Today, EU Ministers of Finance (ECOFIN) meet to reach agreement on the EU Anti-Tax Avoidance Directive. Some of the proposed measures could deter EU-based multinationals from shifting profits into tax havens. Unfortunately, the proposals have been strongly watered down. The meeting of Ministers will be chaired by the Netherlands, which holds the EU presidency until end of June.
According to an Oxfam analysis of a European Commission data, the Netherland is a top tax haven for corporations. 17 out of 33 harmful tax practices listed by the EU executive were identified in the Netherland.
The European Commission report, published in January, outlined 33 indicators of harmful tax practices allowing multinational companies to avoid tax. Oxfam Novib took on the task of identifying the worst offenders when it comes to facilitating corporate tax avoidance. Ranking EU member states by the number of indicators identified for each country: the Netherlands (17 indicators), Belgium (16 indicators) and Cyprus (15 indicators).
In addition, the Netherlands is host to more than 14,000 money-channelling (conduit) companies, most of them letterbox firms. In 2013, 83% of all incoming and 78% of all outgoing foreign investments passed through such conduit companies in this country. These findings came at a time when the Netherlands has a crucial role (holding the Council presidency).
Oxfam’s policy advisor on tax justice, Esmé Berkhout, said: “It is ironic to have a country that is a top EU corporate tax haven leading the bloc’s discussions on anti-tax avoidance measures.”
This Dutch practice example must act as a reminder that strict rules preventing tax avoidance are vital.