.

The dispute is still before the courts.

Newsweek sought comment Monday from Fintiklis, Ithaca Capital Partners and the Trump Organization. Newsweek also contacted the Trump-Vance transition team and Panama's Ministry of Economy and Finance.

Why it matters

The issue is important because Trump could push the United States toward conflict with Panama after accusing the country of financial wrongdoing.

Trump said Sunday that the United States could demand the return of the Panama Canal if Panama does not reduce taxes on American goods passing through the canal.

This key waterway is crucial to the global economy because it connects the Atlantic and Pacific Oceans.

“The fees Panama is charging are ridiculous, especially considering the extraordinary generosity extended to Panama by the United States. This complete 'rip-off' of our country will stop immediately,” Trump wrote on his social media site , TruthSocial. on Sunday.

“The United States has a vested interest in the safe, efficient, and reliable operation of the Panama Canal, and this has always been understood. We would NEVER let it fall into the wrong hands! It was not given to the benefit of others, but simply as a sign of cooperation with us and Panama,” he wrote.

Panama's President José Raúl Mulino responded in a video posted on X: “Every square meter of the Panama Canal and its adjacent areas belongs to Panama and will continue to belong to Panama.”

Trump responded on Truth Social: “We'll see about that.”

What people say

Ana Navarro Flores, a prominent Nicaraguan-American political strategist and commentator, suggested on Sunday on X that Trump was threatening to invade Panama because he still owed millions of dollars in taxes in the country.

“Now we know what the sudden threats against Panama and Panama Canal ownership are about,” she wrote, linking to a 2019 ProPublica article about the hotel tax controversy.

There is currently no evidence that Trump's threats are in any way related to the hotel court case and Trump and his representatives have not made any public statements linking the two issues.

What happens next

Trump is unlikely to win a canal dispute by invoking international law. The United States transferred control of the canal to Panama in 1999 following a 1979 treaty signed by President Jimmy Carter, which Trump called “stupid.”

Trump will be inaugurated on January 20 and he will then become commander in chief of the American army.

Panama is committed to defending its territory. International diplomacy will be necessary if the situation is to be resolved.

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