a taxed economy while not paying its fair share of taxes in that economy. Wealth earned in one (taxed) economy is taken out of circulation (i.e., it cannot be taxed again when re-spent to provide services and infrastructure). It encourages Tax competition between states, provinces, countries, and regions, in the same way that the search for ever cheaper source of manual labor brings down wages everywhere. Offshore investments in poorly regulated tax havens may bypass sanctions against countries established to encourage conventions important to societies (e.g., UN sanctions for failure to adhere to nuclear nonproliferation treaties). This has the effect of undercutting the effectiveness of such sanctions. Efforts to reduce use of offshore investment for tax evasion International efforts to reduce tax evasion The Organisation for Economic Co-operation and Development (OECD), the European Union (EU) and the United States of America (USA) strive for exchanging tax data. The OECD has established a threshold of bilateral tax-information exchange agreements, twelve, as the minimum which a country is also placed on the “white list” and recognized as having “substantially implemented” internationally agreed tax standards. The OECD “grey list” includes countries which have not achieved “white list” status and are considered as fostering tax evasion through insufficient financial openness. As a result, the Cayman Islands and Liechtenstein implemented financial openness reforms to get off the list and escape the threat of sanctions, while Panama, Luxembourg, Liechtenstein, Switzerland and the British Virgin Islands (BVI) were still on the grey list as of late 2009. The expansion of the EU has motivated major improvements in tax-related transparency. The EU requires members to exchange tax information using automatic systems by the end of 2011, which assures that Austria, Belgium and Luxembourg are coming into compliance. Further, since January 2007 former tax havens (noted for their banking secrecy and low tax rates for foreign investments) in Bermuda, the Channel Islands (Jersey and Guernsey) and the Isle of Man have achieved “white list” status due to their EU ties. Panama is currently recognized as one of the more attractive countries for legitimate offshore investment as well as for tax evasion, and is on the OECD “grey list”. Panama's free-trade zone handles over $19 billion in commerce per year and construction is booming. Corporations are easily created in Panama and, although they are heavily taxed on Panama-domestic operations, they pay no taxes on foreign activities. Company ownership can be