Panama Approves 15% Tax on Multinationals in Effort to Exit EU Tax Blacklist

By De Puy & Asociados

Panama has approved a new tax measure that imposes a 15% charge on certain multinational companies that fail to demonstrate sufficient economic activity in the country, as part of efforts to address concerns raised by the European Union regarding tax cooperation standards.

The measure establishes that companies covered by the regulation must prove that their operations have real economic substance in Panama. The concept requires businesses to demonstrate that their activities reflect genuine commercial operations rather than structures created mainly to obtain tax advantages.

The reform is linked to Panama’s objective of being removed from the European Union’s list of non-cooperative jurisdictions for tax purposes. The EU maintains this list as part of its framework to promote transparency, fair taxation and international cooperation on tax matters.

The new rules will apply from the 2027 fiscal year and include provisions related to the treatment of certain income derived from intangible assets developed in Panama, including trademarks and copyrights. The legislation also incorporates mechanisms related to foreign tax credits to address potential double taxation issues.

The reform follows international developments in tax regulation, including the global minimum tax agreement promoted by the Organisation for Economic Co-operation and Development (OECD) and the G20, which establishes a minimum effective corporate tax rate of 15% for large multinational groups.

For multinational companies with operations in Panama, the changes introduce additional compliance requirements related to the demonstration of local activities and corporate structures. The implementation of the rules will depend on future regulations and administrative procedures established by Panamanian authorities.

The measure forms part of a broader international trend toward greater transparency in corporate taxation, where jurisdictions are increasingly required to align their tax frameworks with international standards on economic substance, information exchange and the prevention of artificial profit shifting.