Panama has passed a law requiring multinational shell companies to prove real local activity or pay tax, a bid to exit the EU's non-cooperative list.
Key Facts
—The law. Panama enacted Law 526 on May 28, adding economic-substance rules to its tax code for multinational groups.
—The test. Entities earning foreign passive income must now prove real local activity, or lose their tax exemption.
—The penalty. Those that cannot show substance face a 15 percent tax on that foreign passive income.
—The goal. The aim is to get Panama off the European Union’s list of non-cooperative tax jurisdictions.
Panamá aprueba un impuesto de 15% a multinacionales para salir de una lista negra de la UE
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