https://www.laestrella.com.pa/economia/panama-sigue-en-lista-de-la-ue-la-territorialidad-es-el-punto-de-discusion-clave-CC20000354

Panama will remain on the European Union’s list of non-cooperative jurisdictions for tax purposes. One of the key points of discussion is territoriality, a pillar of the Panamanian economic model that only taxes individuals on income generated within the country.

On Monday, February 16, the EFE news agency , citing “diplomatic sources,” reported that Panama would not be excluded from the European list during the update taking place on Tuesday, February 17.

The jurist Carlos Raúl Moreno, one of the founders of the International Action Group for Financial Equality (GAPIFI), is working with the national government and experts in the field to carry out a strategy to remove Panama from the so-called “lists of tax havens”.

“It’s no surprise. The national government had set a goal of implementing a series of reforms in preparation for the upcoming visit of the European Union and the OECD to Panama, scheduled for the purpose of adopting the necessary legislation to be removed from the tax non-cooperation list,” Moreno explained. “What happened is that there wasn’t enough time to discuss the draft legislation prepared by the Executive Branch with all the relevant sectors.”

In December 2025, a draft bill prepared by the Ministry of Economy and Finance (MEF) circulated, amending the Tax Code specifically regarding multinational companies. Among other things, it added an article to the Tax Code stipulating the exceptional payment of taxes by entities belonging to a multinational group on their dividends, interest, royalties, capital gains, income from real estate capital, and other income from movable capital. The change would affect “non-qualified entities,” those that are part of a multinational group, do not file an annual declaration and documentation of economic substance, or that an authority has declared do not possess adequate economic substance in Panama during the fiscal year.

The MEF’s strategy was, and is, to address one of the criteria for inclusion on the list that refers to tax equity and Foreign Source Income Exemption Regimes (FSIE).

The European Union has openly shared its criticisms of the Panamanian system. The European Union’s ambassador to Panama, Izabela Matusz, detailed in an interview with La Decana the key points they are demanding from Panama.

“There are two criteria for inclusion on the tax list. One is that Panama has a satisfactory rating in information exchange with the OECD. Panama must first request a review from the OECD, a technical visit to assess its information exchange system. We are waiting for Panama to invite the OECD to conduct this review and receive its OECD rating,” Matusz explained. “The other criterion for inclusion on the tax list is an adjustment to the tax regime regarding profits, the profit system, and the territorial tax system. Panama needs to make adjustments to this territorial tax system, as other countries in the region have done, to prevent double taxation. For example, companies or individuals could register in Panama to avoid paying taxes in both Europe and Panama.”

The president of the National Bar Association (CNA), Maritza Cedeño, told La Estrella de Panamá in December 2025 that the association’s position at that time was to reject the MEF project because it was not consulted and said that it would be reviewed in 2026.

Moreno confirmed that the CNA and other unions have submitted numerous comments and that the matter is currently under discussion.

“We all agree on following President Mulino’s lead in removing Panama from that list. That’s not up for debate. The real issue is how to word the agreement—and what terms would be acceptable to both the OECD and us—to remove us from that list,” Moreno emphasized. “Territoriality is definitely an asset, and that’s why we have to manage it with extreme caution, complying with international standards. We aspire to preserve the income and passive assets of individuals who, for example, own property outside of Panama, have an interest-bearing bank account abroad, or hold bonds or shares that generate interest, on which our territoriality dictates they don’t have to pay taxes. We want to ensure that these assets are not considered multinational corporations subject to the tax burdens that the OECD and the European Union want us to have,” he concluded.

The effort to be removed from the lists has been a coordinated national strategy involving various institutions. While the Ministry of Economy and Finance (MEF) prepares and advances the technical aspects, the Ministry of Foreign Affairs (FIN) is spearheading the diplomatic mission. Both efforts are crucial, as the decision is made by the finance ministers of EU member states, and Panama has faced rejection despite meeting all the required technical criteria. Transforming technical and legal language into political trust is the challenge facing Panamanian diplomacy in order to achieve concrete results.

Meanwhile, the Government indicated that it maintains a continuous dialogue with national actors and European authorities, while strengthening its framework for fiscal transparency and international cooperation.

He also expressed confidence that the progress made will allow Panama to be excluded from future reviews and reaffirmed his commitment to a sound, competitive financial system aligned with international standards.