EU Lifts Panama’s Tax Blacklist Status Following Reforms to Improve Financial Transparency

The European Union has removed Panama from its list of non-cooperative tax jurisdictions following reforms to its tax system, marking a significant step in the country’s efforts to improve its international financial reputation.

The decision was announced on October 9, 2026, after EU finance ministers reviewed progress made by countries previously identified as failing to meet international tax standards. Vietnam was also removed from the blacklist, while Belize exited the EU’s monitoring category.

Panama’s removal follows changes to its foreign-source income exemption regime, which had raised concerns over whether the country’s tax framework met international standards. The country is also set to undergo further assessment by the Organisation for Economic Co-operation and Development’s Global Forum to evaluate its compliance with rules on exchanging tax information. Its removal therefore reflects progress, but continued monitoring remains important.

Panama has faced international scrutiny over financial secrecy for years. The 2016 Panama Papers investigation exposed offshore financial arrangements involving wealthy individuals, politicians and businesses worldwide. Although offshore companies are not inherently illegal, concerns about their potential use in tax evasion and money laundering have driven international efforts to improve transparency.

The EU introduced its tax blacklist in 2017 to pressure jurisdictions outside the bloc to meet standards on tax transparency, fair taxation and measures against profit shifting. The list is reviewed twice a year, allowing countries to be removed when they fulfil reform commitments or demonstrate compliance with agreed requirements.

Panama’s removal could improve its standing with international investors and financial institutions. However, its long-term position will depend on continued compliance with international standards and the outcome of further reviews.

The decision highlights the EU’s use of its blacklist as a tool to encourage tax reforms rather than impose permanent penalties. While Panama has made progress, maintaining its improved status will require sustained transparency and cooperation.