EU removes Panama and Viet Nam from non-cooperative tax list

Removal with continuing commitments

Council document 13854/26 revises the list through conclusions rather than amending a corporate tax rate or charging provision. Annex I now contains eight jurisdictions: American Samoa, Anguilla, Guam, Palau, the Russian Federation, Turks and Caicos Islands, US Virgin Islands and Vanuatu.^[1]

Panama has reformed its harmful foreign-source income exemption regime and obtained a new Global Forum review of information exchange on request. Viet Nam has also secured a new review after reforms. Their transfer to Annex II therefore recognises progress while leaving both subject to review of their information-exchange frameworks. Belize leaves Annex II after meeting its commitments.^[2]

Other unresolved commitments remain relevant to group compliance. Annex II records Brunei Darussalam’s deadline of 22 December 2026 to complete reform of its foreign-source income exemption, including capital gains, with retroactive effect from 1 January 2026. Viet Nam also retains a country-by-country reporting commitment for the autumn 2027 peer review.^[1]

Why MNE groups should reassess transactions

The listing mechanism connects to national defensive tax rules. Annex 4 of Council report 14114/19 identifies measures covering deductibility, controlled foreign companies, withholding tax and participation exemptions, while preserving Member States’ choices under domestic law. Paragraph 25 calls for adjustments after listing or delisting as soon as possible, depending on each measure and national lawmaking rules. Groups with Panama or Viet Nam entities should therefore check local effective dates before changing tax treatment.^[3]

There is also a reporting connection. Council Directive (EU) 2018/822 introduced Annex IV to Directive 2011/16/EU. Hallmark C(1)(b)(ii) addresses arrangements involving deductible cross-border payments between associated enterprises where the recipient resides in a jurisdiction assessed collectively by Member States or the OECD as non-cooperative. Delisting should therefore prompt a review of the relevant hallmark, without assuming other reporting triggers disappear.^[4]

The practical task is to update jurisdiction screening and transaction review while retaining evidence of the applicable list and domestic rules. The adopted conclusions change the EU assessment; they do not themselves repeal each Member State’s tax measures.^[1][3]