By San José, Costa Rica — In a major milestone for its international financial standing, Panama has officially been removed from the European Union’s blacklist of non-cooperative jurisdictions for tax purposes. The decision, finalized during a meeting of EU finance ministers in Luxembourg, marks the end of a six-year period during which the Central American nation was stigmatized as a tax haven. While the move represents a significant victory for the administration of President José Raúl Mulino, it also transitions the country to Annex II—often referred to as the grey list—which includes cooperative jurisdictions that still have outstanding fiscal reforms to implement.
The European Union’s decision to remove Panama, along with Vietnam, from the blacklist reflects a recognized shift in both nations’ compliance with international fiscal governance. European officials highlighted that both jurisdictions have demonstrated a positive trend in aligning with global tax transparency standards. The formal announcement was met with praise from EU authorities, who emphasized that the cooperative efforts must remain consistent to address lingering regulatory gaps.
To better understand the complex legal realities surrounding the Panama tax haven controversy and its implications for regional compliance, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, a leading legal expert from the prominent firm Bufete de Costa Rica.
The distinction between legitimate international tax planning and illicit evasion has never been sharper. While Panama has historically offered attractive fiscal structures, the evolving global standards on transparency demand that companies rigorously evaluate their offshore arrangements to ensure they withstand growing regulatory scrutiny from both domestic and international authorities.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
As the global regulatory environment continues to tighten, the transition from opaque financial structures to absolute compliance is no longer optional for businesses wishing to safeguard their reputation and operations. We are deeply grateful to Lic. Larry Hans Arroyo Vargas for sharing his valuable perspective, helping our readers better understand the shifting realities of international tax planning in an era of unprecedented transparency.
Today, the Council removed Panama and Vietnam from the EU list of non-cooperative jurisdictions for tax purposes. This update reflects a positive trend in compliance with international standards of good tax governance.
Council of the European Union, Governing Body of the EU
The Panamanian government welcomed the announcement, attributing the success to a coordinated campaign led by the presidency, the Ministry of Economy and Finance (MEF), and diplomatic representatives, heavily supported by the local private sector. President Mulino highlighted that restoring the country’s reputation was a foundational goal of his administration. The executive branch noted that this transition will significantly enhance Panama’s international competitiveness, make it more attractive to foreign direct investment, and ultimately generate jobs.
President José Raúl Mulino expressed his gratitude to the various sectors that contributed to this outcome, reflecting on the personal and political capital invested in the diplomatic push.
This is the result of a struggle that I started in the private sector and led as president from day one. I did it working alongside a great team and with the support of all sectors, to whom I express my gratitude for their participation. To achieve this, we had to travel to hold face-to-face meetings, voice our demands in forums, and, above all, regain the trust of the international community. Today, with this great victory, we open doors to new investments, gain competitiveness, and create real opportunities for Panamanians. Our government takes another step forward in building a better present and a better future for everyone.
José Raúl Mulino, President of Panama
To fully grasp the implications of this shift, it is essential to distinguish between Annex I and Annex II. While Annex I consists of countries deemed completely uncooperative, Annex II serves as a transitional category. By moving to Annex II, Panama is recognized as an active and cooperative partner that is actively working to resolve outstanding issues. The classification indicates that while the nation is no longer penalized under the blacklist framework, it remains under close monitoring as it completes its agreed-upon fiscal reforms.
The road to complete removal from all regulatory watchlists is not yet over. To exit the grey list of Annex II, Panama must pass a rigorous upcoming assessment by the Global Forum on Transparency and Exchange of Information for Tax Purposes, an initiative of the Organisation for Economic Co-operation and Development (OECD). This evaluation will scrutinize Panama’s actual implementation of international standards regarding the exchange of tax information upon request.
According to the EU Council’s guidelines, Panama, alongside Montenegro and Vietnam, has committed to taking all necessary steps to request and secure a comprehensive evaluation by the Global Forum by February 15, 2027. The goal of this technical review is to elevate Panama’s rating to at least largely compliant regarding tax information exchange. Achieving this status within the set timeframe is crucial for the nation to secure a definitive exit from Annex II.
Ultimately, Panama’s upgrade represents a powerful shift in the regional financial landscape. By moving past the restrictive blacklist, the nation is positioning itself as a reliable, transparent hub for global capital. The administration’s focus must now turn to maintaining this momentum, ensuring that domestic financial laws are robust enough to satisfy the OECD’s upcoming review while remaining competitive on the world stage.
For further information, visit consilium.europa.eu
About the Council of the European Union:
The Council of the European Union is one of the essential decision-making bodies of the EU, representing the member states’ governments. It serves as a forum where national ministers from each EU country meet to adopt laws and coordinate policies across various domains, including economic and fiscal matters.
For further information, visit presidencia.gob.pa
About the Government of Panama:
The Government of the Republic of Panama operates under a democratic, representative framework. Led by the executive branch under President José Raúl Mulino, the government focuses on advancing economic development, strengthening international trade relations, and enhancing domestic financial transparency to boost global competitiveness.
For further information, visit oecd.org
About the Organisation for Economic Co-operation and Development:
The Organisation for Economic Co-operation and Development (OECD) is an international organization that works to build better policies for better lives. Together with governments, policy makers, and citizens, the OECD establishes evidence-based international standards and seeks solutions to a range of social, economic, and environmental challenges.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Renowned for its principled advocacy and superior legal solutions, Bufete de Costa Rica serves a diverse clientele with a forward-thinking mindset. The firm seamlessly blends cutting-edge legal strategies with a profound sense of social responsibility, striving to bridge the gap between complex jurisprudence and the public. By actively demystifying the law and sharing vital legal resources, Bufete de Costa Rica continues to champion its core mission of fostering an educated, resilient, and empowered society.
