In Obama’s blacklist once, but leading fight against tax avoidance today: Dutch tax official

Netherlands may have been on Obama’s blacklist in 2009, but it now leads the fight against tax avoidance, Marnix van Rij, Dutch State Secretary for Tax Affairs has said.

Van Rij was speaking at the IFA European Region Conference held in Amsterdam, Netherlands on July 5-7, 2023.

Van Rij said that “when a freshly inaugurated President Obama announced to great fanfare in 2009 that he intended to combat tax avoidance, he had drawn up a list of notorious tax havens. Besides the Cayman Islands, Bermuda and Switzerland, he also mentioned the Netherlands.”

“This caused a wave of negative publicity here. Obama subsequently took back what he’d said about the Netherlands, but the damage had been done. The public outrage could no longer be contained,” he told the audience.

Van Rij said that BEPS has triggered a turnaround in tax policy for Netherlands. “We are the first EU country to put the Pillar 2 legislation before our Parliament with a view to it becoming effective as of the start of 2024,” he said.

He added: “Netherlands has implemented the ATAD 1 and ATAD 2 rules and others more stringently than the relevant EU directives require. We have unilaterally adopted national measures that primarily tackle tax avoidance. Our list of low-tax jurisdictions includes countries that levy corporate income tax at a rate of below nine percent. This is stricter than the European Union’s list.”

“We have revised our tax ruling policy, including policy on the publication of tax rulings. As of next year we will also levy an additional withholding tax on dividends paid to companies in low-tax jurisdictions and in abuse situations. This will make the Netherlands a less attractive location for shell companies. We aim to include anti-abuse clauses in all our tax treaties. The Dutch anti-abuse clauses go far beyond the internationally agreed minimum standard,” he continued.

Van Rij said that these are just a few examples of measures Netherlands is taking to fight tax avoidance.

Van Rij said that all the tax measures taken by the government to combat tax avoidance seem to be working. “The flow of money from the Netherlands to low-tax countries has reduced sharply. This can be seen in the data. Provisional figures indicate that the total flow of income to these countries has fallen by almost 85 percent from EUR 38.5 billion in 2019 to just under EUR 6 billion in 2021,” he said.

“The remaining EUR 6 billion consists largely of dividends, which will also be covered by the withholding tax from 2024 onwards. So, we expect a further reduction over time,” he told participants.

Van Rij said that many important measures are still ahead.