According to sources in The Hague, the Dutch Cabinet will announce on “Prinsjes Dag” that Dutch multinationals will have to pay profit tax. Companies like Shell, AkzoNobel or Unilever now pay little or no profit tax, because they make use of a tax arrangement. ‘In short, this means that if these companies make foreign investments that involve large amounts of money, and these investments ultimately turn out to be a flop, the costs thereof can be taken into account as a loss in the Netherlands,’ explains Peter Kavelaars, Professor of Fiscal Economics at Erasmus School of Economics.
This arrangement was created at the time so that Dutch companies would not relocate. Kavelaars does not expect companies to move abroad, ‘because this will be so drastic and it would outweigh the fiscal advantage. But I do think that they will look into the possibility of deducting some liquidation losses somewhere abroad. This simply means that, if successful, the activities will be carried out by foreign subsidiaries. Whether or not there is room for this in other countries remains to be seen.’
Furthermore, according to Kavelaars, the questions is where the benefits form abolishing the arrangement will end up and whether it is a benefit at all. ‘It is always good to keep in mind that companies are always supposed to pay taxes, but that all taxes are in some way or another passed on to consumers. In principle, consumers pay all taxes, including those of companies via the prices. It is the distribution of the tax burden that could turn out differently.’
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Listen to the entire item on BNR Nieuwsradio, 11 September 2019 (in Dutch).
