No more Panama games in Panama? The EU has updated its tax haven list

On October 9, the European Union removed Panama and Vietnam from its blacklist of non-cooperative jurisdictions for tax purposes, after the two countries took significant steps to address previously identified shortcomings. The decision by EU finance ministers nonetheless involves further scrutiny: both countries have been moved to the second annex, which lists cooperative jurisdictions that still have commitments to fulfil, where they will face further international review.

Panama had been on the blacklist since February 2020, but has now reformed its system exempting foreign-source income from taxation, which the EU had deemed harmful. The OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes is also conducting a new review to determine whether the country meets international requirements for the exchange of tax information on request; Panama will remain in the second annex until the outcome of this review. Vietnam was added to the blacklist this past February, after a Global Forum assessment found shortcomings in the exchange of tax information. Following reforms implemented since then, the country has been given the opportunity for a new review, and the EU has therefore moved it, like Panama, to the list of cooperative countries under monitoring.

After the revision, eight jurisdictions remain on the EU blacklist: American Samoa, Anguilla, Guam, Palau, Russia, the Turks and Caicos Islands, the U.S. Virgin Islands and Vanuatu. A new shortcoming was recorded in Anguilla's information exchange regulations, while in Vanuatu's case progress on transparency was acknowledged, but the country retained its blacklisted status due to other persisting problems. Belize was removed from the second annex after fulfilling its commitments on information exchange, while Montenegro remains under review until the results of its international assessment are published. Brunei was given additional time to adjust its tax system, meaning this list currently includes ten jurisdictions: the British Virgin Islands, Brunei, Eswatini, Greenland, Jordan, Montenegro, Morocco, Panama, Turkey and Vietnam. Taxation and Customs Union

The EU updates the list twice a year, assessing compliance with international requirements on tax transparency, fair taxation, and the fight against base erosion and profit shifting. The next review is expected in February 2027, and the current reclassification of Panama and Vietnam reflects recognition of the reforms carried out, while monitoring of their information exchange practices continues.

Ugar