Tuesday, June 23, 2009

Symposium on Tax Justice in Dutch Senate

A guest blog from our colleagues at Somo in the Netherlands:

This week the Standing Committee on Finance of the Dutch Senate organised a Symposium on Tax Justice, aiming to create an opportunity to discuss and evaluate tax practice in the Netherlands from different perspectives and in an international context. The Symposium was divided into four sections, respectively on tax havens, bank secrecy and bank privacy, tax evasion and avoidance in relation to developing cooperation, and on tax planning in relation to Corporate Social Responsibility (CSR).

The occasion for the Symposium was the publishing of the book “Tax Justice – Putting Global Inequality on the Agenda” Francine Mestrum, one of the editors, presented the book to Dutch Deputy Minister of Finance Jan Kees de Jager and explained the consequences of tax evasion and avoidance for developing countries. This was a relatively isolated narrative in the symposium, since the other speakers did not consider the effects of tax matters on developing countries in their presentations - showing the absence of this aspect in the current international discussion.

In his opening statement, Mr. De Jager highlighted the importance of transparency and the efforts of the Dutch government to address the problem of tax havens by signing bilateral Tax Information Exchange Agreements (TIEAs - see more here.) He mentioned that the long-term goal of the Netherlands is to create a system of automatic information exchange.

Pascal Saint-Amans of the OECD also stressed the progress made on information exchange. He spoke of a new political momentum and stated that in February and March this year more had been achieved to increase transparency on tax than in the last 20 years. Both speakers focused on private money held in tax havens, leaving aside tax evasion and avoidance practices of multinationals. Albert Hollander, president of Tax Justice Netherlands, did bring up this issue and showed the opportunities for tax avoidance by multinational corporations that the Dutch tax system creates.

Eric Kemmeren, professor of Internal Tax Law at Tilburg University and an adviser for Ernst & Young, indicated it is time to change the tax system instead of fighting the symptoms of the current one. He explained a tax structure based on origin-based taxation of interest payments, presumed to reduce tax avoidance and to benefit developing countries (see more on source and residence taxation here.) He also argued that fair competition requires so-called ‘Capital and Labour Import Neutrality’ of taxes, that is, the taxes on a company should depend on where it operates, not on the nationality of its owners or workers. From this point of view, he argued that the new tax plans of Obama can be considered a step in the wrong direction.

Richard Happé, professor of Tax Law at Tilburg University, indicated that tax has become part of CSR, accelerated by scandals such as Enron or Parmalat. To him, good corporate citizenship is a matter of paying a fair share, which should be translated into transparency requirements and law. In contrast with Happé however, Jos Beerepoot, Head of Group Taxation of Unilever, was more reserved and stated the difficulties multinational companies face with regard to full transparency on paid tax on a country-by-country basis. He brought up the complexity and competitive sensitivity of tax information and stated his preference for better disclosure at the aggregate level.

For more information on the symposium, please see the website of the Senate (information in Dutch!) For the programme in English, please click here.

Soon the speakers' presentations, and a recording of the symposium, will be available on the Senate website too.

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