The Netherlands is to update its tax treaties with 23 poor countries to include provisions to stop the system being abused, foreign trade minister Lilian Ploumen and junior tax minister Frans Weekers announced on Friday.

The move follows several reports showing that developing countries are missing out of millions of euros in tax income because of tax avoidance treaties with the Netherlands.

For example, a report in June by multinational research institute Sono said ‘28 [poor] countries together lose €771m on dividend and interest tax income alone every year,’ because of Dutch tax treaties.

The Netherlands has tax treaties with 90 countries. ‘By making use of loopholes in tax treaties… companies can avoid paying tax,’ the ministerial briefing said. ‘This means poor countries miss out on tax revenue, funds they clearly need to pay for instrastructure and education.’

Worldwide

Weekers said the Netherlands alone cannot stop this happening and the issue needs to be tackled at a global level, following consultations with the OECD, G20 and EU.

In particular, the Netherlands plans to renegotiate a treaty with Zambia, which dates from 1977 and is ‘outdated’, the briefing said.

The most significant measure planned by the cabinet is to ensure letter box companies are more substantive and transparent, the Financieele Dagblad said.

They will need to have their own assets, a bank account, an accountant and the majority of the management board should live in the Netherlands. The company must also carry out actual economic activity.

The cabinet hopes these measures will head off criticism about shell companies locating in the Netherlands purely to take advantage of tax treaties.

Press release (English)

Earlier stories
The Netherlands is not a tax haven, says minister
Dutch tax treaties cost developing lands €700m, but earn us €3bn
Tax office raises Portuguese energy firm’s Dutch tax bill after protests
OECD adds fuel to debate over NL as a tax haven
MPs call for action on tax havens, plan should be ready by the summer
Shell and state bank ABN Amro are masters at tax avoidance
Research into letterbox companies is biased, say critics
Multinationals and French state companies use Dutch tax deals
Tax deals for letter box firms under fire, MPs demand change
Starbucks under fire in Britain over Dutch tax deal
EU wants an end to letterbox companies
Letterbox companies largely exempt from tougher rules
The Netherlands is a popular tax haven for FTSE 100 firms
Holland no longer a US tax haven
More tax levied over tax haven income
Multinationals and French state companies use Dutch tax deals
Tax deals for letter box firms under fire, MPs demand change
Starbucks under fire in Britain over Dutch tax deal
EU wants an end to letterbox companies
Letterbox companies largely exempt from tougher rules
The Netherlands is a popular tax haven for FTSE 100 firms
Holland no longer a US tax haven
More tax levied over tax haven income