The Netherlands on June 22 announced it has renegotiated tax treaties with Ethiopia, Ghana, Kenya, and Zambia to add antiabuse provisions to the treaties, and said that it hopes to add antiabuse clauses to tax treaties with 23 developing nations.
Moreover, talks are now underway with seven developing countries and the expectation is that “several” will agree to a renegotiated tax treaty containing an antiabuse clause before year end, the government said.
“We’re now starting to see real progress. It’s only fair that a company should pay a realistic amount of tax in the country where its operations actually take place,” said Minister for Foreign Trade and Development Cooperation Lilianne Ploumen.
The announcement follows an April 23 notice that The Netherlands signed a revised tax treaty with Malawi which, according to the government, “contains antiabuse provisions to prevent the benefits of the treaty being used solely to avoid paying tax.” The government said the antiabuse provisions in the renegotiated Malawi treaty relate to taxes on dividends, interest, and royalties.
The government also said Dutch tax administrators are instructing Ghanaian tax administrators on how to audit multinational firms through the OECD Tax Inspectors Without Borders program and are assisting developing nations with negotiations on the OECD/G20 base erosion and profit shifting project.
Moreover, The Netherlands is involved in the “Addis Tax Initiative,” the government said, designed to provide resources to increase the tax capacity in developing nations. The initiative will be unveiled at the Financing for Development summit in Addis Ababa in mid-July.
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Why wouldn’t Netherlands wait for the OECD multilateral treaty to do this ? Much easier than renegotiating 23 treaties? In the release on the Malawai treaty, the words “solely to avoid paying tax” are used to describe the antiabuse clause – is it that the Netherlands is only ok with a lesser standard for an antiabuse clause than what will be in the multilateral treaty?