'Tax haven the Netherlands’ as a problem for developing countries

The social debate about 'Tax haven the Netherlands' reminds the Ministry of Finance of its responsibility to ensure that developing countries do not suffer as a result of Dutch tax policy. This is supported by the programme broadcast by Zembla on 18 October 2009 and questions put in Parliament by the SP and PVV political parties. The work of SOMO forms the basis of this debate, including the report The Netherlands: A tax haven? and the establishment of Tax Justice NL.

Is the Netherlands a tax haven?

The Netherlands is a tax haven, not because taxes there are low, but because Dutch legislation and regulations make tax avoidance possible. Tax avoidance ensures that countries, especially those in the south, where tax systems function less effectively, miss out on important income. Such a system makes it very attractive for multinationals to establish their head offices here. 

Importance of taxes

Governments need tax income for public facilities such as infrastructure, education, healthcare and a social safety net. These are of major importance to national prosperity, for a good entrepreneurial climate and for economic development in the country. Businesses which also benefit from these public facilities should make a contribution towards them by paying a fair amount of tax in the country in which they are active. However, some companies use aggressive methods to avoid tax (through loopholes in the law) or even illegally evade tax. As a result of this, governments have fewer funds available for basic public facilities. Tax avoidance leads to unfair competition, because large multinationals often have more opportunities to avoid or evade tax than smaller, domestic competitors. In addition, such tax avoidance results in a shift of the tax burden to labour and consumption, which can be damaging to sustainable economic development.

Tax avoidance as a spearhead

Transparency about the tax policy of companies and reporting at the national level on tax payments are essential elements in combating tax avoidance by companies. After many years of effort by SOMO and other social organisations such as Attac, BothENDS, EVS, Fairfood, Oxfam NiZa, Novib, Oikos and TNI, it is a very important step that tax consultants take up these themes in order to drive back tax avoidance.

A dialogue has also been going on with various multinationals who consider tax avoidance to be in conflict with their social responsibilities. Major consulting firms, who work with ministries and companies, have asked SOMO to contribute its expertise within this dialogue. SOMO is carrying out ongoing work on this within the Tax Justice Network, a platform of various social organisations which work towards an honest and fair tax system.  

President Obama identifies the Netherlands as a tax haven

President Obama are also placed the Netherlands on the list of tax havens at the start of 2010. In view of the large number of letterbox companies established in the Netherlands, it is unlikely that America has made a mistake with regard to the facts when it states that the Netherlands is one of the countries in which American multinationals reported one third of their foreign profits in 2003. This nevertheless turned out to be a misunderstanding, according to the Dutch Minister of Finance. Whether SOMO's reports contributed to this statement by Obama? Who knows. In any case, they did not reduce the effect.

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