SP demands openness on tax on multinationals

22 February 2008

SP demands openness on tax on multinationals

When it comes to the rate of taxation paid by Dutch multinational corporations (MNCs), the government should stop ducking the question, says SP Member of Parliament and finance spokesman Ewout Irrgang. Demanding openness about the matter, Irrgang says: “If it turns out that multinationals are indeed paying scarcely any tax, then the law should be adjusted." During the weekly parliamentary question time he intends to ask Jan Kees de Jager, Secretary of State for Finance, for an explanation regarding revelations in leading Dutch daily newspaper NRC Handelsblad, which alleges that MNCs are paying little or no company taxes.

Statements made to NRC Handelsblad by tax officials reveal that a growing number of MNCs are hardly paying any company tax at all, as a result of the law known as ‘Werken aan Winst’ (literally, 'Work on Profit'), which was pushed through parliament by the caretaker cabinet of Premier Jan Peter Balkenende, following the fall of his government in 2006. Under such interim arrangements, no controversial legislation is supposed to be proposed, yet this law not only provided for a major reduction in taxes on profits, but, according to NRC Handelsblad, also opened up the possibility for MNCs to use new constructions to avoid tax.

So far, Secretary of State De Jager has given no answer to parliamentary questions regarding how much tax Dutch multinationals are paying on their profits. “The Dutch people have a right to know this," Irrgang insists. "Are MNCs making a proper contribution to, for example, all the infrastructure and education which these firms can thank for their profits? Or is it only workers and the firms' customers who have to foot the bill for these while the multinationals salt away their profits unhindered?”

Irrgang concludes that “MNCs have got tax planning down to a fine art. The belief that paying taxes is for suckers is becoming widespread. In reality ordinary Dutch people have to stump up to cover the missing tax revenues. Either that or we have to cut spending on social provision, health care, education and infrastructure. Firms should have to contribute to the society for which they have their existence and their profits to thank, and it is the government's job to organise this properly.”

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