Dutch legislators step up tax demands on multinationals
The Hague — Dutch legislators have launched an inquiry into how to make multinationals pay their fair share of tax, after public criticism that government reforms do not go far enough.
Scores of multinationals use the Netherlands to pare their tax bills, but the Dutch, who bore tax hikes after the financial crisis, are growing increasingly hostile to minimising company tax, which is legal and has gone unchallenged for decades.
Parliamentarians voted on Tuesday to establish an expert commission to examine how to make taxing multinationals “more fair” after Netherlands-based Shell recently acknowledged it had paid virtually no Dutch corporation tax in 2018.
Royal Dutch Shell refused to release details of its unique advance tax ruling with the Dutch government at a recent hearing of a parliamentary panel on taxation.
“The Dutch people take note that one pays income tax when earning a minimum wage but some multinationals make [a] profit and pay no taxes,” Pieter Omtzigt, the Dutch Christian Democrat parliamentarian who instigated the vote, said.
Government data show that more than €4-trillion of assets, more than four times the size of the Dutch economy, are parked with thousands of letter-box companies in the Netherlands. Many are used to route profits to low-tax countries.
“During election times, parties committed to limit the flow. The government needs to deliver,” Omtzigt said.
Menno Snel, the top Dutch official in charge, said the government intends to introduce reforms to break with the image of “deal-making in shady rooms”.
Snel will target letter-box companies with a tax on outgoing payments to discourage €22bn of royalty payments moving through the Netherlands, chiefly to Bermuda.
“If a company is trying to come ashore here for only one reason, to channel capital away, I make sure that this company is not feeling welcome any more,” Snel said.
He also wants to publish “advance tax rulings” previously decided in secret by tax authorities for companies, who use them to establish the legality of tax structures.
Legislators have said the government measures fell short of what is needed and called for more details to be published of tax rulings, including the company name.
“Many people feel they paid for the financial crisis,” said Bart Snels, a Green party MP. “Now they see they still have to pay higher taxes. VAT has risen and corporate taxes are lowered. They are angry.”
Paul Tang, a member of the European parliament, said the Dutch reforms were “highly symbolic”, pointing to the gradual lowering of the main corporate tax rate to 20.5% in 2021. “They just keep on continuing the race to the bottom.”
Philips and AkzoNobel told the parliamentary hearing that they also paid little or no Dutch corporation tax in 2018. Unilever, which routinely discloses its taxes, paid a modest €30m.
Snel said that while firms should still have “red-carpet treatment”, the Netherlands would not be “only tax-friendly”.
The Tax Justice Network, which campaigns for transparency, has placed the Netherlands near the top of a global ranking of countries that helped to cut corporate tax bills.
“Fifteen years ago, no-one in the Netherlands knew this tax avoidance was going on,” Francis Weyzig, a tax expert at anti-poverty charity Oxfam, said. “They know now. And they are angry.”