News

by Jeff Barton.

The European Union is getting ready to remove Panama’s designation as a tax haven, recognizing Panama’s continued steps to increase financial transparency.

The EU established a list of countries viewed as tax havens in December, but Panama is already one of several countries that have shown evidence that they are meeting the EU standards, according to a Reuters report. South Korea and the United Arab Emirates are also in consideration for removal from the list, according to the news service.

In some ways, the EU status is a formality, but it was still perceived as a setback, after years of Panama making the case that it had taken steps forward in meeting international standards. Much of the negative perception of Panama’s financial institutions date to the practices of years ago, as well as the media furor over the Panama Papers, which focused on account information that was leaked to the media.

In recent years, Panama has instituted a wide range of reforms targeting financial transparency and conforming to international rules and regulations. In 2016, October, Panama joined more than 100 countries in agreeing to follow guidelines on sharing foreign taxpayer data organized by the Organization for Economic Cooperation and Development (OECD).

This week, Panama reaffirmed its commitment to the OECD standards, which will go into effect in September.

“I congratulate Panama for having taken this substantial step that will allow the creation of a global exchange network for the automatic exchange of financial information,” said OECD under-secretary Masamichi Kono, at a ceremony commemorating the deal, as reported by La Prensa. “Today’s signature puts Panama in an excellent position to fully comply with its commitment to initiate exchanges with all interested partners in September of this year.”

The EU’s move to remove Panama from its recently created blacklist should provide more evidence that Panama is working to comply with the international regulators. The recommendation to de-list Panama was made by the EU’s Code of Conduct Group, which includes tax experts representing the EU members, who are assigned to monitor the individual country’s commitment to meet EU standards on tax matters, Reuters reports.

Jeff Barton is managing director of Punta Pacifica Realty, the top sales and property management company in the waterfront skyscraper community of Punta Pacifica.