The EU’s finance ministers agreed on Tuesday to remove eight countries, including Panama, from their newly updated list of tax havens.
Only a month after the original list was compiled, EU finance ministers opted to remove Barbados, Grenada, South Korea, Macao, Mongolia, Tunisia, the UAE, and, surprisingly, Panama from its designated tax haven list and move them to its registry of 55 jurisdictions that have committed to changing their tax rules to abide by EU standards on transparency and cooperation.
Key policymakers said the delisting was a sign that countries around the world were following through with their pledge to adopt EU standards on tax transparency and reiterated that any of the countries can be moved back onto the blacklist if they backtrack on their reforms.
“Jurisdictions around the world have worked hard to make commitments to reform their tax policies. Our aim is to promote good tax governance globally,” said ECOFIN president Vladislav Goranov, who also serves as Bulgaria’s finance minister.
Goranov’s comments were backed by French Finance Minister Bruno Le Maire, who tweeted “European pressure has brought its first results!”
Despite a certain degree of enthusiasm from some quarters in Brussels, the move attracted strong criticism for including Panama on the list of countries that are no longer considered tax dodgers.
The move left only nine countries of the EU’s blacklist and comes just a month after the Economic and Financial Affairs Council had drawn up the original list of 17 tax havens located outside Europe.
“The EU is rushing to take countries off the blacklist without it being clear what they have actually committed to…this is further undermining the process,” said Aurore Chardonnet, a tax and inequality policy adviser for Oxfam EU. “It is no secret that tax havens remain at the heart of the EU, with four European countries actually failing the EU’s own blacklisting criteria.”
Panama is known as one of the global centre’s for tax avoidance. The scale of its reputation as a widely-used tax haven by some of the wealthiest and most powerful individuals in the world came to light in 2015 with the publication of the Panama Papers. The leaked documents revealed confidential information about hundreds of thousands of offshore entities that were registered with Panamanian law firm, Mossack Fonseca.
“Today’s decision is a confession of failure. Crossing Panama – one of the world’s most prolific tax havens – off the blacklist is a disastrous sign in the fight against tax avoidance,” said Markus Ferber, the Vice-Chair of the European Parliament’s economic committee.