The Dutch government is reviewing double taxation treaties with developing countries to determine if they are unfair and should be renegotiated, the State secretary of finance minister, Frans Weekers, told Reuters.
The decision to examine the treaties, some of which date back to the 1950s, came after several studies found that emerging economies are losing revenue due to low tax rates set in the deals.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The Dutch government’s assessment comes in wake of growing international effort to halt tax dodging by multinationals, reports Reuters.
The Netherlands has more than 90 double taxation agreements. Most of the international corporations, including 80 of the world’s largest, use the Netherlands to re-route profits from dividends, royalties and interest, often paying no withholding tax in the country of origin.
From the Netherlands, capital can be transferred to tax havens, often reducing tax rates to below 10%. The use of holding companies known as "brass-plaque" companies has led to annual capital flows of 8 trillion ($10.44 trillion), or more than 10 times annual Dutch GDP.
A spokesman for the ministry for development said that the government commissioned the outside study into its dual taxation agreements (DTA) with Bangladesh, Ghana, Uganda, Zambia and the Philippines. It was launched shortly after Mongolia cancelled its treaty with the Netherlands, accusing the Dutch of facilitating fiscal avoidance.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData"We are looking at whether these treaties are possibly damaging for these countries. We are looking (to see) if they can be misused and if there is a level playing field," Weekers told Reuters.
Weekers said the study would determine if rich countries have won better terms than developing ones.
