EU removes Panama from tax haven blacklist

The Panama Papers scandal dealt a severe blow to the country's reputation as an offshore financial hub. (EPA Images pic) LUXEMBOURG: The EU removed Panama from its tax havens blacklist on Friday after the country made progress on sharing tax information and reformed a "harmful" regime of exemptions for foreign-source income.

Vietnam was also removed after undertaking a series of reforms. The updated list now contains eight "non-cooperative" jurisdictions: American Samoa, Anguilla, Guam, Palau, Russia, Turks and Caicos Islands, US Virgin Islands and Vanuatu.

"This update reflects a positive trend in compliance with international tax good governance standards," the EU said in a statement.

The list was created in 2017 in the wake of a series of scandals, including the so-called Panama Papers that revealed how the world's wealthy stashed assets in offshore companies, triggering scores of investigations around the globe.

Panama had been removed in 2018, before returning to the list in 2020.

The EU said Panama had been removed once again in light of a review granted by the OECD Global Forum regarding its "compliance with international standards on the exchange of tax information on request".

It also underlined that Panama "has now reformed its harmful foreign-source income exemption regime".

The leak of 11.5 million files from the law firm Mossack Fonseca in Panama City in 2016 rocked the world, exposing how the rich and famous used offshore accounts to stash hundreds of millions of dollars from tax authorities.

The Panama Papers scandal dealt a severe blow to the country's reputation as an offshore financial hub, prompting it to implement several reforms, including penalising tax evasion.

The country had hit out at the EU for keeping it on its tax haven blacklist despite efforts to crack down on tax evasion.

The Financial Action Task Force, an intergovernmental organization that combats money laundering and terrorism financing, removed Panama from its gray list in 2023.