NL To Rethink Tax Treaties

State Secretary of Finance Minister Frans Weekers said the government is reviewing its double taxation treaties with developing countries to decide if they are inequitable and if they need revisions on the terms.

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The plan to reassess the treaties was initiated when several studies confirmed an income drop among rising economies due to low tax rates fixed in the agreements. It also aims to stop tax evasion by multinationals, which has become a rising attempt worldwide.

The Netherlands maintains over 90 double taxation agreements. Thousands of international companies, including 80 of the biggest in the world, use the Netherlands to redirect income from dividends, royalties and interest, usually without any retention tax from the country it came from.

Capital can be moved to tax havens from the Netherlands, with a frequent cut on tax rates to less than 10%. The application of holding companies branded as “brass-plaque” companies has resulted to capital flows of €8 trillion every year. This is 10 times above the yearly Dutch GDP.

A representative from the Ministry for Development said the government authorized the outside study into its dual taxation deals with Ghana, Uganda, Bangladesh, Zambia and the Philippines. The study began following Mongolia’s termination of its treaty, condemning the Dutch of making financial evasion easy.

“We are looking at whether these treaties are possibly damaging for these countries,” Mr. Weekers told Reuters. “We are looking [to see] if they can be misused and if there is a level playing field.”

Source: Reuters