On October 9th, the European Union (EU) removed Panama and Vietnam from its “blacklist” of tax havens, the so-called list of non-cooperative jurisdictions for tax purposes. The decision was made in Luxembourg by the EU’s Economic and Financial Affairs Council (Ecofin).
The decision follows tax reforms introduced by both countries to improve compliance with international standards for good tax governance. Following their removal, eight jurisdictions remain blacklisted, including Russia and the U.S. Virgin Islands.
Panama had been on the EU blacklist since February 2020. Its removal follows reforms of its foreign-source income exemption regime earlier this year, alongside an upcoming OECD reassessment of the country’s adherence to international requirements for exchanging tax information.
Benefits for European Businesses
Panama’s removal from the EU’s blacklist is expected to reduce costs and administrative requirements for European businesses investing in Panama and Panamanian companies with business relationships in Europe.
The EU’s decision lays the groundwork for member states to eliminate the restrictive tax scrutiny and restrictions applied to transactions linked to Panama as well as additional sanctions that may have been in place under national legislation.
Pending the outcome of the evaluation by the Global Forum of the OECD, the Council has transferred Panama from Annex I non-cooperative blacklist) to Annex II (monitoring grey list, which is sanction free).
About the EU list of Non-Cooperative Jurisdictions for Tax Purposes
The blacklist, which has been in operation since 2017 and is updated every six months, includes jurisdictions that fail to meet EU standards on tax transparency, tax fairness, or the implementation of international rules to prevent base erosion and profit shifting, and that also fail to take steps to address these problems.
Read the Press Release Council updates the EU list of non-cooperative jurisdictions for tax purposes
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