Panama: Removed from EU list of Non-Cooperative Jurisdictions for Tax Purposes
UE Panama
On 9 October 2026, EU Finance Ministers decided to remove Panama from the list of non-cooperative jurisdictions for tax purposes (Annex I), recognising the tangible reforms undertaken by the Panamanian authorities to address the EU’s concerns on fair taxation.
Today’s decision marks an important milestone. It reflects Panama’s sustained and constructive engagement with the EU, backed by concrete actions to bring its tax framework in line with international tax good governance standards. These included the passing of a law on economic substance and its implementing decree earlier this year.
The progress achieved is a strong signal of Panama’s determination to uphold a fair, transparent and rules-based tax environment. It also demonstrates the tangible benefits of sustained reform and alignment with international standards, reinforcing Panama’s standing as a committed partner in international tax cooperation. Furthermore, Panama has committed to strengthening its framework on exchange of information and has recently been granted an in-depth review by the Global Forum which will assess its compliance with the relevant international standard.
Welcoming the positive development, the EU Ambassador to Panama, Andrea Matteo Fontana stated: “Today’s decision is an important recognition of the hard work and meaningful progress made by Panama to strengthen the country’s tax framework. This is a good example of how constructive dialogue and a shared commitment to international standards can deliver tangible positive results. We congratulate the government of Panama on this major achievement, and I look forward to working together on promoting closer economic and trade ties.”
“Panama's removal from Annex I is the result of concrete and verifiable reforms. We have introduced economic substance requirements for entities earning passive foreign-source income, in line with the EU's tax good governance criteria and international standards. Panama's commitment is reflected in the fact that the law was approved unanimously by the National Assembly. These requirements were developed with input from the private sector, and the Ministry of Economy and Finance is already working to ensure they are implemented effectively. Our next step is the Global Forum's in-depth review on exchange of information on request. Panama will approach that process with the same technical rigor, with the aim of demonstrating its compliance with the standard," said Minister of Economy and Finance Felipe Chapman.
Minister of Foreign Affairs Javier Eduardo Martínez-Acha Vásquez stated: "The Ministry of Foreign Affairs of Panama welcomes today’s decision by the Council of the European Union to remove Panama from Annex I of the EU list of non-cooperative jurisdictions for tax purposes. This decision reflects the constructive and sustained dialogue between Panama and the European Union, as well as the Government of Panama’s continued commitment to transparency and compliance with international standards. Advancing these objectives has been a consistent priority of Panama’s foreign policy and diplomatic efforts. Panama looks forward to building on this progress and further strengthening its relationship with the European Union. The Government of Panama also expresses its appreciation for the continued support of the Delegation of the European Union to Panama and EU Member States throughout this process and reaffirms its commitment to remaining a reliable partner in international tax cooperation."
Background
The EU list of non-cooperative jurisdictions for tax purposes forms part of the European Union’s work to promote tax transparency, fair taxation and the implementation of internationally agreed standards against tax avoidance and base erosion.
Annex I identifies jurisdictions that have refused to cooperate with the EU on tax good governance matters or that failed to deliver on their commitments. Inclusion in Annex I triggers the application of defensive measures by EU Member States, which retain discretion in determining the measures to be imposed. These could include tax and administrative measures, as well as enhanced scrutiny of certain transactions involving the Annex I jurisdiction. Now that Panama is removed from Annex I, such measures will also be lifted.
In turn, Annex II reflects a state of play of ongoing cooperation with committed jurisdictions that have undertaken to address outstanding issues. Panama has committed to a review of the OECD Global Forum on Tax Transparency and Exchange of Information for Tax Purposes and will be removed from Annex II once the results of the review confirm Panama as largely or fully compliant with the international standards.
The list (Annex I) and the accompanying state-of-play document (Annex II) are reviewed regularly by the Council, on the basis of work carried out by the Code of Conduct Group on Business Taxation.