{
  "title": "Dutch State Secretary for Finance Menno Snel on Tackling Tax Avoidance",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2019/12/dutch-finance-menno-snel-on-tackling-tax-avoidance",
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  "summary": "F&D’s Maureen Burke interviews Menno Snel, the Dutch State Secretary for Finance, on stamping out tax avoidance and evasion, and positioning the Netherlands at the forefront of the green taxation movement.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- F&D’s Maureen Burke interviews Menno Snel, the Dutch State Secretary for Finance since October 2017, on efforts to stamp out tax avoidance and evasion and to position the Netherlands at the forefront of the green taxation movement.\n- Central themes: preventing the Netherlands being used as a conduit for tax evasion, targeting letterbox companies, increasing transparency of tax rulings, coordinating internationally (OECD, European partners), and greening the tax system."
    },
    {
      "heading": "Measures to fight tax avoidance and evasion",
      "content": "- Created an annual blacklist for countries with a tax rate lower than 9 percent.\n- Withholding tax applied on dividends and royalties when paid to countries on the blacklist; this withholding tax does not apply to capital flows to countries with a tax rate higher than 9 percent.\n- From next year on, the Netherlands will collect a withholding tax of more than 20 percent on these kinds of streams.\n- Objective: make it very unlikely companies will route capital through the Netherlands and end the country’s role as a “conduit country.”"
    },
    {
      "heading": "Letterbox companies and capital flow statistics",
      "content": "- Definition: letterbox companies are generally foreign-owned entities without any real presence or employees that use the Netherlands as an intermediary.\n- Targeting: all measures are aimed at letterbox companies that do not represent real economic value.\n- Exact figures preserved from the interview:\n  - \"More than 200 billion euros every year in form of dividends, interest flows, royalties\"\n  - \"More than 22 billion euros flow directly from the Netherlands into countries with a tax rate lower than nine percent.\"\n- Legislative timing: the legislation is expected to go into effect beginning on January 1, 2021."
    },
    {
      "heading": "Tax rulings, transparency, and eligibility",
      "content": "- Tax rulings provide advance certainty on taxation based on law for companies that behave like A, B, and C.\n- New limits and transparency measures:\n  - Shell companies will not receive advance certainty from tax authorities.\n  - Companies whose sole purpose is to lower another country’s tax burden will not receive advance certainty.\n  - All rulings by Dutch tax authorities are now published.\n- Netherlands implements more than the legally required minimum on new laws tackling tax avoidance proposed at the European level.\n- OECD has called the Netherlands a front runner in the fight against tax avoidance."
    },
    {
      "heading": "International coordination and outreach",
      "content": "- Emphasis on multilateral action: engaging the OECD and asking other countries to follow the Netherlands’ example.\n- Proposal: if other European countries adopt taxing financial flows to countries on a blacklist, the continent could be prevented from being used as a conduit for tax evasion.\n- The ministry is negotiating meetings to find support; OECD recently presented a big paper on how to combat tax evasion.\n- Acknowledgment of increasing monitoring difficulty as the world becomes more digitalized."
    },
    {
      "heading": "Greening the tax system and climate-related fiscal measures",
      "content": "- National climate change accord finalized; many proposals are fiscal.\n- Measures and proposals:\n  - One of the first countries to put in place a carbon emissions tax for industry.\n  - Preparing legislation to be put forward in the first quarter of next year.\n  - Introduced a minimum carbon price for electricity-producing sectors.\n  - Actively advocating for a European aviation tax; if unsuccessful at EU level, a national aviation tax will be introduced in 2021.\n  - Hosted an international conference in The Hague last June and published a paper discussing options from a kerosene tax to a ticket tax.\n  - The Netherlands, together with 8 other EU countries, put out a statement recently calling on the new European Commission to come up with a proposal for some form of aviation tax.\n- Rationale: significant externalities of carbon emissions and lack of taxation on aviation and shipping fuel/electricity."
    },
    {
      "heading": "Digital economy and tax policy stance",
      "content": "- Challenge: defining where profits are made in a digitalized economy (examples: brand vs. location of sale).\n- Position on digital services tax:\n  - Prefers a multilateral solution via the OECD rather than individual countries instituting national digital services taxes.\n  - Believes working with more than 160 countries is preferable even if it takes more time."
    },
    {
      "heading": "Taxation philosophy",
      "content": "- Core principle: fairness—everyone must pay their fair share (big companies and small companies, individuals and corporations, poor countries and rich countries).\n- Fairness underlies actions on tax evasion, tax avoidance, and greening the tax system.\n\nInterview with Menno Snel, F&D Magazine (Maureen Burke).\n\n---\n\n\nSource: https://www.imf.org/en/publications/fandd/issues/2019/12/dutch-finance-menno-snel-on-tackling-tax-avoidance"
    }
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    "Authors: MAUREEN BURKE",
    "Published: December 1, 2019",
    "F&D’s Maureen Burke interviews Menno Snel, the Dutch State Secretary for Finance since October 2017, on efforts to stamp out tax avoidance and evasion and to position the Netherlands at the forefront of the green taxation movement.",
    "Central themes: preventing the Netherlands being used as a conduit for tax evasion, targeting letterbox companies, increasing transparency of tax rulings, coordinating internationally (OECD, European partners), and greening the tax system.",
    "Created an annual blacklist for countries with a tax rate lower than 9 percent.",
    "Withholding tax applied on dividends and royalties when paid to countries on the blacklist; this withholding tax does not apply to capital flows to countries with a tax rate higher than 9 percent.",
    "From next year on, the Netherlands will collect a withholding tax of more than 20 percent on these kinds of streams.",
    "Objective: make it very unlikely companies will route capital through the Netherlands and end the country’s role as a “conduit country.”",
    "Definition: letterbox companies are generally foreign-owned entities without any real presence or employees that use the Netherlands as an intermediary.",
    "Targeting: all measures are aimed at letterbox companies that do not represent real economic value.",
    "Exact figures preserved from the interview:",
    "Legislative timing: the legislation is expected to go into effect beginning on January 1, 2021.",
    "Tax rulings provide advance certainty on taxation based on law for companies that behave like A, B, and C.",
    "New limits and transparency measures:",
    "Netherlands implements more than the legally required minimum on new laws tackling tax avoidance proposed at the European level.",
    "OECD has called the Netherlands a front runner in the fight against tax avoidance.",
    "Emphasis on multilateral action: engaging the OECD and asking other countries to follow the Netherlands’ example.",
    "Proposal: if other European countries adopt taxing financial flows to countries on a blacklist, the continent could be prevented from being used as a conduit for tax evasion.",
    "The ministry is negotiating meetings to find support; OECD recently presented a big paper on how to combat tax evasion.",
    "Acknowledgment of increasing monitoring difficulty as the world becomes more digitalized.",
    "National climate change accord finalized; many proposals are fiscal.",
    "Measures and proposals:",
    "Rationale: significant externalities of carbon emissions and lack of taxation on aviation and shipping fuel/electricity.",
    "Challenge: defining where profits are made in a digitalized economy (examples: brand vs. location of sale).",
    "Position on digital services tax:",
    "Core principle: fairness—everyone must pay their fair share (big companies and small companies, individuals and corporations, poor countries and rich countries).",
    "Fairness underlies actions on tax evasion, tax avoidance, and greening the tax system."
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