Officials express doubts on dividend tax abolition in secret memos

Officials from the Ministry of Finance expressed serious doubts about the abolition of the dividend tax during the Rutte III government formation, according to secret memos on this topic that the government released under pressure on Tuesday, AD reports.

In the memos, the Ministry of Finance warned that the abolition of dividend tax increases the risk of the Netherlands becoming a tax evasion country. International companies could use the Netherlands to reduce their tax burden. "That is not in line with the Dutch commitment to combating tax evasion and bad for the image of the Netherlands", the Ministry wrote, according to the newspaper. The Finance Ministry advised rather reducing corporation tax. And said that abolishing the dividend tax will "mainly serve the foreign state treasury" because international companies can often settle their tax n their own country. All in all, this leads to a higher tax burden for domestic tax payers.

Officials from the Ministry of Economic Affairs, on the other hand, recommend abolishing the dividend tax. According to them, it would have a positive effect on the business settlement climate in the Netherlands. Both Ministries agree that the measure can only succeed if there is an extra tax for letterbox firms. As that tax is included in the government agreement, the Rutte III cabinet seems to have listened to that advice.

A total of 12 secret documents were released on the topic of the dividend tax abolition. They show that scrapping this tax was the VVD's plan, according to AD. And that Prime Minister Mark Rutte asked former Finance State Secretary Eric Wiebes to draw up a document that he could use to convince the other three parties' negotiators during the government formation. The documents show that consultations were held with Unilever on this topic in June last year. Opposition parties repeatedly asked the government whether big companies - which will benefit from the abolition of dividend tax - lobbied for this measure.

The Tweede Kamer, the lower house of Dutch parliament, will debate these documents with Prime Minister Rutte on Wednesday afternoon. It is expected to be a difficult debate for the Prime Minister. The left-wing opposition parties in particular are furious. 

According to PvdA leader Lodewijk Asscher, the documents create a "disconcerting image". "The government again opted for the multinationals and not for the people. And everyone helped cover it up. People must always be certain of honest information", he said, according to AD. "The Dutch taxpayer pays the bill to give some multinationals a favor", Asscher continued. "The documents show that this is happening at the request of Unilever and Shell." According to him, this is why the government wanted "to hold back the documents so frantically". 

GroenLinks leader Jesse Klaver wrote on Twitter: "Giving away 1.4 billion euros per year abroad, while your own civil servants strongly advised against it. What was the cabinet thinking? How can you so obviously choose large multinationals over people."

"If he had only listened to the advice of his own officials, this would never have happened", SP leader Lilian Marijnissen said to NOS about Rutte. She wrote on Twitter: "I understand why Rutte wanted to keep these documents under wrap. Once again he is unmasked as a big-capital errand boy. 1.4 billion from Dutch taxpayers in the pit to serve multinationals."