On March 13, 2019, after intense analysis and dialogue, the finance ministers from the European Union removed Panama from the list of “tax haven” countries.
This means that Panama is no longer categorized under the list of countries labelled “non coopera- tive on tax issues”.
In 2017, the European Commission (EC) wrote the first list, drafting countries known as “tax haven”. This was in response to the “Panama papers” scandal. The “Panama papers” were revealed in 2016, stating that the law firm Mossack Fonseca had created a number of companies to avoid worldwide taxes.
The “Panama papers” exposed highly sensitive information regarding the companies created by the law firm, including: 40 years of information, approximately 11.5 million documents, e-mail addresses, bank accounts, passports, client information, names of personalities, football players, business men, actors, 12 chiefs of state, ministry workers and other politicians.
During this period the European Union accused Panama of not having transparency, of having special tax regime and no respect for the criteria of the Organization for Economic co-operation and Development (OECD) tributary regime. The OECD was acting on behalf of the G-20. Due to the “Panama papers”, Panama worked quickly to protect its financial system and pact several treaties with the OECD, including the exchange of automatic information. Panama also signed with 30 countries special tax agreements, including measures to prevent double taxation. Panama completely changed its fiscal system, abolishing various fiscal regimes and adjusting itself to the international norms of transparency.
Now that Panama is no longer categorized as a “tax haven”, the projected economic growth of Panama is optimistic. The renewal of Panamaʼs tax system will allow a multitude of countries to continue establishing their business in Panama with government approval. The expected rate of Panamaʼs economic growth ranges from 5 – 6% annually.