Beyond the Blacklist: Panama and Vietnam Exit EU Tax Watch

For decades, the name Panama has been inseparable from a singular global conversation about offshore finance, secrecy, and accountability. It was here that the 2016 leak of 11.5 million internal documents from the law firm Mossack Fonseca, the Panama Papers, exposed how vast fortunes were channelled through shell companies to shield wealth from tax authorities, triggering public outrage, criminal inquiries, and a fundamental reshaping of international financial rules. When the European Union created its tax haven blacklist the following year, Panama stood prominently among the jurisdictions named, a symbol of a global system under scrutiny. This past Friday, that chapter formally turned: the EU announced that both Panama and Vietnam had been removed from its list of non‑cooperative tax jurisdictions, marking the culmination of years of legal overhaul, diplomatic engagement, and sustained international pressure.

Reforms That Opened the Door

The decision did not come easily or quickly for Panama. It was first delisted in 2018, only to return to the blacklist in 2020 an indication that early reforms had been judged incomplete. Since then, the country has moved systematically to address the concerns raised. Most significantly, it has overhauled what the EU described as a “harmful” regime of exemptions applied to foreign‑source income, closing loopholes that had allowed companies to operate with minimal local economic presence or tax contribution. Equally important has been progress in transparency: the OECD Global Forum has now formally confirmed that Panama complies fully with international standards for the exchange of tax information on request, meaning that authorities elsewhere can obtain financial data promptly and reliably when investigating suspected evasion. This shift has been recognised elsewhere too: the Financial Action Task Force removed Panama from its monitoring “gray list” in 2023, signalling growing confidence in its anti‑money‑laundering framework. For a nation that once protested publicly that its efforts were going unrecognised, the delisting is a definitive validation of the changes undertaken.

Vietnam’s Quiet Transformation

Vietnam’s path off the list followed a different but no less purposeful course. Over the period it remained under EU scrutiny, the country carried out a comprehensive series of legislative and administrative reforms designed to align its tax rules and transparency practices with international norms. These changes affect not only how foreign investment is taxed and reported but also how the government engages with cross‑border oversight, a meaningful shift for a major emerging economy whose investment appeal has long rested in part on fiscal incentives. While less globally known than Panama’s story, Vietnam’s delisting sends an equally powerful message: no jurisdiction, regardless of size or region, remains permanently outside the evolving framework of global tax governance.

Who Remains Under Scrutiny?

With these two removals, the EU’s blacklist now stands at eight jurisdictions: American Samoa, Anguilla, Guam, Palau, Russia, Turks and Caicos Islands, US Virgin Islands, and Vanuatu. The updated roster reflects a narrowing group of places where the bloc has found persistent gaps in governance, legal standards, or willingness to cooperate. As the EU noted in its accompanying statement, the overall trend is one of gradual improvement, with more jurisdictions choosing reform over continued scrutiny a sign that the listing process is reshaping behaviour beyond those directly named.

Why the List Exists and What It Means

It is worth recalling why this list exists at all. Born in 2017 in the immediate aftermath of the Panama Papers and other major leaks, it was conceived as a public instrument of accountability: to name and shame jurisdictions judged to facilitate tax avoidance or secrecy, and to encourage corrective action. Since then, it has evolved from a controversial novelty into a fixture of global financial diplomacy, one that carries tangible reputational and practical consequences. Being listed complicates banking relationships, raises questions for investors, and draws heightened attention from tax authorities worldwide; being removed signals that a jurisdiction has brought its practices into line with agreed global benchmarks.

For Panama, the journey has been particularly long and scarred by reputation. The revelations of 2016 damaged its standing as an international financial centre deeply. Since then, successive governments have moved to strengthen oversight, penalise evasion, and rebuild trust. No single announcement erases that history entirely, nor does it mean every concern has vanished overnight. What it does confirm is that the country has met the specific, demanding tests set by the EU an external validation that matters to investors, partners, and citizens alike.

A Turning Point for Global Financial Standards

Ultimately, these delistings tell a broader story: that global standards are shifting, and jurisdictions are adjusting to a world where financial opacity is becoming harder to sustain. Some have moved quickly; others remain entrenched. Panama and Vietnam’s exit from the blacklist is not the end of scrutiny, but it is a clear turning point a demonstration that reform, however slow or contested, can lead to recognition, renewed standing, and a different kind of place in the global financial order.