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Panama Sheds Tax Haven Label: A New Horizon for Investors and Residents 2025

In the dynamic global landscape, fiscal transparency and international cooperation are fundamental pillars for any jurisdiction’s credibility. Panama, historically associated with the debated tax haven label, is undergoing a profound transformation process, with a clear vision towards a future of greater openness and compliance with international standards. This effort, driven by the government and various entities, seeks to consolidate the country’s reputation as a legitimate and reliable business and tax residency center.

For entrepreneurs, investors, and professionals considering a transfer of their tax residency or the expansion of their operations to Panama, understanding this evolution is crucial. It not only impacts international perception but also strengthens legal certainty and the opportunities the country offers. In 2025, Panama’s advancements in information exchange and adjustment of its tax regime mark the beginning of a new era, projecting a definitive exit from non-cooperative jurisdictions lists by 2026. Let’s analyze in detail what this change implies and why Panama is emerging as an even more attractive destination.

Panama’s Tax Transparency Strategy: Towards 2026

Panama’s commitment to fiscal transparency is a strategic priority at the governmental level. Led by the Ministry of Foreign Affairs (Cancillería) and the Ministry of Economy and Finance (MEF), this initiative seeks to align the country with global best practices and strengthen its position in the international economy.

Commitment to Global Standards: OECD and European Union

Foreign Minister Javier Martínez-Acha has emphasized Panama’s determination to exit the European Union’s (EU) “blacklist” of non-cooperative jurisdictions for tax purposes (Annex I) by 2026. This objective is pursued through technical and coordinated work with international forums such as the Organization for Economic Cooperation and Development (OECD).

“The tax issue is technical within the global forum of the Organization for Economic Cooperation and Development (OECD), and we are working on it to try and exit, and I believe we will achieve it by 2026.”

– Javier Martínez-Acha, Foreign Minister of Panama.

This active collaboration with international bodies is essential to dispel any shadow of doubt about Panama’s commitment to fiscal transparency and cooperation. Participation in conferences and constant communication with other governments demonstrate Panama’s clear willingness to leave behind the tax haven label and be recognized as a fully cooperative country.

Currently, the EU Annex I list of non-cooperative jurisdictions for tax purposes is one of the reference lists, and Panama has made considerable efforts to comply with the requirements for its removal.

Breaking Down the Pending Criteria: Information Exchange and Economic Substance

To achieve its goal of being removed from tax lists, Panama has focused on two key criteria that require attention and adjustment:

The Pillar of Information Exchange

The first criterion is to obtain a satisfactory rating in tax information exchange in Panama with the OECD. This implies that Panama must demonstrate its ability and willingness to share relevant data with other jurisdictions efficiently and in accordance with international standards. To do this, it is necessary to:

  • Request an exhaustive technical review of its information exchange system from the OECD.
  • Ensure that existing mechanisms operate optimally and meet the expectations of the global forum.
  • Demonstrate traceability and due diligence in handling information requests.

The Foreign Minister has made it clear that Panama has no issues in this regard, reaffirming the country’s commitment to the fight against money laundering and any illicit activities.

The Importance of Economic Substance

The second criterion refers to the adjustment of the tax regime in the profit system and the territorial tax system to “avoid double non-taxation” and thus comply with transparency and economic substance standards in Panama. This concept is fundamental to ensure that companies operating in a jurisdiction have a real presence and substantive economic activities, and are not merely structures to avoid taxes.

Panama is studying successful models from similar countries, such as Uruguay, which managed to exit tax haven lists through economic substance laws. This seeks to:

  • Ensure that legal entities established in Panama demonstrate genuine and operational economic activity.
  • Prevent the use of corporate structures for aggressive tax evasion or avoidance purposes.
  • Strengthen the integrity of the territorial tax system, which remains a legitimate advantage for activities carried out outside Panamanian territory.

Both issues, information exchange and economic substance, are being led with determination by the Minister of Economy and Finance, Felipe Chapman, who is working to ensure that Panama complies with these technical requirements.

Impact and Benefits of a Transparent Panama for Investors and Residents

The successful culmination of these efforts will transform the perception of Panama in the international arena, generating multiple benefits for those wishing to establish their tax residency in Panama or make investments.

Increased International Credibility and Legal Certainty

By being removed from the lists of non-cooperative jurisdictions, Panama will gain invaluable credibility. This translates into:

  • Attraction of Foreign Direct Investment: Companies and investment funds will more confidently seek a legally robust and transparent environment.
  • Ease in International Transactions: Frictions and additional scrutiny in cross-border banking and financial operations will be reduced.
  • Confidence to Establish Companies: For those looking to start a company in Panama, the elimination of the tax haven label means a more predictable and globally respected business environment.

Continued Advantages of the Territorial Tax Regime

It is important to note that the transparency effort does not nullify the legitimate advantages of Panama’s territorial tax regime. This system, which taxes only income generated within Panamanian territory, is a legal and transparent pillar, not a tax loophole. Panama seeks to harmonize its policies without losing the attributes that make it attractive for investment and residency, such as its efficient tax system and strategic position.

For more details on how the system works, you can consult our article on taxes in Panama for expats and tax residents.

Political Commitment and Panama’s Future

The current government’s determination is a key factor in this process. The President of the Republic, José Raúl Mulino, has expressed a firm commitment to comply with international requirements for Panama to shed the tax haven label and progress as a country. This leadership is essential to drive the necessary reforms and ensure their effective implementation.

“Here, we do not want to be a refuge for any type of dirty money. We cooperate with all countries and are willing to sign free taxation treaties.”

– Javier Martínez-Acha, Foreign Minister of Panama.

Panama not only seeks to be removed from the lists but also to be actively recognized as a cooperative partner. Examples like Ecuador’s recent decision to remove Panama from its tax list are a testament that efforts are bearing fruit and that bilateral dialogue with other South American countries continues to eliminate other discriminatory lists. This tax future of Panama is built on foundations of openness and responsibility.

Conclusion: Panama, a Destination of Renewed Opportunities

Panama’s advancements in 2025 to shed the tax haven label represent a significant step towards its consolidation as a first-class financial and logistical hub. These efforts not only enhance its international reputation but also offer greater security and confidence for those looking to invest, establish businesses, or obtain residency in Panama.

The commitment to fiscal transparency and international cooperation creates a more predictable business environment and a stronger legal framework, making Panama an even more attractive option for global entrepreneurs and investors. If you are considering a move to this vibrant nation, having the right advice is essential to navigate the processes and make the most of the opportunities this new horizon offers.

Interested in establishing your tax residency or expanding your business in Panama?

Contact Panamaway.com today for personalized advice and discover how we can guide you every step of the way.

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