European Union Blacklists Panama as Tax Haven

The European Commission has added Panama to its blacklist of countries designated as tax havens over a lack of support for anti-tax fraud and evasion efforts.

The European Union’s executive Commission unveiled the list in the introduction to its action plan to fight tax fraud. The blacklist consists of 30 countries and territories, including the Caribbean Cayman Islands, Barbados, and Antigua and Barbuda.

“These tax havens cover the five continents,” Economic and Monetary Affairs Commissioner Pierre Moscovici said. The official urged the listed countries to quickly adopt “agreed international standards” to fight against tax evasion.

“Our citizens can no longer tolerate that certain companies, often the most prosperous, avoid fair tax contributions and that certain tax regimes encourage them on this path,” Moscovici added.

The EU blacklist is made up of countries that show up on at least 10 national lists of tax havens among the European Union member nations.

Panama has previously earned the distinction as a tax haven in the past. In October 2014, Colombia added the country to a “grey list” after the Panamanian government failed to sign an agreement on a tax-information exchange with Bogotá.

The diplomatic dispute was finally solved after foreign affairs ministers from both countries agreed to sign a memorandum of understanding, where Panama committed to sign further agreements on double taxation, tax-information exchange, cooperation on money-laundering investigations, and terrorism.

The EU Commission’s move is part of a larger crackdown following a document leak that indicates some multinationals have preferential tax deals with Luxembourg. The body aims to create a simpler set of rules to be used by the companies to calculate their earnings, and enforce tax payments more efficiently.

The commission also aims to increase “transparency” and is considering forcing companies to disclose more tax information.