Tax Haven Status Remains after Panama Removed from EU High-Risk List

  • The government of Panama is celebrating the European Union’s (EU) decision to remove Panama from its list of “high-risk” countries for money laundering and terrorism financing as a victory. Economy and Finance Minister Felipe Chapman asserts that Panama is “cooperative” in the fight against money laundering. However, Panama remains on the EU’s tax haven list.
  • Panama has a territorial tax regime, where only income generated within the country is taxed, while foreign-sourced income is exempt. This enables tax evasion since an offshore company registered in Panama and connected to a business and a bank account elsewhere can hide funds without declaring them anywhere. After the “Panama Papers” scandal in 2016, the Financial Action Task Force (FATF), an intergovernmental body, and the EU included Panama on their lists for money laundering and terrorism financing risks.
  • In response to the scandal, Panama reformed its laws and began sharing financial information with over 100 countries. It criminalised tax evasion and implemented measures to trace accounting movements and identify the real beneficiaries of offshore companies. This led to Panama being removed from the EU list in July 2025. The FATF had already taken Panama off its list in 2023. The Panamanian government now expects increased investment and lower-cost foreign credit, as businesses and banks will no longer be penalised for operating in a blacklisted country.
  • To be removed from the EU’s tax haven list, Panama must change its laws to require companies to have offices and employees within its territory. “If Panama passes a law by September 2025 regulating this requirement, it could be removed from the list in the EU’s October 2025 review,” said tax consultant Luis Ocando. The Organisation for Economic Cooperation and Development (OECD) also includes Panama on a list for deficiencies in tax information exchange. Panama, which seeks to join the OECD, has asked the organisation to reconsider its status.

(Source: CariCRIS)