The Council of the European Union confirmed on Tuesday that Panama will remain on its blacklist of non-cooperative tax jurisdictions, extending a designation the country has struggled to shake since the Panama Papers scandal. The semiannual update, adopted by EU finance ministers, also added Vietnam and the Turks and Caicos Islands while removing Fiji, Samoa, and Trinidad and Tobago, which the bloc determined now meet international standards.
The blacklist now comprises 10 jurisdictions: American Samoa, Anguilla, Guam, Palau, Panama, Russia, Turks and Caicos, the US Virgin Islands, Vanuatu, and Vietnam. The EU screens around 100 countries against three criteria — tax transparency, fair taxation, and implementation of OECD rules against profit shifting. Those that fail and refuse to reform land on the blacklist; those that commit to changes go on a separate “grey list.”
EU Keeps Panama on Tax Haven Blacklist. (Photo Internet reproduction)
For Panama, the sticking point is structural. Its territorial tax regime exempts all foreign-sourced income, meaning a company registered in Panama but operating entirely abroad pays zero tax. The EU considers this harmful because it allows corporations to exist without real economic activity — no local offices, no employees, no genuine operations. Until Panama introduces substance requirements compelling companies to demonstrate real presence, the listing is unlikely to change.
What It Costs, and What Comes Next
Being blacklisted does not trigger automatic financial penalties, but the consequences are real. European funds cannot flow through entities in listed jurisdictions, member states can impose extra withholding taxes on payments to Panama-based companies, and banks across Europe apply heightened due diligence that makes transactions slower and costlier. For a country built on logistics, the Canal, free trade zones, and financial services, those frictions accumulate.
President José Raúl Mulino has acknowledged the process will be slow but says his administration aims to exit the blacklist by late 2026 or early 2027. The government points to Costa Rica and Uruguay as models — countries that kept territorial taxation while tightening substance rules enough to satisfy the EU. Panama was removed from the EU’s separate anti-money-laundering high-risk list in 2025, a step officials cite as proof the country is moving. But as the Council made clear on Tuesday, moving and arriving are not the same thing.
