Dutch double taxation treaties lead to huge revenue losses

The Netherlands serves as a conduit country for international tax dodging, leading to huge revenue losses in developing countries, a Dutch research agency stated in a report published Tuesday. According to the report, published by SOMO under the name "Should the Netherlands sign tax treaties with developing countries?", Dutch double taxation treaties (DTA's) lead to huge revenue losses in developing countries because they reduce taxation on passive income. "This is in contradiction to the Dutch government's policy coherence for development," SOMO said in a statement. Research showed that out of the 36 researched countries, 28 countries together lose 771 million euros (1,023 million U.S. dollars) on dividend and interest tax income alone every year. But SOMO thinks that the total revenue loss resulting from Dutch DTAs will be much higher. "This is because tax avoidance through profit shifting with the use of royalties and capital gains are not included in the calculations," the statement said. "The Dutch government's claim that treaties are beneficial for developing countries is simply not true. This report shows that Dutch tax treaties have a seriously negative impact on poor countries' revenue and that there is no evidence that these tax losses are compensated with an increase in investment as a result of having DTAs," said SOMO researcher Katrin McGauran. Last year, Mongolia annulled its tax agreement with The Netherlands following claims that the deal allows multinationals to avoid paying tax. State Secretary of Finance Frans Weekers and a majority of the House recently denied that the Netherlands is a tax haven. According to Weekers, Dutch tax treaties with developing countries have a beneficial effect because they provide more investment.