Speech door staatssecretaris Snel op de internationale bijeenkomst ‘Conférence Law and multilateralism’

Toespraak | 05-11-2019

The Netherlands is a relatively small country with an open economy. We are a trading nation, so foreign markets are vital for Dutch businesses. This international outlook is reflected in the Dutch tax system.

For a small, open country like ours, it’s important that our tax system doesn’t stand in the way of companies that want to do business abroad. And that it helps make the Netherlands an attractive investment climate for foreign businesses.

The flipside of such an open system is that it can also attract those who want to exploit it. Globalisation and digitalisation only increase this risk. So the question, especially for a small country like the Netherlands, is: how do you deal with this? One the one hand, you could say we adhere to all our international obligations and so we’re free to have a tax system that creates as few barriers as possible. On the other hand, you could argue that we need to look critically at what steps we can take to prevent the system being abused. And of course there’s a risk that such steps could have a real impact on investors.

Despite this, the Netherlands has chosen the latter option. You could look at it as ethics winning out over the spirit of enterprise. But actually I think that by closing loopholes, we’re actually helping businesses. Both at home and abroad. In any case, no one benefits if the Netherlands’ reputation is damaged because its tax system is being exploited. On the contrary, that could cause harm to all the well-intentioned companies doing business in the Netherlands. What’s more, if we want to encourage companies and individuals to pay their taxes, I believe we must combat any abuse of the system.

That’s why we’re taking measures at both international and national level. This will help us protect not only Dutch tax revenues, but also tax revenues in other countries. We don’t just want to stop the Dutch tax base being eroded. We also want to prevent the Netherlands being used to erode the tax base in other countries. That’s why the Dutch bill to introduce a withholding tax of 20 per cent or more on all interest and royalty flows to low-tax jurisdictions is so crucial. On 1 July we stopped issuing rulings on transactions involving low-tax jurisdictions that have a corporation tax below 9 per cent. Our commitment is clear from the fact that the list of countries that the Netherlands deems low-tax jurisdictions is currently longer that the EU’s list of non-cooperative jurisdictions. Right now, our list comprises 16 countries, including the Bahamas, Bermuda and the Cayman Islands.

In addition, when we implement international agreements we go further than the minimum standards whenever necessary. And that includes OECD measures to combat tax avoidance. Few countries go as far as the Netherlands when it comes to opening up bilateral treaties through the OECD Multilateral Instrument. We also want to take further steps at international level by actively working on the OECD’s economic digitalisation project. And we share the goal of having global solutions to tax avoidance by 2020.

Although the Netherlands is relatively small and we continue to value an open tax system, it is up to us to prove that we can change the image of the Netherlands as a tax haven. We can do that by putting real measures in place. And to do it with more conviction than other countries, by going one step further than the rest. What’s more, I’m certain that changing that image will benefit our investment climate. And we need to keep up our efforts. Because it’s the right thing to do. And because we feel it’s our duty, including at international level, to consign this image to our shared history. That’s what I want and that’s what I aim to do.

Thank you