On 9 October 2026, the European Union officially removed Panama from its list of non-cooperative tax jurisdictions (the “blacklist”) and transferred the country to Annex II, which comprises jurisdictions that have committed to addressing EU concerns but require monitoring. This decision follows a comprehensive review by the EU Code of Conduct Group on Business Taxation, acknowledging Panama’s significant legislative and administrative reforms in tax transparency, exchange of information, and adherence to OECD BEPS standards. The move reflects a coordinated national effort led by President José Raúl Mulino and the Ministry of Economy and Finance (MEF), including the enactment of laws on beneficial ownership registration, economic substance requirements, and automatic exchange of financial account information under the Common Reporting Standard (CRS). The EU’s recognition marks a critical milestone in Panama’s multi-year strategy to align with global tax governance frameworks, particularly the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan and the Global Forum on Transparency and Exchange of Information for Tax Purposes. Panama’s commitment included the passage of Law 254 of 2021 on beneficial ownership, Law 164 of 2021 on economic substance for relevant entities, and the signing of the Multilateral Competent Authority Agreement (MCAA) for CRS implementation. These measures addressed the EU’s core criteria on tax transparency, fair taxation, and anti-BEPS measures. The government also strengthened the capacity of the Directorate General of Revenue (DGI) and the Superintendency of Banks to enforce compliance and facilitate timely information exchange with foreign tax authorities.
Key Takeaways
- Reputational Upgrade and Market Access: Removal from the blacklist eliminates the stigma that restricted Panama’s access to certain EU funding, public procurement, and financial markets, while reducing the risk of defensive tax measures by EU member states against Panamanian entities. This enhances the country’s attractiveness for foreign direct investment and cross-border banking relationships.
- Continued Monitoring Under Annex II: Panama remains under EU observation in Annex II and must fully implement its committed reforms by agreed deadlines to achieve full “white list” status, requiring sustained political will and technical capacity from the MEF and the Superintendency of Banks. The EU will conduct periodic reviews to assess effective implementation of economic substance rules, beneficial ownership registries, and automatic exchange of information.
- Domestic Compliance Obligations Intensify: Multinational enterprises and financial institutions operating in Panama must ensure robust compliance with economic substance reporting, beneficial ownership declarations, and CRS/FATCA filing requirements. The DGI has signaled increased audit focus on entities claiming tax residency without adequate substance, and penalties for non-compliance have been strengthened under recent legislative amendments.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement