The governments of Ecuador and Panama confirmed in mid-August 2025 that they signed a Tax Info Alternate Settlement. Ecuador’s tax authority then eliminated Panama from its nationwide record of tax havens, which reduces the tax burden on cross-border transactions.
This transformation lowered the withholding tax price on providers paid from Ecuador to Panama. Corporations beforehand confronted a 37 % price as a result of Panama was listed as a tax haven.
With the brand new classification, funds now face the usual 25 % non-resident price. Ecuador’s Inside Income Service confirmed this adjustment, which instantly reduces the price of doing enterprise between the 2 international locations.
Authorities spokesperson Carolina Jaramillo stated Ecuador sees the settlement as a step towards larger transparency and as a foundation for stronger bilateral ties.
She said that the transfer creates house for a doable free commerce settlement with Panama. President José Raúl Mulino of Panama praised Ecuadorian President Daniel Noboa for supporting the deal, noting that it resulted from months of direct talks.
Panama good points worldwide credibility from this removing. President Mulino has set the target of clearing his nation from all discriminatory lists.
His authorities can be pursuing accession to the Organisation for Financial Co-operation and Growth, which requires excessive requirements of tax transparency.
Ecuador–Panama Tax Deal Boosts Commerce and Companies
Panama has already superior comparable agreements with the USA and the European Union, which helps enhance its picture in monetary markets. For Ecuador, the change carries clear financial advantages.
The commerce steadiness with Panama is constructive, and the discount in service tax charges lowers prices for corporations that depend on logistics, finance, {and professional} providers managed by means of Panama’s regional hubs.
Ecuador exported items value about 5.8 billion {dollars} to Panama in 2024, largely hydrocarbons, in response to UN COMTRADE information. Panama, by means of its Colón Free Zone, re-exported items value over 12 billion {dollars} in the identical 12 months, underlining its position as a regional gateway.
Decreasing the withholding price makes it cheaper for Ecuadorian corporations to purchase delivery, insurance coverage, and consulting providers. Enterprise leaders additionally argue that being off the tax haven record permits simpler entry to financing routed by means of Panama’s banks.
These sensible outcomes clarify why officers describe the choice as greater than symbolic. Each governments signaled that the subsequent steps might contain formal discussions on a bilateral free commerce settlement.
Officers stated that cooperation in logistics and vitality stays a shared precedence, which aligns with the financial actuality of each nations. The removing of fiscal boundaries now clears the way in which for such negotiations.
The choice exhibits how focused fiscal coverage can straight decrease prices, enhance transparency, and open channels for wider commerce agreements.
