The Netherlands welcomes progress in the fight against international tax avoidance

State Secretary Wiebes of the Ministry of Finance welcomes the OECD's interim report on transparancy in tax matters and possible measures against tax avoidance by multina-tionals. The interim report shows that the OECD and the G20 member states have achieved a lot of progress in the Base Erosion & Profit Shifting project. The Netherlands supports this project and is one of the forerunners in the international cooperation against tax avoidance.

International collaboration yielding results

The international cooperation against tax avoidance is yielding its first results. Exchange of infor-mation in tax matters is improving and steps have been taken in the form of measures against tax avoidance. These are the most salient messages of the Organisation for Economic Cooperation and Development (OECD) to the meeting of the Ministers of Finance of the G20 in Australia. The Netherlands welcomes the progress made in the fight against international tax avoidance.

The OECD presented an interim report within the framework of the two-year Base Erosion and Profit Shifting project. The Netherlands underlines the importance of the initial results of the BEPS project. The OECD and the G20 are working in this project on 15 Action Items against the opportunities for businesses that operate internationally to reduce their tax burden in ways that are at odds with the purpose of the legislation. Today, State Secretary Wiebes of the Ministry of Finance informed the Upper and Lower Houses, by letter, about the most recent developments.

International cooperation is the key

Wiebes emphasised that international tax evasion and tax avoidance can only be solved with international cooperation. “Businesses that operate internationally and other investors in particular make use of differences between national tax rules.” Unilateral measures will actually increase these differences, instead of dealing with them effectively. “This is why the Netherlands is actively attempting to solve this problem in international cooperation,” explained Wiebes. The Netherlands has chosen three fronts for its offensive.

Continuing the BEPS project

The first front is the international cooperation in the BEPS project. State Secretary Wiebes emphasises that next year the participating countries will have to work particularly hard. “International dialogue has really got off the ground, but a lot of elaboration is still needed. The Netherlands is taking great care to avoid the fragmentation of measures. In the end, the measures will have to be amenable to implementation and properly harmonised with one another.” It also means that countries will first have to enter into agreements about coordinated implementation. “If everyone were to "go it alone", it would remain a never-ending story. This is why the Netherlands will not be taking any unilateral measures.”

Expectations are that the BEPS project will be completed in the autumn of 2015 and only then will it be possible to review all the OESO recommendations in conjunction.

Advance guard is improving the fiscal exchange of data

In the second place the Netherlands is among the leaders when it comes to countries that want to improve fiscal transparency and the exchange of information. This is how countries can help one another to protect their tax base. Together with the OECD, the EU and the G20 countries, the Netherlands has actively contributed to developing a new global standard for the automatic exchange of financial account information, known as the Common Reporting Standard. The Netherlands has taken the lead, along with more than forty-five other countries, Early Adopters who are the first to use the new global standard. In connection with this the Netherlands will sign an agreement on 29 October 2014 at the Global Forum on Transparency & Exchange of Information.

The international aim is to cooperate with as many countries as possible, in order to quickly realise a real global system that will leave no room for undeclared savings and storing capital abroad, out of sight of the tax authorities.

Renewing the Dutch treaty network

Lastly, the Netherlands is actively renewing its tax treaty relationships. “We are currently revising more than a quarter of our treaty network, together with our treaty partners. We will take advantage of the opportunity of countering the abuse of treaties.” An important source of inspiration is the work of the OECD in the field of treaty shopping. In a phased plan, the Ministry of Finance is examining treaties and taking measures to avoid abuse. This is something that had already been proposed in the Fiscal Treaty Policy Memorandum 2011.

Last year the Netherlands began revising its treaty relationships with twenty-three developing countries. Discussions are also currently being held with other countries within the regular (re-) negotiating programme.

“The Netherlands has one of the best tax treaty networks in the world. These efforts will ensure that the treaty network is future-proof. And the treaty network will remain a mainstay of the fiscal investment climate, and citizens and businesses alike will be able to reap the benefits”.