Panama: Corporate tax evasion threatens to bankrupt the country

Panama's image as a tax haven still clings to its skin. According to the latest official data from the Directorate General of Taxation (DGI), La Estrella de Panamá reports that the lost revenue due to companies' non-compliance with their tax obligations—corporate income tax alone—amounts to more than $8.7 billion per year (approximately €7.6 billion), or four times the revenue generated by the Panama Canal's operations in 2024.

According to the Panamanian daily, companies, along with other legal entities, represent only 36% of the total income tax collected at the national level, compared to 64% for individuals.

Faced with this imbalance, La Estrella continues, several economists and financial sector experts are (once again) sounding the alarm and calling for "urgent measures" to correct this fiscal inequality. They also highlight a critical shortfall for the State, which, moreover, "struggles to meet the needs of the population, especially in a context of serial protests " against a backdrop of social and environmental demands.

Furthermore, this significant tax evasion by companies on Panamanian soil is part of a climate of growing instability in public finances. In May, the newspaper reported that the state continued to resort to borrowing to finance subsidies and public salaries, deploring “still insufficient revenue collection” and current savings in the red reaching -2.9 billion dollars (approximately -2.5 billion euros) by December 2024.

Quoted by La Estrella, economist Ernesto Bazán warns of a possible collapse of the national economy in the coming years if the issue of tax evasion is not completely resolved: “We must be aware that if public finances are not put in order, the country will end up bankrupt within eight to twelve years,” comparing the Panamanian situation to that of a person living fictitiously on their credit card “and who will end up totally impoverished,” reports La Estrella .

In February, the European Union decided to keep the Central American country on its blacklist of tax havens , demanding a more stringent monitoring system. This decision provoked outrage from the president of the Chamber of Multinational Enterprises (Casem), Tony Roldán, who deplored an attack on the country's "international prestige." This list was established in 2017, a few months after the Panama Papers leaked, which revealed a robust tax evasion system developed by numerous foreign companies.