Islands appear on new Netherlands tax haven blacklist

Posted: 04/01/2019

Jersey and Guernsey have both been included on a new list of low-tax jurisdictions published by the Netherlands as a part of its campaign against tax avoidance.

The list, published by the Dutch government at the end of last year, highlights 21 jurisdictions deemed to have low-tax regimes. 

It includes the five jurisdictions currently blacklisted by the European Union – American Samoa, US Virgin Islands, Guam, Samoa, and Trinidad and Tobago. But it also includes another 16 jurisdictions, including the British Virgin Islands, Jersey, Guernsey, the Isle of Man and the Cayman Islands, which either have no corporation tax or a corporation tax rate lower than 9%.

The Netherlands' State Secretary for Finance, Menno Snel, said in a government statement: "By drawing up its own stringent blacklist, the Netherlands is showing that it is serious in its fight against tax avoidance."

The government said the list would be used in relation to three measures to combat tax avoidance:
• A newly announced measure on controlled foreign companies aims to prevent companies avoiding tax by moving mobile assets to low-tax jurisdictions.
• A conditional withholding tax on interest and royalties will apply from 1 January 2021, so that companies registered in the blacklisted jurisdictions pay 20.5% tax from 2021 on interest and royalties received from the Netherlands, preventing funds being channelled to tax havens through the Netherlands.
• The Tax and Customs Administration will no longer issue rulings on transactions with companies based in jurisdictions on the list.

Dominic WheatleyAccording to the Dutch government, the list will be updated each year. If, when the EU updates its list in the first quarter of this year, jurisdictions are added that are not on the Dutch list, the measures will also apply to these jurisdictions.

Guernsey Finance Chief Executive Dominic Wheatley (pictured right) commented: “The Netherlands is not the only EU member state to introduce its own tax blacklist of jurisdictions.

"However, now the EU is taking a collective approach to this issue. Late in 2017 it announced a list of jurisdictions it considered were non-cooperative or needed to improve transparency standards. Guernsey has long called for a fair, consistent and objective EU approach on this issue.

“Guernsey has committed to strengthen economic substance requirements in line with EU guidance, and remains confident of the outcome of that process, which we expect in the next few months.

“When the position is confirmed, it will be an important step in Guernsey’s reputation as a well-regulated and respected place to do business.”

GeoffCook_JerseyFinance_2018Geoff Cook (pictured left), CEO of Jersey Finance, said: "It's disappointing this list has been packaged up as a blacklist, when it's based only on tax rates, with no regard to regulatory standards. Jersey is a leader when it comes to tax compliance, cooperation and transparency, something that's been verified time and again by the OECD, the FATF and indeed the EU. 

"To be clear, Jersey's zero tax rate enables Jersey to offer a tax-neutral environment to support international investment, where no tax is levied in Jersey but tax is still paid everywhere else it is due. It has nothing to do with tax evasion."

He added: "It's important this list isn't confused with the wider EU Code of Conduct Group's assessment of third countries, with which Jersey has fully engaged, most recently by introducing economic substance legislation.

"These measures are largely directed at multinationals that have holding structures in the Netherlands and are principally designed to clarify the Dutch approach to how withholding tax is applied to foreign companies. As such, we don't think it will have much of an impact on Jersey.

"Jersey has a good relationship with and will continue to work with the Netherlands as we continue to support international financial flows professionally and add value to the European and global economy."

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