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EU ministers debate Panama’s financial classification


EU ministers debate Panama’s financial classification

EU Ministers of Economy and Finance (EcoFin) will today meet to discuss removing Panama from its blacklist of tax havens.

Panama is one of twelve countries currently on the blacklist, which includes non-cooperative tax jurisdictions. The EU believes these dominions encourage abusive tax practices that harm the economies and trade of its member states, and blacklisted countries are subject to a broad range of financial sanctions recommended by EcoFin. Panama was added to the list in February 2020 after it failed to implement EU-requested tax reforms.

As Panama’s refusal to cooperate with international tax transparency initiatives has done little to improve its standing with the EU, it is extremely unlikely that Brussels will remove the country from its blacklist today. However, this status could change in the future. With Panama recovering from its worst economic decline in history, many in the government, including Finance Minister Hector Alexander, believe that structural tax reform is inevitable.

If these reforms bring Panama further in line with EU policy by increasing transparency and cooperation, it could be downgraded from the blacklist to the grey list of closely monitored countries in the process of reforming their tax policies, and eventually removed from the list altogether.

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